It's got to be B
"In the past price increases of 10% => decrease of 4% in per capita sales"
The assumption is that this price increase is because of taxes which is what the conclusion says.
- pradeep
assumption question
Not an easy one.jamesk486 wrote:In the past, every ten-percentage-point increase in cigarette prices in the country of Coponia has decreased per capita sales of cigarettes by four percent. Coponia is about to raise taxes on cigarettes by 9 cents per pack. The average price of cigarettes in Coponia is and has been for more than a year 90 cents per pack. So the tax hike stands an excellent chance of reducing per capita sales of cigarettes by four percent.
Which of the following is an assumption on which the argument depends?
A.Tobacco companies are unlikely to reduce their profit per pack of cigarettes to avoid an increase in the cost per pack to consumers in Coponia.
B.Previous increases in cigarette prices in Coponia have generally been due to increases in taxes on cigarettes.
C.Any decrease in per capita sales of cigarettes in Coponia will result mainly from an increase in the number of people who quit smoking entirely.
D.At present, the price of a pack of cigarettes in Coponia includes taxes that amount to less than ten percent of the total selling price.
E.The number of people in Coponia who smoke cigarettes has remained relatively constant for the past several years.
4% drop needs to be consistant in application regardless of the smoker popluation size (i.e. 4% on 100 is 4, 4% on 200 is 8, and so forth) So, in any case of increase in price by 10% point, there should be 4% drop in per capita sales. So, we don't need to have a constant number of people who smoke.
And 9 cents increase is equal to 10% point price increase?
Anyone for D?
Looking for 780~
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4meonly
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I think answer is not D because D speaks about he portion af the tax in the total price of the pack and it is not the assumption in logic
price increase ---> sales decrease
May be I misunderstood you?
price increase ---> sales decrease
May be I misunderstood you?
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logitech
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For those who have not met Ronnie before, he is the Mr. IMO of the beat the gmat forum but he is trying hard to get rid of this title. So one big thank you for him from the members of the forum!ronniecoleman wrote:IMO A
LGTCH
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bluementor
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Conclusion: So the tax hike stands an excellent chance of reducing per capita sales of cigarettes by four percent.
What assumption did the author make to arrive at this conclusion?
B. This has got nothing to do with reducing per capita sales in future. The previous trend does not indicate anything about the future.
C. This does not support the conclusion. An assumption should support the conclusion.
D. The percentage of tax included in the price does not affect the consumer. What matters is the final price.
E. It could be that no tax hikes were enforced in the past several years. Doesn't affect the conclusion.
A. It could be that in the past, each time a 10% tax raise is imposed, the tobacco companies responds with a price hike which results in a reduction of cigarette sales. In order for the conclusion to be true, the companies must continue to do same. This is the assumption made. Choice A simply states that the probability of the companies not increasing prices (but instead reduce their profits) is very low (unlikely).
-BM-
What assumption did the author make to arrive at this conclusion?
B. This has got nothing to do with reducing per capita sales in future. The previous trend does not indicate anything about the future.
C. This does not support the conclusion. An assumption should support the conclusion.
D. The percentage of tax included in the price does not affect the consumer. What matters is the final price.
E. It could be that no tax hikes were enforced in the past several years. Doesn't affect the conclusion.
A. It could be that in the past, each time a 10% tax raise is imposed, the tobacco companies responds with a price hike which results in a reduction of cigarette sales. In order for the conclusion to be true, the companies must continue to do same. This is the assumption made. Choice A simply states that the probability of the companies not increasing prices (but instead reduce their profits) is very low (unlikely).
-BM-
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samanthaJ79
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