Find all School-related info fast with the new School-Specific MBA Forum

It is currently 24 Oct 2014, 16:38

Close

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
Your Progress

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

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

Over the past few years, retailers in the town of

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:
Senior Manager
Senior Manager
User avatar
Status: Final Lap
Joined: 25 Oct 2012
Posts: 294
Concentration: General Management, Entrepreneurship
GPA: 3.54
WE: Project Management (Retail Banking)
Followers: 2

Kudos [?]: 104 [0], given: 85

Over the past few years, retailers in the town of [#permalink] New post 25 Jun 2013, 01:21
00:00
A
B
C
D
E

Difficulty:

  95% (hard)

Question Stats:

44% (03:12) correct 56% (02:15) wrong based on 254 sessions
Over the past few years, retailers in the town of Statesville have suffered from decreasing sales, largely because increasing numbers of consumers, after seeing items in stock at those retailers' stores, have opted instead to purchase those items on the Internet. As a result, Statesville's local government revenues have been impacted as well. To make up the lost revenue, Statesville's mayor has proposed legislation that would require Internet retailers to charge and remit local sales taxes on all orders shipped to addresses in Statesville, at the same tax rate assessed on purchases in physical stores. If this legislation is enacted, the mayor reasons, Statesville will be able to bring its revenue back up to the level of a few years ago.

All of the following, if true, cast doubt on the mayor's conclusion EXCEPT


A- Because they do not need to rent or maintain physical showrooms, Internet retailers generally charge substantially lower prices for most items than do physical stores.

B- The vast majority of Statesville's residents have at least one trusted friend or family member who lives in one of the smaller towns surrounding Statesville and whom they would trust to receive their packages.

C- Statesville's retail stores have been consistently considered the best in the county, and consequently draw a lot of shoppers from other towns.

D- Over the next few years, the Statesville area is likely to experience a severe recession, which could reduce consumer spending by as much as 40 percent.

E- Administering the proposed tax will increase the cost of doing business for Internet retailers, who will then pass the increased cost on to consumers in the form of slight markups on the price of merchandise.
[Reveal] Spoiler: OA

_________________

KUDOS is the good manner to help the entire community.

"If you don't change your life, your life will change you"

5 KUDOS received
Senior Manager
Senior Manager
avatar
Joined: 19 Oct 2010
Posts: 274
Location: India
GMAT 1: 560 Q36 V31
GPA: 3
Followers: 6

Kudos [?]: 38 [5] , given: 27

Re: Over the past few years, retailers in the town of Statesvill [#permalink] New post 25 Jun 2013, 02:52
5
This post received
KUDOS
A- Because they do not need to rent or maintain physical showrooms, Internet retailers generally charge substantially lower prices for most items than do physical stores.
Since they charge substantially lower prices, the tax would also be correspondingly lower. Ergo, Stateville will not return to earning the revenues it did in the past.

B- The vast majority of Statesville's residents have at least one trusted friend or family member who lives in one of the smaller towns surrounding Statesville and whom they would trust to receive their packages.
So they could ship it to another address and collect it thus avoiding the excess tax.

C- Statesville's retail stores have been consistently considered the best in the county, and consequently draw a lot of shoppers from other towns.
Therefore, this floating population will remain in their home state and thus not need to pay Statesville.

D- Over the next few years, the Statesville area is likely to experience a severe recession, which could reduce consumer spending by as much as 40 percent.
Again Internet shopping will take a hit. Ergo, no taxes for SV.

E- Administering the proposed tax will increase the cost of doing business for Internet retailers, who will then pass the increased cost on to consumers in the form of slight markups on the price of merchandise.
This one's a winner. Since online stores will hike prices, they will pay taxes to Statesville. This may hit online retail ultimately, but that's another argument.
_________________

petrifiedbutstanding

Senior Manager
Senior Manager
User avatar
Status: Final Lap
Joined: 25 Oct 2012
Posts: 294
Concentration: General Management, Entrepreneurship
GPA: 3.54
WE: Project Management (Retail Banking)
Followers: 2

Kudos [?]: 104 [0], given: 85

Re: Over the past few years, retailers in the town of Statesvill [#permalink] New post 25 Jun 2013, 02:58
Official Explanation :

Identify the Question

We are asked to identify choices that “cast doubt on the mayor's conclusion”, so this is a weakening question. Note, however, that the goal of the question is to find the statement that does not weaken the argument.

Deconstruct the Argument

According to the argument, physical retailers in Statesville are losing business to Internet retailers, resulting in a concomitant loss of sales tax revenue for Statesville's government. To address the problem, the mayor of Statesville proposes that the town collect sales tax on all Internet purchases shipped to addresses within the town. If this measure is enacted, the mayor believes, Statesville will be able to bring its tax revenue back up to its previous levels.

State the Goal

The mayor believes that the new tax will restore the town's sales tax revenue to its original level. Therefore, any evidence that the proposed measure will not generate such additional revenue, or will generate less tax revenue than was collected before the advent of the Internet retailers, will weaken the mayor's argument.

Four of the given statements should weaken the mayor's argument; ultimately, we are looking for the one statement that does not.

Work from Wrong to Right

(A) If Internet retailers charge substantially lower prices for merchandise, and Statesville collects sales tax at the same rate used for purchases in physical stores, then Statesville will receive substantially less tax revenue from Internet purchases than it would if those purchases were made in the town's physical stores. This choice therefore weakens the mayor's argument.

