The government should stop permitting tobacco companies to subtract advertising expenses from their revenues in calculating taxable income. Tobacco companies would then have to pay more taxes. As a consequence, they would raise the prices of their products and this price increase would raise the prices of their products and this price increase would discourage tobacco use.
Which of the following is an additional premise required by the argument above?
(A) Tobacco companies would not offset the payment of extra taxes by reducing costs in other areas.
(B) Tobacco companies would not continue to advertise if they were forced to pay higher taxes.
(C) People would not continue to buy tobacco products if these products were no longer advertised.
(D) The money the government would gain as a result of the increase in tobacco companies' taxable income would be used to educate the
public about the dangers of tobacco use.
(E) The increase in taxes paid by tobacco companies would be equal to the additional income generated by raising prices.
5-Day Free Trial
5-day free, full-access trial TTP
Available with Beat the GMAT members only code
MORE DETAILS
The government should stop permitting tobacco
This topic has expert replies
-
BTGmoderatorDC
- Moderator
- Posts: 7187
- Joined: Thu Sep 07, 2017 4:43 pm
- Followed by:23 members
-
deloitte247
- Legendary Member
- Posts: 2214
- Joined: Fri Mar 02, 2018 2:22 pm
- Followed by:5 members
Timer
00:00
Your Answer
A
B
C
D
E
Global Stats
Option A - INCORRECT.
This decision will only have effect on other areas but won't reduce the cost of tobacco and also won't reduce the intake of tobacco by its consumers.
Option B - INCORRECT.
Tobacco company does not need advertisement to succeed anymore with the level at which the increase in consumers has become. Therefore higher taxes should be impose on them for other reasons.
Option C - INCORRECT.
With or without advertisement Tobacco company will still make their sales.
Option D - CORRECT.
This option is the most suitable additional premise required to justify the argument. The increase in taxable income of the Tobacco company will reduce the production of it and the revenue generated from this will be use to educate the consumers/public on the dangerous use of tobacco.
Option E - INCORRECT.
This option can not be ascertained, because, anytime there is an increase in products there is a decrease in the level of purchase by its consumer. However, the increase in taxes paid by the tobacco company would not be equal to the amount generated by raising prices.
This decision will only have effect on other areas but won't reduce the cost of tobacco and also won't reduce the intake of tobacco by its consumers.
Option B - INCORRECT.
Tobacco company does not need advertisement to succeed anymore with the level at which the increase in consumers has become. Therefore higher taxes should be impose on them for other reasons.
Option C - INCORRECT.
With or without advertisement Tobacco company will still make their sales.
Option D - CORRECT.
This option is the most suitable additional premise required to justify the argument. The increase in taxable income of the Tobacco company will reduce the production of it and the revenue generated from this will be use to educate the consumers/public on the dangerous use of tobacco.
Option E - INCORRECT.
This option can not be ascertained, because, anytime there is an increase in products there is a decrease in the level of purchase by its consumer. However, the increase in taxes paid by the tobacco company would not be equal to the amount generated by raising prices.
