In the year following an 8-cent increase in the federal tax on a pack of cigarettes, sales of cigarettes fell 10%. In contrast, in the year prior to the tax increase, sales had fallen 1%. The volume of cigarette sales is therefore strongly related to the after-tax price of a pack of cigarettes.
The argument above requires which of the following assumptions?
A. During the year following the tax increase, the pretax price of a pack of cigarettes did not increase by as much as it had during the year prior to the tax increase.
B. The one percent fall in cigarette sales in the year prior to tax increase was due to a smaller tax increase.
C. The pretax price of a pack of cigarettes gradually decreased throughout the year before and the year after the tax increase.
D. For the year following the tax increase, the pretax price of a pack of cigarettes were not eight or more cents lower than it had been the previous year.
E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.
I had picked A official answer is D from gmat prep
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- pnf619
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Re: In the year following an 8-cent increase in the federal tax
On reading the argument below:
In the year following an 8-cent increase in the federal tax on a pack of cigarettes, sales of cigarettes fell 10%. In contrast, in the year prior to the tax increase, sales had fallen 1%. The volume of cigarette sales is therefore strongly related to the after-tax price of a pack of cigarettes.
To find the underlying assumption regarding the corrleation between cigartee sales and tax price , we need to find some option in which we can say for surity that sales didn't fall by any other reason. If we say that before tax price was same and only there is change in tax , then we can assume that sales fell because of rise of tax.
as per the options below:
A. During the year following the tax increase, the pretax price of a pack of cigarettes did not increase by as much as it had during the year prior to the tax increase.
>> didn't increase as much , so can we say for surity that it didn't effect sales at all. the rate of increase may have been different.so what if the cigartee price increased then may be increase of cgartee prices itself was the reason for decrease of sales.
B. The one percent fall in cigarette sales in the year prior to tax increase was due to a smaller tax increase.
>> fall due to what reason is not important.
C. The pretax price of a pack of cigarettes gradually decreased throughout the year before and the year after the tax increase.
>> rate of decrease of pre tax price is not imp.
D. For the year following the tax increase, the pretax price of a pack of cigarettes were not eight or more cents lower than it had been the previous year.
if it were lower than 8 cent or higher then probably increase of tax would not have much effected, and we couldnt have said by surity then fall of sales was solely because of tax.
E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.
>> both rises ? so may be sales decreased because of cigartee prices not because of tax
In the year following an 8-cent increase in the federal tax on a pack of cigarettes, sales of cigarettes fell 10%. In contrast, in the year prior to the tax increase, sales had fallen 1%. The volume of cigarette sales is therefore strongly related to the after-tax price of a pack of cigarettes.
To find the underlying assumption regarding the corrleation between cigartee sales and tax price , we need to find some option in which we can say for surity that sales didn't fall by any other reason. If we say that before tax price was same and only there is change in tax , then we can assume that sales fell because of rise of tax.
as per the options below:
A. During the year following the tax increase, the pretax price of a pack of cigarettes did not increase by as much as it had during the year prior to the tax increase.
>> didn't increase as much , so can we say for surity that it didn't effect sales at all. the rate of increase may have been different.so what if the cigartee price increased then may be increase of cgartee prices itself was the reason for decrease of sales.
B. The one percent fall in cigarette sales in the year prior to tax increase was due to a smaller tax increase.
>> fall due to what reason is not important.
C. The pretax price of a pack of cigarettes gradually decreased throughout the year before and the year after the tax increase.
>> rate of decrease of pre tax price is not imp.
D. For the year following the tax increase, the pretax price of a pack of cigarettes were not eight or more cents lower than it had been the previous year.
if it were lower than 8 cent or higher then probably increase of tax would not have much effected, and we couldnt have said by surity then fall of sales was solely because of tax.
E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.
>> both rises ? so may be sales decreased because of cigartee prices not because of tax
- jlucero
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Re: In the year following an 8-cent increase in the federal tax
Premise: cigarette tax went up by $0.08 and sales went down.
