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Studies in restaurants

This topic has 1 expert reply and 4 member replies
abcgmat Master | Next Rank: 500 Posts Default Avatar
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Studies in restaurants

Post Tue May 01, 2012 6:06 am
Studies in restaurants show that the tips left by customers who pay their bill in cash tend to
be larger when the bill is presented on a tray that bears a credit-card logo. Consumer
psychologists hypothesize that simply seeing a credit-card logo makes many credit-card
holders willing to spend more because it reminds them that their spending power exceeds
the cash they have immediately available. Which of the following, if true, most
strongly supports the psychologists’ interpretation of the studies?
A. The effect noted in the studies is not limited to patrons who have credit cards.
B. Patrons who are under financial pressure from their credit-card obligations tend to tip less
when presented with a restaurant bill on a tray with credit-card logo than when the tray
has no logo.
C. In virtually all of the cases in the studies, the patrons who paid bills in cash did not possess
credit cards.
D. In general, restaurant patrons who pay their bills in cash leave larger tips than do those
who pay by credit card.
E. The percentage of restaurant bills paid with given brand of credit card increases when that
credit card’s logo is displayed on the tray with which the bill is prepared

OA: B
Can you explain how B is strengthening
Conclusion: seeing a credit-card logo --(causes)--> to spend more (as it reminds more spending power)

conclusion: A->B
we strengthen by
1. B --\-> A
2. C --\->B
3. A occurs B occurs
4. A doesnot B doesnot occurs
5. Data used is representative
Can someone explain which one of these B falls in and how is it strengthening the argument

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zoe Master | Next Rank: 500 Posts Default Avatar
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Post Sat Sep 24, 2016 4:46 am
anyone can help to explain that why the stimulus mentions " the tips left by customers who pay their bill in cash "

I cannot figure out the function of it.

thanks a lot
have a nice weekend
>_~

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MBA Challengers Senior | Next Rank: 100 Posts
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Top Reply
Post Sun Oct 02, 2016 4:34 am
Hi Zoe,

The question stem is essentially talking about a subset of customers dining and paying at a restaurant - the customers who pay in cash. To make it more clear, divide the stimulus into premises and conclusion:

Premise 1: Customers are presented the bill on a tray with a credit-card (CC) logo.
Premise 2: Customers paying the bill in cash, leave larger tips in such a situation

Conclusion: Consumer psychologist hypothesis: Seeing a CC logo makes CC holders spend more as they realize their spending power is more than the cash that they are about to spend, while paying the restaurant bill or the cash that they have available

Now, check for the options:

Option A: This actually weakens the study conclusion as the hypothesis is valid only for customers holding credit cards as well. INCORRECT.
Option B: This adds another dimension to the idea that the CC logo on the bill tray will lead consumers to remember their credit-worthiness owing to their credit card. If the creditworthiness is strong, they will end up tipping more (assuming this to be a majority) and for people with more obligations on their credit card, they will end up tipping much lesser when they get a reminder of their CC dues. CORRECT.
Option C: Again weakens the argument as the conclusion depends on the patrons holding a credit card, yet paying in cash. INCORRECT.
Option D: Again weakens the hypothesis, as the patrons have an impact owing to their alternate payment channel of the credit card. INCORRECT.
Option E: There is nothing in relation to the specific logo on the tray mentioned in the question stem. INCORRECT.

Thus, the correct answer is B.

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zoe Master | Next Rank: 500 Posts Default Avatar
Joined
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Posted:
113 messages
Upvotes:
1
Post Sat Sep 24, 2016 4:46 am
anyone can help to explain that why the stimulus mentions " the tips left by customers who pay their bill in cash "

I cannot figure out the function of it.

thanks a lot
have a nice weekend
>_~

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MBA Challengers Senior | Next Rank: 100 Posts
Joined
09 Sep 2016
Posted:
51 messages
Upvotes:
20
Post Sun Oct 02, 2016 4:34 am
Hi Zoe,

The question stem is essentially talking about a subset of customers dining and paying at a restaurant - the customers who pay in cash. To make it more clear, divide the stimulus into premises and conclusion:

