Spring 14 #8
This just drives me mad...the problem specifically asks for a revenue neutral rate change. From everything I understand, revenue neutral means the overall average change is 0%. However, the examiners appear to have accepted non-revenue neutral changes in both sample answers 1 and 2.
Does it also appear that way to everyone else, or is it just me missing something?
Comments
After some further study and problems, I believe sample answers 1 and 2 are assuming the calculation of an off-balance factor to keep the change revenue neutral. However, it still drives me mad that they appear to have accepted answers with this assumption not explicitly stated.
Yeah, you're right. Sample answer 3 is the only answer that's correct, strictly speaking. For sample answers 1 & 2, you would still have to adjust the base rate the make the change revenue-neutral but that didn't seem to be what they question was asking you to do. And the examiner's report made no mention of that.