Preposition 13 : GMAT Critical Reasoning (CR) - Page 2
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# Preposition 13

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10 Sep 2010, 10:30
Ian,

I agree with you that Choice D covers both the sides,

Per Choice D: if prop 13 is not repealed, different tax rates will continue ........... that means that if prop 13 is repealed, tax rates will become identical. Good. Choice fully covered the stimulus.

But then what is the stem ? The stem is "not" asking for a choice that summarizes the stimulus. It is asking for a choice that most likely the author will argue for.

Point is, how do you decide if the author is for or against prop 13. choosing D means author is against prop 13. How did we reach that conclusion ? "Identical properties will continued to be taxed at different rates " - means that he wants them to be taxed at the same rate. The stimulus does not show us whether the author is for or against it.

Choice B is more neutral in the way that it states a more general fact (from the stimulus) that if prop 13 is repealed, everyone will face hike. By using this the author is only arguing in favor of a clearly known fact from the stimulus.

No doubt this one is tricky. I might be wrong, however, not yet convinced. Appreciate input / feedback.
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10 Sep 2010, 10:35
ahsanmalik12 wrote:
D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates.

Identical properties will not be taxed different...They'll be taxed only if the economical status is not balanced. Please go through the passage. The two houses it refers to are not equivalent in value. One of them is 11 yrs old...

You just might be trying to reading too much. I think the info about identical houses can be taken as is, without trying t justify what is and what is not identical.
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10 Sep 2010, 21:20
I was stuck btw B & D, its just the term "every homeowner" which drew me away from picking B.
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15 Sep 2010, 15:10
amitjash wrote:
OA is potential candidate but can someone explain why other choices fail???

With Proposition 13, if you bought your house 11 years ago for $75,000, your property tax would be approximately$914 a year (1 percent of $75,000 increased by 2 percent each year for 11 years); and if your neighbor bought an identical house next door to you for$200,000 this year, his tax would be $2,000 (1 percent of$200,000). Without Proposition 13, both you and your neighbor would pay $6,000 a year in property taxes (3 percent of$200,000).
Which of the following is the conclusion for which the author most likely is arguing in the passage above?
(A) Proposition 13 is unconstitutional because it imposes an unequal tax on properties of equal value.
(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes.
(C) By preventing inflation from driving up property values, Proposition 13 has saved homeowners thousands of dollars in property taxes.
(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates.
(E) Proposition 13 has benefited some homeowners more than others.

B is the correct answer. You guys are missing a few key points here. B does not say that every homeowner will certainly experience a substantial increase in property taxes, only that it is likely. Consider the following.

House with a cost of $100,000 (I think you guys allowed yourself to be distracted by the fact that 2 separate values were given in the stimulus) when you bought it 5 years ago but is currently worth$200,000. Focus on the difference in the calculation of property taxes with and without Prop 13.

With Prop 13: 1% of the historical cost/purchase price in the first year, 1% increase every year. Property Tax = 1% of $100K =$1K in the first year. $1K x1.01 (increase by 1%) =$1,010 in the 2nd year. $1,010 x 1.01 =$1,020...and so forth. Today (5 years later), your tax would be around $1,040. Without Prop 13: 3% of the current value each year. Your tax rate today, if Prop 13 is repealed, would be 3% of$200K = $6,000. How do I know it's based on current value and not historical cost? The stimulus states that without Prop 13, my neighbor and I will both pay$6K in taxes, which equates to 3% x $200K, even though he bought his house this year for$200K and I bought mine 11 years ago for only $75K. But what if I just bought my house this year for$200K? Same thing... instead of property taxes of only 1% of $200K, I would have to pay taxes of 3% of$200K.

