BREAKING: Target Test Prep releases Brand New 2026 On Demand GMAT prep course

Redeem

Studies in restaurants

This topic has expert replies
Post new topic Post Reply
Previous Topic Next Topic
Master | Next Rank: 500 Posts
Posts: 222
Joined: Sat Aug 27, 2011 1:06 pm
Thanked: 19 times
Followed by:1 members

Studies in restaurants

by abcgmat » 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

[spoiler]OA: B[/spoiler]
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
Top
Source: — Critical Reasoning |
Master | Next Rank: 500 Posts
Posts: 341
Joined: Sun Mar 25, 2012 6:59 pm
Thanked: 17 times
Followed by:4 members
GMAT Score:720

by ice_rush » Tue May 01, 2012 2:53 pm
I am not too familiar with logic diagrams, but here's my take on this question:

The hypothesis is: Credit card logo reminds credit card holders that their spending power exceeds the cash they have immediately available, so they end up tipping more.

In order to support this hypothesis, we have to find a choice that talks about the credit card logo giving some sort of a "reminder", good or bad, to its card holders.

This is exactly what choice (B) says: credit card holders under financial pressure from their credit card obligations tip less when they see the credit card logo. Indeed, not a good reminder :)


Hope this helps!
Top
User avatar
Legendary Member
Posts: 1239
Joined: Tue Apr 26, 2011 6:25 am
Thanked: 233 times
Followed by:26 members
GMAT Score:680

by sam2304 » Tue May 01, 2012 7:34 pm
B is similar to 4.

Seeing the credit card logo which reminds of you additional spending capacity -> more tips
Seeing the credit card logo which reminds of your debts -> less tips.
Getting defeated is just a temporary notion, giving it up is what makes it permanent.
https://gmatandbeyond.blogspot.in/
Top

GMAT/MBA Expert

User avatar
GMAT Instructor
Posts: 3835
Joined: Fri Apr 02, 2010 10:00 pm
Location: Milpitas, CA
Thanked: 1854 times
Followed by:523 members
GMAT Score:770

by Anurag@Gurome » 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

[spoiler]OA: B[/spoiler]
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.
Anurag Mairal, Ph.D., MBA
GMAT Expert, Admissions and Career Guidance
Gurome, Inc.
1-800-566-4043 (USA)

Join Our Facebook Groups
GMAT with Gurome
https://www.facebook.com/groups/272466352793633/
Admissions with Gurome
https://www.facebook.com/groups/461459690536574/
Career Advising with Gurome
https://www.facebook.com/groups/360435787349781/
Top
Master | Next Rank: 500 Posts
Posts: 121
Joined: Mon Apr 04, 2016 6:31 pm
Thanked: 1 times

by zoe » 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
>_~
Top
User avatar
Senior | Next Rank: 100 Posts
Posts: 51
Joined: Fri Sep 09, 2016 11:59 pm
Thanked: 20 times

by MBA Challengers » 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.
Log on to www.mbachallengers.com for
Easy strategic GMAT prep
For any queries mail us at [email protected]
Follow MBA Challengers on Facebook
Top
Post new topic Post Reply
• Page 1 of 1