OG 13 - CR# 95 - Strengthen

Question

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 do 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 the reasoning!!

gmatwar13 · Answer

Must be true type question..
"if x then y"... is true..
then "if not y then not x" is also true

Now going to options
a) Unstated and out of scope we are not dealing with those people
b) yup this is true. as credit card = more spending power.. if more spending power than more tip... Now
in this situation there is financial pressure from credit card on individual so credit card = less spending power. Now if less tip than less spending power

c) whether they possess card or not is not an issue stated in premise, it just says people spend more as they feel they have more spending power

d) This is not the concern. People pay more when they have CC is the concern

e) Again not relevant.. seeing CC logo increases the spending power of people having CC.. Now internal details not relevant. Whether they spend more than average is not our concern.

GMAT Kolaveri · Answer

Conclusion Seeing a credit card logo increases the willingness of the cardholder to spend more. Pre-thinking: Any answer options which shows that there is some relationship between viewing the logo and spending mentality of the cardholder. Or in other words we have to show that viewing AFFECTS (increases/decreases) the spending mentality of the cardholder. (A) The effect noted in the studies is not limited to patrons who have credit cards. IRRELEVANT. This fact does not affect the conclusion. (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. This is the correct AO. This show that viewing the logo affects the spending mentality of the cardholder (C) In virtually all of the cases in the studies, the patrons who paid bills in cash did not possess credit cards. IRRELEVANT. We are not worried about the bills paid in cash (D) In general, restaurant patrons who pay their bills in cash leave larger tips than do those who pay by credit card. This statement compares those who pay in cash and those who pay by credit card. Does not address the conclusion. viewing vs spending mentality (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. Most may select this as the answer option. But it is incorrect. This statement says that customers prefer credit card over cash. This does not address the conclusion viewing vs spending mentality. It DOES NOT say that they spend more or less when logo is displayed.

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OG 13 - CR# 95 - Strengthen

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