Very clearly, a repeal of Prop 13 will likely result in a substantial increase in property taxes for every homeowner. It would take many, many years before the amount of tax imposed under Prop 13 even comes close to the uniform $6K per year to be imposed without Prop 13. Taking it a step further, the author is likely arguing in favor of Prop 13 by arguing that its repeal will result in a substantial increase in property taxes. D is wrong because regardless of whether Prop 13 is repealed or not, all properties, whether identical or not, will be taxed at identical tax rates: either 1% of historical cost/purchase price in the first year plus 1% increase each year, or 3% of the current value each year (be careful not to confuse tax amounts, which can vary, with tax rates, which will be the same for all). GMAT Tutor Joined: 24 Jun 2008 Posts: 1183 Followers: 421 Kudos [?]: 1509 [0], given: 4 Re: Preposition 13 [#permalink] ### Show Tags 15 Sep 2010, 22:02 Xmarksthespot wrote: Very clearly, a repeal of Prop 13 will likely result in a substantial increase in property taxes for every homeowner. You're making an assumption here, namely that all properties are taxed at the same rates as those in the example given. There's no reason, from the information in the passage, to think that should be true. It is very possible that houses of different prices are taxed at different rates; indeed that's something one might naturally expect to be the case. This is why B is not a good answer to the question: to establish that *every* homeowner will see their property tax increase, the best examples to provide would be that of a very expensive house and of a very cheap house. The examples given prove very little about what will happen to 'every' homeowner, so if the conclusion is that every homeowner will see their tax go up, the argument is a very poor one. If, instead, the conclusion is that identical houses are taxed at different rates under Prop 13, the evidence is perfect. Xmarksthespot wrote: D is wrong because regardless of whether Prop 13 is repealed or not, all properties, whether identical or not, will be taxed at identical tax rates: either 1% of historical cost/purchase price in the first year plus 1% increase each year, or 3% of the current value each year (be careful not to confuse tax amounts, which can vary, with tax rates, which will be the same for all). You've just explained why D is the right answer: the tax rates are not identical. 3% of the current value is not the same as 1% plus the annual increase. There is no confusion here between amounts and rates. _________________ GMAT Tutor in Toronto If you are looking for online GMAT math tutoring, or if you are interested in buying my advanced Quant books and problem sets, please contact me at ianstewartgmat at gmail.com Director Status: Apply - Last Chance Affiliations: IIT, Purdue, PhD, TauBetaPi Joined: 17 Jul 2010 Posts: 690 Schools: Wharton, Sloan, Chicago, Haas WE 1: 8 years in Oil&Gas Followers: 15 Kudos [?]: 147 [0], given: 15 Re: Preposition 13 [#permalink] ### Show Tags 15 Sep 2010, 22:38 tend to agree with Ian here, although to be honest on the actual test would have probably run with B.. _________________ Consider kudos, they are good for health CEO Status: Nothing comes easy: neither do I want. Joined: 12 Oct 2009 Posts: 2795 Location: Malaysia Concentration: Technology, Entrepreneurship Schools: ISB '15 (M) GMAT 1: 670 Q49 V31 GMAT 2: 710 Q50 V35 Followers: 226 Kudos [?]: 1621 [0], given: 235 Re: Preposition 13 [#permalink] ### Show Tags 16 Sep 2010, 00:53 IanStewart wrote: ahsanmalik12 wrote: Identical properties will not be taxed different...They'll be taxed only if the economical status is not balanced. Please go through the passage. The two houses it refers to are not equivalent in value. One of them is 11 yrs old... The passage tells us the houses are identical. The passage can't be wrong on this point. Nowhere do we learn how old the houses are - they might both be 200 years old for all we know. We only know that one was bought 11 years ago, not that it was built 11 years ago. Ian you are missing one point. He clearly mentioned 'if you bought your house 11 years ago for$75,000, your property tax would be approximately $914 a year'. The author is generalizing the comparison between two similar things at two different times. Since he has not emphasized on - which houses, it is irrelevant to neglect 'B' just because it is generalizing just two identical houses to all the houses. Eg. Suppose X is paying 10% income tax and his father used to pay 8% 10 years back ( under preposition 13). If this preposition is not into effect, x and his father will have to pay 15% tax. This completely support B. _________________ Fight for your dreams :For all those who fear from Verbal- lets give it a fight Money Saved is the Money Earned Jo Bole So