ten-percentage-point increase in cigarette prices

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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.

OA A
Source: — Critical Reasoning |

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by [email protected] » Sun Jun 01, 2014 11:59 pm
Hi AnjaliOberoi,

This CR prompt is based on "causality" - the idea that one thing will cause another thing to happen. When dealing with causality, there are a number of assumptions, but the primary assumption is that "everything else will stay the same."

The Facts:
-In the past, a 10% increase in cigarette prices has decreased per-capita sales by 4% in Coponia.
-Coponia is about to raise taxes on cigarettes by 9 cents (the current price of cigarettes averages 90 cents/pack, so this represents a 10% increase in price).

The Conclusion:
-The tax hike stands an excellent chance of reducing per-capita sales by 4%.

The Logic:
With this new tax, the conclusion that per-capita sales would drop by 4% seems logical (based on historical data). For this causal argument to hold true, we have to assume that "everything else stays the same" - the number of smokers, the population, the fixed price per pack of cigarettes before this new tax takes effect, etc. We have to assume that the cigarette companies won't lower the price of cigarettes to offset the tax. The only answer that addresses the issue that everything will stay the same is Answer A.

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by AnjaliOberoi » Mon Jun 02, 2014 12:25 am
Hi Rich,

I am new to the CR section.My question might sound weird but i want to know why we assuming that everything else stays the same.

Also, Is the answer choice {D} weakens the conclusion to some extent?? My understanding says that increase in the tax amount by more than 10% would reduce the per capita sales by more than 4%, while the conclusion states that sales will be reduced by 4%...so somehow weakens the conclusion..

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by theCodeToGMAT » Mon Jun 02, 2014 9:29 am
Con: So the tax hike stands an excellent chance of reducing per capita sales of cigarettes by four percen

To show: it doesn't

{A} Tobacco companies are likely to reduce their profit per pack of cigarettes to avoid an increase in the cost per pack to consumers in Coponia; KEEP
{B} Previous increases in cigarette prices in Coponia have generally NOT been due to increases in taxes on cigarettes. IGNORE
{C} Any decrease in per capita sales of cigarettes in Coponia will NOT result mainly from an increase in the number of people who quit smoking entirely. IGNORE
{D} At present, the price of a pack of cigarettes in Coponia DOESNT includes taxes that amount to less than ten percent of the total selling price. IGNORE
{E} The number of people in Coponia who smoke cigarettes has NOT remained relatively constant for the past several years. IGNORE
R A H U L

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by [email protected] » Mon Jun 02, 2014 11:33 am
Hi AnjaliOberoi,

CR prompts that are based on Causality must assume that everything else stays the same because if other things changed, then there'd be no way to present a causality-based argument.

Here's an example:

There's a strong causal argument that regularly exercising leads to a healthier life. If you don't exercise now, but start exercising regularly, then you'll probably get in "better shape", lose weight, etc. This assumes that everything else in your life will stay about the same. If, however, you start eating LOTS of junk food, then you might get in "worse shape", gain weight, etc., even though you're exercising. The argument for the benefits of exercising regularly are built on the assumption that the other aspects of your life will stay consistent.

GMAT CR prompts are built on that same general idea: everything else stays the same.

As to your other question, Answer D is irrelevant to the prompt. The current amount of tax on cigarettes in Coponia has no effect on the issue. The country is about to RAISE TAXES 9 cents, meaning that it's a new tax that wasn't there before and this new tax will decrease sales.

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