Hey Guys
About the following question,
The total market value of real estate in Altonville has steadily declined over the past 4 years. This decline has meant that the overall figure on which the city's property tax is based - the assessed value of that real estate- has also declined. The percentage of assessed value that was paid as property taxes to the city, however, did not change from year to year during this period.
The information above most strongly support which of the following?
The percentage of Altonville yearly revenue that comes from money collected in property taxes has declined steadily over the last 4 years.
The amount of revenue that Altonville collected from property taxes was lower last year than it was 4 years ago
In my opinion both are correct answers, I just don't see where the second one is strongly supported than the first one.
Any suggestions?
Many thanks
Lukas
property taxes
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Whenever CR questions involve PROPORTIONS v. ACTUAL NUMBERS, we have to consider what we know about both of those metrics.
If we're given that a) the assessed value of real estate has declined, and b) the percentage of assessed value that was paid as property taxes to the city did not change, then we can infer that the same percentage of a smaller pool = a smaller total amount of property taxes collected.
We can put this in terms of real numbers: let's say that 4 year ago the assessed value of real estate in the town was $100 million, and 10% was collected in property tax (these don't need to be realistic numbers - I'm just using easy ones). If the assessed value dropped to $80 million, but the tax percentage stayed 10%, then the city is now collecting $8 million instead of $10 million. It must be true that the total amount collected from property taxes has declined --> the second statement must be true.
The first statement, though, talks about property taxes as a percentage of all city revenue. If the amount from property taxes declined and nothing else changed, this would be true. But be careful - we're not given any information about any other city revenue. If other forms of revenue declined even more than property taxes, property taxes might actually constitute a greater percentage of the whole (even though the actual amount was smaller). We can't make the assumption that nothing else changed.
Whenever arguments deal with proportions, we need to consider:
a) how big a piece of the whole pie is it?
b) how big is the whole pie? Has it changed?
If we're given that a) the assessed value of real estate has declined, and b) the percentage of assessed value that was paid as property taxes to the city did not change, then we can infer that the same percentage of a smaller pool = a smaller total amount of property taxes collected.
We can put this in terms of real numbers: let's say that 4 year ago the assessed value of real estate in the town was $100 million, and 10% was collected in property tax (these don't need to be realistic numbers - I'm just using easy ones). If the assessed value dropped to $80 million, but the tax percentage stayed 10%, then the city is now collecting $8 million instead of $10 million. It must be true that the total amount collected from property taxes has declined --> the second statement must be true.
The first statement, though, talks about property taxes as a percentage of all city revenue. If the amount from property taxes declined and nothing else changed, this would be true. But be careful - we're not given any information about any other city revenue. If other forms of revenue declined even more than property taxes, property taxes might actually constitute a greater percentage of the whole (even though the actual amount was smaller). We can't make the assumption that nothing else changed.
Whenever arguments deal with proportions, we need to consider:
a) how big a piece of the whole pie is it?
b) how big is the whole pie? Has it changed?
Ceilidh Erickson
EdM in Mind, Brain, and Education
Harvard Graduate School of Education
EdM in Mind, Brain, and Education
Harvard Graduate School of Education
GMAT/MBA Expert
- ceilidh.erickson
- GMAT Instructor
- Posts: 2095
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PROPORTIONS v. NUMBERS is a very common theme on CR questions. Here are just a few others that test this topic:
https://www.beatthegmat.com/i-m-doubting ... tml#551227
https://www.beatthegmat.com/cr-evaluate- ... tml#558393
https://www.beatthegmat.com/total-books- ... tml#680834
https://www.beatthegmat.com/statistics-c ... tml#564609
https://www.beatthegmat.com/lyme-diseas- ... tml#714758
https://www.beatthegmat.com/i-m-doubting ... tml#551227
https://www.beatthegmat.com/cr-evaluate- ... tml#558393
https://www.beatthegmat.com/total-books- ... tml#680834
https://www.beatthegmat.com/statistics-c ... tml#564609
https://www.beatthegmat.com/lyme-diseas- ... tml#714758
Ceilidh Erickson
EdM in Mind, Brain, and Education
Harvard Graduate School of Education
EdM in Mind, Brain, and Education
Harvard Graduate School of Education