CR1..urgent

manasi_sh · Posted: Sat Oct 27, 2007 9:16 pm Post subject: CR1..urgent

The government should stop permitting tobacco companies to subtract advertising expenses from their revenues in calculating taxable income. Tobacco companies would then have to pay more taxes. As a consequence, they would raise the prices of their products and this price increase would raise the prices of their products and this price increase would discourage tobacco use.
Which of the following is an additional premise required by the argument above?
(A) Tobacco companies would not offset the payment of extra taxes by reducing costs in other areas.
(B) Tobacco companies would not continue to advertise if they were forced to pay higher taxes.
(C) People would not continue to buy tobacco products if these products were no longer advertised.
(D) The money the government would gain as a result of the increase in tobacco companies’ taxable income would be used to educate the public about the dangers of tobacco use.
(E) The increase in taxes paid by tobacco companies would be equal to the additional income generated by raising prices.

ANS: A..why?

jangojess · Posted: Sun Oct 28, 2007 12:53 am Post subject:

Conclusion - More tax ==> Price increase ==> Tobacco use will reduce
Evidence - Govt new rule...

Tobacco comp has to pay some extra money as extra tax. Here we assume that the ONLY way to get that extra money is thru price increment of products.........This is clearly mentioned in A.