(B) If this statement is true, then most residents of Statesville will be able to have Internet purchases shipped to an address outside the town, and will thus not have to pay the new tax. This statement also casts doubt on the mayor's argument.

(C) If shoppers from outside Statesville choose to purchase items on the Internet rather than in Statesville's retail stores, they will not pay the new tax, as those items will not be shipped within the town. (For purchases these customers still do choose to make at Statesville's retail stores, the argument is unaffected.) This choice serves as more evidence that the tax will not generate as much revenue as the mayor believes.

(D) If this statement is true, the total dollar amount of purchases made by Statesville's residents is likely to decrease sharply, resulting in a corresponding decrease in local tax revenue. Therefore, this choice also works against the mayor's argument.

(E) This choice does not give any evidence that local tax revenue will decrease. In fact, if Internet retailers compensate for the increase in their costs by raising the price of merchandise, Statesville's government will receive slightly more tax revenue from its residents' purchases of that merchandise. This choice thus works in favor of the mayor's argument, not against it.

The correct answer is E.
_________________

KUDOS is the good manner to help the entire community.

"If you don't change your life, your life will change you"

Expert Post
Princeton Review Representative
User avatar
Joined: 17 Jun 2013
Posts: 163
Followers: 115

Kudos [?]: 170 [0], given: 0

Re: Over the past few years, retailers in the town of Statesvill [#permalink] New post 25 Jun 2013, 21:05
Expert's post
On any type of except question it may be helpful not to eliminate answers but to mark each answer with a word based on the question. Since this question is a weaken except question marking each answer on your scratch paper with "weaken," "not" or a "?" will be helpful to keep track of your thinking without having to go through the thinking process of whether an answer is correct or not each time.

One common way to weaken an argument is to introduce a new circumstance which, if true, means that the conclusion to the argument does not necessarily need to be true.

A) weaken. If internet retailers can charge lower prices then the tax money will also be reduced so if this is true, the conclusion does not have to be true.

B) weaken. If people can get the packages outside the city then they will not pay the tax and the city will not recoup its revenue.

C) weaken. If consumers go to the city stores, but still purchase on the internet, the city will not recoup the tax money because those people will not pay the city tax.

D) weaken. If the city is experiencing lowered retail sales, then the city will not recoup its revenue.

E) This answer does not weaken, in fact, we don't know what effect the increased prices will have - we don't know who will actuall have to pay the tax and who can avoid it so we don't know how this will affect the tax revenue.
_________________

Special offer! Save $250 on GMAT Ultimate Classroom, GMAT Small Group Instruction, or GMAT Liveonline when you use the promo code GCVERBAL250. Or, save $150 on GMAT Self-Prep when you use the code GCVERBAL150. Enroll at www.princetonreview.com

Intern
Intern
avatar
Joined: 14 Feb 2012
Posts: 30
Followers: 0

Kudos [?]: 2 [0], given: 6

Re: Over the past few years, retailers in the town of Statesvill [#permalink] New post 14 Oct 2013, 08:15
petrifiedbutstanding wrote:
A- Because they do not need to rent or maintain physical showrooms, Internet retailers generally charge substantially lower prices for most items than do physical stores.
Since they charge substantially lower prices, the tax would also be correspondingly lower. Ergo, Stateville will not return to earning the revenues it did in the past.

B- The vast majority of Statesville's residents have at least one trusted friend or family member who lives in one of the smaller towns surrounding Statesville and whom they would trust to receive their packages.
So they could ship it to another address and collect it thus avoiding the excess tax.

C- Statesville's retail stores have been consistently considered the best in the county, and consequently draw a lot of shoppers from other towns.
Therefore, this floating population will remain in their home state and thus not need to pay Statesville.

D- Over the next few years, the Statesville area is likely to experience a severe recession, which could reduce consumer spending by as much as 40 percent.
Again Internet shopping will take a hit. Ergo, no taxes for SV.

E- Administering the proposed tax will increase the cost of doing business for Internet retailers, who will then pass the increased cost on to consumers in the form of slight markups on the price of merchandise.
This one's a winner. Since online stores will hike prices, they will pay taxes to Statesville. This may hit online retail ultimately, but that's another argument.


I am not from the United States, nor from Europe, how can I possibly know that you pay all your taxes regionally?

If you DO pay all your taxes regionally, it actually strengthens the mayor his proposal, because revenues will go up.

Or am I something missing here?
SVP
SVP
User avatar
Joined: 01 Oct 2013
Posts: 2350
Followers: 279

Kudos [?]: 66 [0], given: 0

Premium Member
Re: Over the past few years, retailers in the town of [#permalink] New post 23 Oct 2014, 10:40
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
Re: Over the past few years, retailers in the town of   [#permalink] 23 Oct 2014, 10:40
    Similar topics Author Replies Last post
Similar
Topics:
6 Over the past few years, banks have systematically raised Archit143 9 24 May 2013, 01:32
2 Over the past few decades, despite periodic attempts to gmatchase 2 30 Sep 2012, 12:41
Over the past twenty-five years the introduction of angel2009 10 10 Mar 2010, 11:18
During the past few years, photojournalists have been Riya05 7 15 May 2006, 06:37
During the past few years, photojournalists have been Riya05 7 15 May 2006, 06:36
Display posts from previous: Sort by

Over the past few years, retailers in the town of

  Question banks Downloads My Bookmarks Reviews Important topics  


GMAT Club MBA Forum Home| About| Privacy Policy| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group and phpBB SEO

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.