Conclusion: higher cigarette costs mean fewer sales
Assumption: No change in cigarette cost other than the $0.08 tax.
(D) tells us that the pre-sale cost of cigarettes did not change my more than $0.08 cheaper. Because if it had, then cigarette costs could be less than the year prior, even though the taxes went up. In an extremem scenario, last year, cigarettes cost $10 per pack, and this year, they cost $1.08. Even though I added $0.08 tax, I could still discount my product so that it is cheaper than it was before.
Conclusion: higher cigarette costs mean fewer sales
Assumption: No change in cigarette cost other than the $0.08 tax.
(D) tells us that the pre-sale cost of cigarettes did not change my more than $0.08 cheaper. Because if it had, then cigarette costs could be less than the year prior, even though the taxes went up. In an extremem scenario, last year, cigarettes cost $10 per pack, and this year, they cost $1.08. Even though I added $0.08 tax, I could still discount my product so that it is cheaper than it was before.
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- TooLong150
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Re: In the year following an 8-cent increase in the federal tax
jlucero Wrote:Premise: cigarette tax went up by $0.08 and sales went down.
Conclusion: higher cigarette costs mean fewer sales
Assumption: No change in cigarette cost other than the $0.08 tax.
(D) tells us that the pre-sale cost of cigarettes did not change my more than $0.08 cheaper. Because if it had, then cigarette costs could be less than the year prior, even though the taxes went up. In an extremem scenario, last year, cigarettes cost $10 per pack, and this year, they cost $1.08. Even though I added $0.08 tax, I could still discount my product so that it is cheaper than it was before.
Hi Joe,
If the pre-tax prices did drop considerably, how would that affect the volume of the sales which I assume is the number of cigarettes sold compared to the revenue which is the total amount that the companies made from the sales.
- RonPurewal
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Re: In the year following an 8-cent increase in the federal tax
TooLong150 Wrote:Hi Joe,
If the pre-tax prices did drop considerably, how would that affect the volume of the sales which I assume is the number of cigarettes sold compared to the revenue which is the total amount that the companies made from the sales.
Since the word "sales" is in both parts"”"sales fell 10%" vs. "the volume of sales""”you can assume that both references are to the same quantity. (Otherwise, you'd have "sales" referring to two different quantities!)
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Re: In the year following an 8-cent increase in the federal tax
though for some Strenthen/weaken questions, prethinking of assumption is harder than directly finding out the weakener/strengthener, prethinking of assumption is still very good for assmption and evaluate questions
is my thinking correct?
this question is typical of questions in which prethinking is good.
the problem: after tax price affect the decrease
prethinking: 2 steps
1, challenge the argument: what if the the after tax price dose not change, if the pretax price is lower.
2. find out assumption: pretax price is not much lower.
D matches.
is my process of doing this cr correct?
is my thinking correct?
this question is typical of questions in which prethinking is good.
the problem: after tax price affect the decrease
prethinking: 2 steps
1, challenge the argument: what if the the after tax price dose not change, if the pretax price is lower.
2. find out assumption: pretax price is not much lower.
D matches.
is my process of doing this cr correct?
- RonPurewal
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Re: In the year following an 8-cent increase in the federal tax
If such an objection comes to mind as you're reading the problem, then, good.
On the other hand, you shouldn't take forever to "pre-think" (as you call it). If no immediate objections come to mind, then just go to the answer choices.
On the other hand, you shouldn't take forever to "pre-think" (as you call it). If no immediate objections come to mind, then just go to the answer choices.
- RonPurewal
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Re: In the year following an 8-cent increase in the federal tax
Two additional thoughts:
"- If you are seldom (or never) able to predict what issue(s) will be addressed in the answer, then your thought process is probably too "academic" (= too much formal logic, not enough real-world thinking).
If you can get these passages to become conversations in your head (with an imaginary partner), then, as the "conversations" proceed, you should naturally come up with objections / identify issues. "Wait a minute..."