Premise 1: Customers are presented the bill on a tray with a credit-card (CC) logo.
Premise 2: Customers paying the bill in cash, leave larger tips in such a situation

Conclusion: Consumer psychologist hypothesis: Seeing a CC logo makes CC holders spend more as they realize their spending power is more than the cash that they are about to spend, while paying the restaurant bill or the cash that they have available

Now, check for the options:

Option A: This actually weakens the study conclusion as the hypothesis is valid only for customers holding credit cards as well. INCORRECT.
Option B: This adds another dimension to the idea that the CC logo on the bill tray will lead consumers to remember their credit-worthiness owing to their credit card. If the creditworthiness is strong, they will end up tipping more (assuming this to be a majority) and for people with more obligations on their credit card, they will end up tipping much lesser when they get a reminder of their CC dues. CORRECT.
Option C: Again weakens the argument as the conclusion depends on the patrons holding a credit card, yet paying in cash. INCORRECT.
Option D: Again weakens the hypothesis, as the patrons have an impact owing to their alternate payment channel of the credit card. INCORRECT.
Option E: There is nothing in relation to the specific logo on the tray mentioned in the question stem. INCORRECT.

Thus, the correct answer is B.

_________________
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Easy strategic GMAT prep
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GMAT/MBA Expert

Anurag@Gurome GMAT Instructor
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Post Tue May 01, 2012 8:58 pm
abcgmat wrote:
Studies in restaurants show that the tips left by customers who pay their bill in cash tend to
be larger when the bill is presented on a tray that bears a credit-card logo. Consumer
psychologists hypothesize that simply seeing a credit-card logo makes many credit-card
holders willing to spend more because it reminds them that their spending power exceeds
the cash they have immediately available. Which of the following, if true, most
strongly supports the psychologists’ interpretation of the studies?
A. The effect noted in the studies is not limited to patrons who have credit cards.
B. Patrons who are under financial pressure from their credit-card obligations tend to tip less
when presented with a restaurant bill on a tray with credit-card logo than when the tray
has no logo.
C. In virtually all of the cases in the studies, the patrons who paid bills in cash did not possess
credit cards.
D. In general, restaurant patrons who pay their bills in cash leave larger tips than do those
who pay by credit card.
E. The percentage of restaurant bills paid with given brand of credit card increases when that
credit card’s logo is displayed on the tray with which the bill is prepared

OA: B
Can you explain how B is strengthening
Conclusion: seeing a credit-card logo --(causes)--> to spend more (as it reminds more spending power)

conclusion: A->B
we strengthen by
1. B --\-> A
2. C --\->B
3. A occurs B occurs
4. A doesnot B doesnot occurs
5. Data used is representative
Can someone explain which one of these B falls in and how is it strengthening the argument
This is a challenging CR question and may require two iterations. Let me show how.

Scope of the passage is: cash-paying customers who have credit cards.
The studies show that: when cash-paying customers receive the bill on a tray with a credit-card logo, they tip larger.
Consumer psychologists hypothesize credit-card logo reminds customers that they have more spending power thanks to their credit cards) even though they are paying in cash.
A is out of the scope of the study and does nothing to strengthen the hypothesis (which is focused on credit card owning customers).
B suggests that those credit-card owning customers that are under financial pressure are reminded of their reduced financial capacity when they see the logo. This sort of refers to the effect of logo on the customers' perception of their financial capacity but seems a bit of a stretch. We will return to this.
C tells us that most ustomers who paid in cash did not have credit card. But the hypothsis is about those cash-paying customers who DO own credit cards. So C is out of scope.
D compares customers that pay in cash vs. those that pay using credit cards, not the focus of the hypothesis at all.
E talks about the effect of logo on the increased usage of that credit card. This again diverges from the scope of the hypothesis.

B was the only one that seem to be focused on the scope of the argument. So even though it talks about a subset of the cash-paying customers who own credit cards (specifically the ones under financial pressure), the data does support the main thrust of the hypothesis that logo of the tray reminds them of their financial capacity associated with their credit cards.

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