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Expert replies
by niketdoshi123 » Mon Jun 11, 2012 3:03 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 a 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 for those who pay by credit-card.
e)The percentage of restaurant bills paid with a given brand of credit card increases when that credit card's logo is displayed on the tray with which the bill is presented.

Please explain this question by paraphrasing.
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Source: — Critical Reasoning |

by Kasia@EconomistGMAT » Mon Jun 11, 2012 3:57 am
Premise: customers who pay their bill in cash usually give higher tips when the waiter brings the bill on a tray with a credit-card logo
Assumption/ conclusion: when they see the credit-card logo, they feel they have more spending power because of credit cards they have (although presently they are paying in cash)

Now, what we need to look for is an argument that will support this conclusion.

The correct answer is b - the credit-card logo can also have a negative effect, if the customers have already used their credit limit. Thus, this proves that seeing the logo generally influences spending behavior.
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