In the year following an 8-cent increase in the federal tax : GMAT Critical Reasoning (CR)
Check GMAT Club Decision Tracker for the Latest School Decision Releases http://gmatclub.com/AppTrack

 It is currently 23 Jan 2017, 03:44

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

# In the year following an 8-cent increase in the federal tax

Author Message
TAGS:

### Hide Tags

Director
Joined: 24 Aug 2006
Posts: 751
Location: Dallas, Texas
Followers: 6

Kudos [?]: 146 [1] , given: 0

In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

26 Nov 2006, 17:10
1
KUDOS
14
This post was
BOOKMARKED
00:00

Difficulty:

95% (hard)

Question Stats:

51% (02:41) correct 49% (01:49) wrong based on 472 sessions

### HideShow timer Statistics

In the year following an 8-cent increase in the federal tax on a pack of cigarettes, sales of cigarettes fell 10%. In contrast, in the year prior to the tax increase, sales had fallen 1%. The volume of cigarette sales is therefore strongly related to the after-tax price of a pack of cigarettes.

The argument above requires which of the following assumptions?

A. During the year following the tax increase, the pretax price of a pack of cigarettes did not increase by as much as it had during the year prior to the tax increase.

B. The one percent fall in cigarette sales in the year prior to tax increase was due to a smaller tax increase.

C. The pretax price of a pack of cigarettes gradually decreased throughout the year before and the year after the tax increase.

D. For the year following the tax increase, the pretax price of a pack if cigarettes were not eight or more cents lower than it had been the previous year.

E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.
[Reveal] Spoiler: OA

_________________

"Education is what remains when one has forgotten everything he learned in school."

Last edited by Skywalker18 on 25 Sep 2016, 20:16, edited 1 time in total.
If you have any questions
New!
VP
Joined: 28 Mar 2006
Posts: 1381
Followers: 2

Kudos [?]: 31 [1] , given: 0

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

26 Nov 2006, 20:00
1
KUDOS
D but not confident....

Tried negation but wording is too quirky
VP
Joined: 21 Aug 2006
Posts: 1025
Followers: 1

Kudos [?]: 31 [3] , given: 0

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

26 Nov 2006, 20:47
3
KUDOS
1
This post was
BOOKMARKED
Swagatalakshmi wrote:
In the year following an 8-cent increase in the federal tax on a pack of cigarettes, sales of cigarettes fell 10%. In contrast, in the year prior to the tax increase, sales had fallen 1%. The volume of cigarette sales is therefore strongly related to the after-tax price of a pack of cigarettes.

The argument above requires which of the following assumptions?

A. During the year following the tax increase, the pretax price of a pack of cigarettes did not increase by as much as it had during the year prior to the tax increase.

B. The one percent fall in cigarette sales in the year prior to tax increase was due to a smaller tax increase.

C. The pretax price of a pack of cigarettes gradually decreased throughout the year before and the year after the tax increase.

D. For the year following the tax increase, the pretax price of a pack if cigarettes were not eight or more cents lower than it had been the previous year.

If the pretax price was less than 8 cents or more then the increase in tax would not have any impact and that impact can't be attributed to drop in sales. Tax can have impact only when there is overall increase in the price.

E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.

_________________

The path is long, but self-surrender makes it short;
the way is difficult, but perfect trust makes it easy.

VP
Joined: 25 Jun 2006
Posts: 1172
Followers: 3

Kudos [?]: 148 [0], given: 0

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

26 Nov 2006, 22:33
prefer D 2, as explained by ak.
Senior Manager
Joined: 17 Oct 2006
Posts: 438
Followers: 1

Kudos [?]: 27 [0], given: 0

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

26 Nov 2006, 23:41
Swagatalakshmi wrote:
In the year following an 8-cent increase in the federal tax on a pack of cigarettes, sales of cigarettes fell 10%. In contrast, in the year prior to the tax increase, sales had fallen 1%. The volume of cigarette sales is therefore strongly related to the after-tax price of a pack of cigarettes.

The argument above requires which of the following assumptions?

A. During the year following the tax increase, the pretax price of a pack of cigarettes did not increase by as much as it had during the year prior to the tax increase.

B. The one percent fall in cigarette sales in the year prior to tax increase was due to a smaller tax increase.

C. The pretax price of a pack of cigarettes gradually decreased throughout the year before and the year after the tax increase.

D. For the year following the tax increase, the pretax price of a pack if cigarettes were not eight or more cents lower than it had been the previous year.

E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.

