Critical Reasoning

1. One state adds a 7 percent sales tax to the price of most products purchased within its jurisdiction. This tax, therefore, if viewed as tax on income, has the reverse effect of the federal income tax: the lower the income, the higher the annual percentage rate at which the income is taxed.
The conclusion above would be properly drawn if which of the following were assumed as a premise?
(A) The amount of money citizens spend on products subject to the state tax tends to be equal across income levels.
(B) The federal income tax favors citizens with high incomes, whereas the state sales tax favors citizens with low incomes.
(C) Citizens with low annual incomes can afford to pay a relatively higher percentage of their incomes in state sales tax, since their federal income tax is relatively low.
(D) The lower a state’s sales tax, the more it will tend to redistribute income from the more affluent citizens to the rest of society.
(E) Citizens who fail to earn federally taxable income are also exempt from the state sales tax.
OA: [spoiler]A[/spoiler]
My Analysis:
Conclusion: the new tax has the following effect: the lower the income, the higher the annual percentage rate at which the income is taxed. this is opposite of the federal tax: the higher the income, the lower the annual percentage rate at which the income is taxed. Have I understood the conclusion right?
Then, why the answer is not c ?

2. Surveys show that every year only 10 percent of cigarette smokers switch brands. Yet the manufacturers have been spending an amount equal to 10 percent of their gross receipts on cigarette promotion in magazines. It follows from these figures that inducing cigarette smokers to switch brands did not pay, and that cigarette companies would have been no worse off economically if they had dropped their advertising.

Of the following, the best criticism of the conclusion that inducing cigarette smokers to switch brands did not pay is that the conclusion is based on
(A) computing advertising costs as a percentage of gross receipts, not of overall costs
(B) past patterns of smoking and may not carry over to the future
(C) the assumption that each smoker is loyal to a single brand of cigarettes at any one time
(D) the assumption that each manufacturer produces only one brand of cigarettes
(E) figures for the cigarette industry as a whole and may not hold for a particular company
OA: [spoiler]E[/spoiler]
MyAnalysis:
Conclusion: The spending did not pay and the companies would have been no worse if they had not spent on the promotion.
premise: the author reasons that since only 10% of consumers switched brands, inspite of spending 10% of the gross recipts, the spending has not paid. The Q asks us to weaken the conclusion. so we need to show that the spending would have benifited the company in some way. I chose (D), because the author is assuming that the manufacturer produces only one brand. It could be possible that the manufacturer produces more than 1 brand and the spending would have caused the consumer to switch between the 2 brands that the same manufacturer produces. Then, this answer choice can weaken the conclusion that the spending did not pay.
kindly let me know your way of approaching this Q.

Thanx

The first question i got it this way.(hope it is correct)

X has a salary of 10,000$ and Y has a salary of 5000$

They both decide to buy a cell phone worth 500$ let us assume sales tax for the mobile is 100$

Now calculate the percentage impact on their salaries
X pays 1 % of his income as Stax
Y pays 2% of his income as Stax

Thus as a result with Y having less income gets to pay more % of his income as tax.


A :says the amount that X spends totally on buyin things are same as that of Y.(Meaning to say rich ppl will not buy more and dont end up payin more tax)

Hope this helps!!

For the second question, my guess is on E bcoz

Consider there is a company X, with 2 brands X1 and X2.
and a company Y with one brand Y.

The conclusion given is 'inducing cigarette smokers to switch brands did not pay'.
If a person was to switch from X1 to X2, there will not be any profit for company X.
If a person was to switch from X1 to Y, there would be profit for company Y.

The criticism to the conclusion is - ''inducing cigarette smokers to switch brands did pay'.

For this criticism to be true, the assumption would be (it is based on) that it does not hold for a company alone ( In this case X alone b'coz of the reason stated above (If a person was to switch from X1 to X2, there will not be any profit for company X)) but across companies ( from X to Y).

Hope this helps.
srn

wow! excellent breaking down of the problem krishnakumarhod
hats off!

but how would all this stuff strike to me in a matter of 1.5 mins ??

I found the second one quite time taking and hope is of a kind that does not turn up more often on the GMAT.

Now simply put, the argument looks like

Surveys - only 10% of the smokers switch brands yearly.
Companies spend 10% of the gross receipts on advertising.
conclusion:: therefore spending on advertisement did not pay.

what are you talking about here, the industry as a whole or the bits and pieces..

let us say all the people who switched, did so to only one company(say X).

then though at industry level the promotion might not have worked, as far as company X is concerned it has worked perfectly well.

Now saying that the "promotional spending did not work" is a generic statement which might not work in a particular case.

If the statement would have been about some of the companies then it might have been much more difficult.

got the 1st one wrong choose B, didnt understand option A quite well

2nd one
came down to D or E
then choose "(E) figures for the cigarette industry as a whole and may not hold for a particular company"

nice questions and explainations
wats the source of question

2. Surveys show that every year only 10 percent of cigarette smokers switch brands. Yet the manufacturers have been spending an amount equal to 10 percent of their gross receipts on cigarette promotion in magazines. It follows from these figures that inducing cigarette smokers to switch brands did not pay, and that cigarette companies would have been no worse off economically if they had dropped their advertising.

Of the following, the best criticism of the conclusion that inducing cigarette smokers to switch brands did not pay is that the conclusion is based on
(A) computing advertising costs as a percentage of gross receipts, not of overall costs
(B) past patterns of smoking and may not carry over to the future
(C) the assumption that each smoker is loyal to a single brand of cigarettes at any one time
(D) the assumption that each manufacturer produces only one brand of cigarettes
(E) figures for the cigarette industry as a whole and may not hold for a particular company

For this question,According to a survey: 10% smokers switch brands and companies spend 10% of their revenues for advertising.
From this Survey the author says that advertising is of no use, because he is assuming that

Money obtained from 10% smokers who switch = 10% of revenue money spent on advertising.

Now this assumption is completely flawed because the 10% of number of smokers could be more and amount of 10% of revenue spent on advertising could be less. But the author assumes that they are equal.

Option (E) tells us that, such an assumption of figures for the cigarette industry as a whole cannot possibly hold true when you actually go about applying it to a few particular companies. Which means that for those companies
Money obtained from 10% smokers who switch > 10% of revenue money spent on advertising.[/quote]