That's how conversations work.
"- You should also evaluate your own tendency to have "tunnel vision""”"”i.e., to become so fixated on your prediction that you become blind to OTHER correct answers.
There will almost never be only one way to strengthen/weaken an argument. So, it's possible that your prediction might be completely different from the correct answer. (E.g., if you had to explain why someone isn't gaining weight despite eating more food, you might predict "more exercise" while the actual answer is "started a drug that speeds metabolism").
If you (personally) are likely to become so hung up on your own prediction that you won't notice other correct answers, then you may want to avoid making predictions. If not"”"”i.e., if you'll still notice other valid angles of critique"”"”then there's no downside, so you may as well go ahead and make predictions.
"- If you are seldom (or never) able to predict what issue(s) will be addressed in the answer, then your thought process is probably too "academic" (= too much formal logic, not enough real-world thinking).
If you can get these passages to become conversations in your head (with an imaginary partner), then, as the "conversations" proceed, you should naturally come up with objections / identify issues. "Wait a minute..."
That's how conversations work.
"- You should also evaluate your own tendency to have "tunnel vision""”"”i.e., to become so fixated on your prediction that you become blind to OTHER correct answers.
There will almost never be only one way to strengthen/weaken an argument. So, it's possible that your prediction might be completely different from the correct answer. (E.g., if you had to explain why someone isn't gaining weight despite eating more food, you might predict "more exercise" while the actual answer is "started a drug that speeds metabolism").
If you (personally) are likely to become so hung up on your own prediction that you won't notice other correct answers, then you may want to avoid making predictions. If not"”"”i.e., if you'll still notice other valid angles of critique"”"”then there's no downside, so you may as well go ahead and make predictions.
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Re: In the year following an 8-cent increase in the federal tax
Hi Ron, can you please explain why A is not right? I got stuck between A and D
The argument states that the reason for a drop of sales is eight cent tax, therefore, the pretax price should be equal so that the tax can be reflected at the final price.
Doesn't A mean that the pretax price stays stable during two years?
Or does A mean pretax price increased anyways, so eventually the total price increased so the decrease of the sales is caused by the final price ( probably exclude the tax )
Thanks
The argument states that the reason for a drop of sales is eight cent tax, therefore, the pretax price should be equal so that the tax can be reflected at the final price.
Doesn't A mean that the pretax price stays stable during two years?
Or does A mean pretax price increased anyways, so eventually the total price increased so the decrease of the sales is caused by the final price ( probably exclude the tax )
Thanks
- RonPurewal
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Re: In the year following an 8-cent increase in the federal tax
choice A is exactly backward!
remember—
an ASSUMPTION is something that's NECESSARY for the argument to work.
if an ASSUMPTION is FALSE... the whole logic of the argument should be DESTROYED!
if we make A false... we get this:
During the year following the tax increase, the pretax price of a pack of cigarettes increased as much as, or more than, it had during the year prior to the tax increase
if that ^^ is true, then the OVERALL, AFTER-TAX increase over that year (after the imposition of the tax) would have been even BIGGER! ...this makes the argument in the passage even STRONGER.
that's exactly the opposite of what should happen—when you negate an assumption, the argument should be DESTROYED—so, A is precisely the opposite of what we want.
remember—
an ASSUMPTION is something that's NECESSARY for the argument to work.
if an ASSUMPTION is FALSE... the whole logic of the argument should be DESTROYED!
if we make A false... we get this:
During the year following the tax increase, the pretax price of a pack of cigarettes increased as much as, or more than, it had during the year prior to the tax increase
if that ^^ is true, then the OVERALL, AFTER-TAX increase over that year (after the imposition of the tax) would have been even BIGGER! ...this makes the argument in the passage even STRONGER.
that's exactly the opposite of what should happen—when you negate an assumption, the argument should be DESTROYED—so, A is precisely the opposite of what we want.
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