Agree with D after reading ak_idc explaination. But I think a verb is missing in D hence this doesn't convey meaning well..Any comments?
Senior Manager
Joined: 19 Jul 2006
Posts: 361
Followers: 2

Kudos [?]: 6 [0], given: 0

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

27 Nov 2006, 01:55
Agree D
Director
Joined: 17 Jul 2006
Posts: 714
Followers: 1

Kudos [?]: 12 [0], given: 0

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

27 Nov 2006, 12:59
ak_idc wrote:
Swagatalakshmi wrote:
In the year following an 8-cent increase in the federal tax on a pack of cigarettes, sales of cigarettes fell 10%. In contrast, in the year prior to the tax increase, sales had fallen 1%. The volume of cigarette sales is therefore strongly related to the after-tax price of a pack of cigarettes.

The argument above requires which of the following assumptions?

A. During the year following the tax increase, the pretax price of a pack of cigarettes did not increase by as much as it had during the year prior to the tax increase.

B. The one percent fall in cigarette sales in the year prior to tax increase was due to a smaller tax increase.

C. The pretax price of a pack of cigarettes gradually decreased throughout the year before and the year after the tax increase.

D. For the year following the tax increase, the pretax price of a pack if cigarettes were not eight or more cents lower than it had been the previous year.

If the pretax price was less than 8 cents or more then the increase in tax would not have any impact and that impact can't be attributed to drop in sales. Tax can have impact only when there is overall increase in the price.

E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.

To discourage smokers, govt could increase the sale tax for cigarettes too.

So I'm unable to decide between A and D.

What's wrong in A?
SVP
Joined: 08 Nov 2006
Posts: 1559
Location: Ann Arbor
Schools: Ross '10
Followers: 14

Kudos [?]: 189 [0], given: 1

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

27 Nov 2006, 13:43
I am going with B.

B says that the sales fell in the previous year because of a smaller tax increase. An inverse relationship between sales and tax is thus established. Applying this to the question, a larger increase in tax would further decrease the sales.

What is wrong with B?
Manager
Joined: 08 Nov 2006
Posts: 69
Followers: 1

Kudos [?]: 2 [0], given: 0

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

27 Nov 2006, 14:23
Swagatalakshmi wrote:
In the year following an 8-cent increase in the federal tax on a pack of cigarettes, sales of cigarettes fell 10%. In contrast, in the year prior to the tax increase, sales had fallen 1%. The volume of cigarette sales is therefore strongly related to the after-tax price of a pack of cigarettes.

The argument above requires which of the following assumptions?

A. During the year following the tax increase, the pretax price of a pack of cigarettes did not increase by as much as it had during the year prior to the tax increase.

B. The one percent fall in cigarette sales in the year prior to tax increase was due to a smaller tax increase.

C. The pretax price of a pack of cigarettes gradually decreased throughout the year before and the year after the tax increase.

D. For the year following the tax increase, the pretax price of a pack if cigarettes were not eight or more cents lower than it had been the previous year.

E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.

D
_________________

------------------------------------------------------
"The future belongs to those who believe in the beauty of their dreams"

Director
Joined: 24 Aug 2006
Posts: 751
Location: Dallas, Texas
Followers: 6

Kudos [?]: 146 [0], given: 0

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

27 Nov 2006, 17:03
OA=D
_________________

"Education is what remains when one has forgotten everything he learned in school."

Senior Manager
Status: Now or never
Joined: 07 Aug 2010
Posts: 329
Location: India
Concentration: Strategy, Technology
GPA: 3.5
WE: Consulting (Consulting)
Followers: 7

Kudos [?]: 235 [0], given: 27

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

06 Aug 2011, 11:42
_________________

Please press KUDOS if you like my post

Intern
Joined: 21 Apr 2010
Posts: 31
GMAT 1: 710 Q48 V40
Followers: 0

Kudos [?]: 37 [1] , given: 0

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

06 Aug 2011, 11:56
1
KUDOS
If the pre tax price was 8 or more cents lower. Cigarettes would cost just as much or less than they did before. If thats true then the conclusion cannot stand on its own. After tax price would not be the cause of slower sales .
_________________

Ps. Kudos are always welcomed ; )

Senior Manager
Joined: 17 May 2010
Posts: 299
GMAT 1: 710 Q47 V40
Followers: 4

Kudos [?]: 48 [2] , given: 7

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

19 Aug 2011, 18:12
2
KUDOS

http://www.manhattangmat.com/forums/pac ... t7354.html
_________________

If you like my post, consider giving me KUDOS!

