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Due to a sharp rise in the price of gasoline, commuters who

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Due to a sharp rise in the price of gasoline, commuters who [#permalink] New post 16 Feb 2012, 18:03
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80% (02:02) correct 20% (00:40) wrong based on 20 sessions
Due to a sharp rise in the price of gasoline, commuters who drive to work in the center of the city are facing a large increase in transportation expenses that will limit the funds they have available to spend in other areas. In order to forestall a slowdown in the local economy, the city council has decided that fares on all forms of public transportation will be suspended for the next three months. Clearly, if commuters can get to work more cheaply, they will have more money left over to spend in other sectors of the economy, and the city’s finances on the whole will not be negatively affected by higher gasoline prices.


Which of the following is an assumption underlying the plan to avoid a slowdown in the city’s economy?
• Three months is a sufficient period of time to allow gasoline prices to stabilize.
• Commuters who usually drive to work will begin taking public transportation if it is free.
• Other factors in the local economy are affecting the price of gasoline.
• The cost of parking in the city will remain relatively stable.
• People who work in the city are more likely to drive than to take public transportation.

Why is C incorrect?
[Reveal] Spoiler: OA
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Re: Due to a sharp rise in the price of gasoline, [#permalink] New post 16 Feb 2012, 20:06
(A): We are not considering a definite time period here - just whether the measures will be effective. Incorrect.
(B): Correct. If commuters who drive to work do not begin taking public transportation when it is free, they will not have savings left over on fuel expenditure, and so will not spend in other sectors of the economy. This assumption is therefore critical to this argument -> it will render the argument void if it is false.
(C): Irrelevant. Even if other factors are affecting the price of gasoline, the plan proposed by the city council will still work. The factors contributing to the gasoline price rise are not a part of the argument at all. Incorrect.
(D): The cost of parking is irrelevant to the plan. Incorrect.
(E): This is not an assumption made in the plan. Rather it will render the plan invalid if true. Incorrect.
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Re: Due to a sharp rise in the price of gasoline, [#permalink] New post 16 Feb 2012, 22:20
The price of petroleum as quoted in news generally refers to the spot price per barrel of either WTI/light crude as traded on the New York Mercantile Exchange for delivery at Cushing, Oklahoma, or of Brent as traded on the Intercontinental Exchange for delivery at Sullom Voe.

High gas prices are usually caused by high prices for crude oil, which accounts for 55% of the price of gasoline. This year, concerns about a potential military action, by either Israel or even the U.S., against Iran are causing oil prices to creep up.
Re: Due to a sharp rise in the price of gasoline,   [#permalink] 16 Feb 2012, 22:20
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