CAT 1998 — DILR Question 24

The total income of high income category in 1987-88 is Rs. (5000 × 75000).
The total income of upper-middle class category in 1987-88 is Rs. (10000 × 50000).
Hence, the current ratio of their total incomes = 3 : 4 = 0.75
Since the number of households in each category were equally distributed in all regions, we can have the following table for high income category.

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The average household income for high-income category increased by 90%. Hence, average household income for this category in 1994-95 = (75000 × 1.9) = Rs. 1,42,500
Hence, the total income for high-income category in 1994-95 = (17375 × 142500) = Rs. 2,476 million The same table can be drawn for upper-middle class category as follows:​​​​​

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The average household income for upper-middle class category increased by 60%. Hence, the average 
household income for this category in 1994-95 = (50000 ×1.6) = Rs. 80,000
Hence, the total income for high-income category in 1994-95 = (30125 × 80000) = Rs. 2,410 million Hence, the ratio of total income for these two categories in 1994-95 = $\frac{2476}{2410}=1.02.$

Hence, percentage increase in ratio $=\frac{(1.02-0.75)}{0.75}=36\%$