Manager
Joined: 17 Feb 2011
Posts: 112
Followers: 1

Kudos [?]: 5 [0], given: 25

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

19 Aug 2011, 18:32
@ gijoedude the link you posted has a different ques. STRENGTH. Discussion here is assumption.
Intern
Joined: 19 Aug 2011
Posts: 20
Followers: 0

Kudos [?]: 1 [0], given: 0

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

19 Aug 2011, 22:11
D
Manager
Status: Time to apply!
Joined: 24 Aug 2011
Posts: 220
Location: India
Concentration: Finance, Entrepreneurship
GMAT 1: 600 Q48 V25
GMAT 2: 660 Q50 V29
GMAT 3: 690 Q49 V34
GPA: 3.2
WE: Engineering (Computer Software)
Followers: 4

Kudos [?]: 113 [0], given: 166

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

26 Nov 2011, 22:42
Why not B ?
Also A is very confusing
_________________

Didn't give up !!! Still Trying!!

Manager
Status: Time to apply!
Joined: 24 Aug 2011
Posts: 220
Location: India
Concentration: Finance, Entrepreneurship
GMAT 1: 600 Q48 V25
GMAT 2: 660 Q50 V29
GMAT 3: 690 Q49 V34
GPA: 3.2
WE: Engineering (Computer Software)
Followers: 4

Kudos [?]: 113 [0], given: 166

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

26 Nov 2011, 22:44
gijoedude wrote:

the choices are different in this mahattan post ... it is a different question ..
_________________

Didn't give up !!! Still Trying!!

Director
Status: Prep started for the n-th time
Joined: 29 Aug 2010
Posts: 707
Followers: 6

Kudos [?]: 166 [1] , given: 37

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

27 Nov 2011, 07:16
1
KUDOS
Went with D.

This is a perfect question to apply Assumption negation technique to find the correct assumption. Choices B and D are contenders. Negating the choices, it is clear that B will not have any affect on the conclusion. D on the other hand would weaken the conclusion considerably. D wins !!!

Crick
Senior Manager
Status: D-Day is on February 10th. and I am not stressed
Affiliations: American Management association, American Association of financial accountants
Joined: 12 Apr 2011
Posts: 270
Location: Kuwait
Schools: Columbia university
Followers: 5

Kudos [?]: 272 [0], given: 52

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

27 Nov 2011, 11:21
hard!
_________________

Sky is the limit

BSchool Forum Moderator
Status: Flying over the cloud!
Joined: 16 Aug 2011
Posts: 912
Location: Viet Nam
GMAT Date: 06-06-2014
GPA: 3.07
Followers: 73

Kudos [?]: 603 [2] , given: 44

Re: In the year following an 8-cent increase in the federal tax [#permalink]

### Show Tags

12 Dec 2011, 23:09
2
KUDOS
1
This post was
BOOKMARKED
Practicegmat wrote:
Why not B ?
Also A is very confusing

The premise: tax fee/pack of cigarette = 8 cent ==> sales decrease 10%
no tax ===> sales decrease only 1%

Conclusion: Tax correlate with sales

I will negate A and B:
A. During the year following the tax increase, the pretax price of a pack of cigarettes INCREASED by as much as it had during the year prior to the tax increase.

Last: pretax price 110 cent (increase 10 cent from 100 cent in the previous year) => price after tax: 118
Now: pretax price 120 cent (also increase 10 cent) => price after tax: 128

This fact does not reflect add tax into pretax price of cigarette pack will make the sale decrease

B. The one percent fall in cigarette sales in the year prior to tax increase was due to a smaller tax increase.

In contrast, in the year prior to the tax increase, sales had fallen 1%. (from the argument). In fact the year before tax increase, there is no tax increase. The tax keep constant. That explains why choice B is wrong answer.
_________________

Rules for posting in verbal gmat forum, read it before posting anything in verbal forum
Giving me + 1 kudos if my post is valuable with you

The more you like my post, the more you share to other's need

CR: Focus of the Week: Must be True Question

Re: In the year following an 8-cent increase in the federal tax   [#permalink] 12 Dec 2011, 23:09

Go to page    1   2    Next  [ 25 posts ]

Similar topics Replies Last post
Similar
Topics:
1 Federal tax evasion is a serious crime that places an unfair tax burde 9 12 Jan 2017, 00:18
14 The increase in taxes on cigarettes next month will not limit the use 10 17 Oct 2015, 16:16
9 In the year following an eight-cent increase in the federal 7 16 Apr 2014, 23:50
51 A proposed change to federal income tax laws would eliminate 32 19 May 2008, 13:35
30 In the year following an eight-cent increase in the federal 19 04 Feb 2007, 14:41
Display posts from previous: Sort by