Nihaal , Sat Shri Akaal Support GMAT Club by putting a GMAT Club badge on your blog/Facebook GMAT Club Premium Membership - big benefits and savings Gmat test review : http://gmatclub.com/forum/670-to-710-a-long-journey-without-destination-still-happy-141642.html Intern Joined: 15 Sep 2010 Posts: 10 Followers: 0 Kudos [?]: 40 [0], given: 0 Re: Preposition 13 [#permalink] ### Show Tags 16 Sep 2010, 04:45 IanStewart wrote: Xmarksthespot wrote: Very clearly, a repeal of Prop 13 will likely result in a substantial increase in property taxes for every homeowner. You're making an assumption here, namely that all properties are taxed at the same rates as those in the example given. There's no reason, from the information in the passage, to think that should be true. It is very possible that houses of different prices are taxed at different rates; indeed that's something one might naturally expect to be the case. This is why B is not a good answer to the question: to establish that *every* homeowner will see their property tax increase, the best examples to provide would be that of a very expensive house and of a very cheap house. The examples given prove very little about what will happen to 'every' homeowner, so if the conclusion is that every homeowner will see their tax go up, the argument is a very poor one. If, instead, the conclusion is that identical houses are taxed at different rates under Prop 13, the evidence is perfect. Xmarksthespot wrote: D is wrong because regardless of whether Prop 13 is repealed or not, all properties, whether identical or not, will be taxed at identical tax rates: either 1% of historical cost/purchase price in the first year plus 1% increase each year, or 3% of the current value each year (be careful not to confuse tax amounts, which can vary, with tax rates, which will be the same for all). You've just explained why D is the right answer: the tax rates are not identical. 3% of the current value is not the same as 1% plus the annual increase. There is no confusion here between amounts and rates. I think I see what your problem is. Take a step back and determine what the question is asking you to do. The question is NOT asking you to determine the validity or invalidity of the stimulus. It is asking you to determine the conclusion the author is likely trying to prove based on the way he/she has laid out the premises. What are the key premises (stated and unstated)? 1) Under Prop 13, the tax rate is 1% of purchase price in the first year and a 1% increase in the first year's tax amount in the 2nd year, a 1% tax amount on the 2nd year's tax amount in the 3rd year, and so on. What is the proof of this? Note that the way the author has framed his argument if you had bought your house 11 years ago for$75K, under Prop 13, your tax today would be $914. It goes on to say how the$914 came to be computed as such. Under Prop 13, your neighbor's tax rate on the house he bought today would be 1% of the purchase price of $200K. Do you notice how it's the same tax rate in the first year that applied to your house in the first year? 2) If Prop 13 is repealed, the tax rate would be 3% of the current market value of the house. As proof of this, the author says that without Prop 13, you and your neighbor will both pay 3% of$200K, which is $6K. This in spite of the fact that you bought your house for only$75K, and 11 years ago at that, while your neighbor bought his house this year for $200K. The author goes on to say that your neighbor's house is identical to yours and located right next to yours. Do you see what he's trying to imply there? He is basically saying that your house has the same value as your neighbor's house, hence you both pay 3% of$200K. Whether or not this is a valid assumption is irrelevant to the question as the question is asking you to determine what the author is trying to prove.

Look at choice B: If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes.

In real life, is there reason to doubt this conclusion, maybe even based on the points you raised? Certainly. But again, the question is not asking you to determine whether the conclusion or premises are valid. It is asking you what the author is likely trying to prove based on the way he has structured his premises and argument. As shown above, this is the likely argument he is trying to prove.

Now look at choice D: If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates.

What premises does the author offer to prove this conclusion? None at all. Let's break it down. Based on the premises offered by the author, what will happen if Proposition 13 is not repealed? Then the current tax rate (1% of purchase price in the first year, 1% increase each year) will continue to be imposed. Nowhere in the author's argument does he imply that identical properties are taxed at different rates. In fact, he only gives 2 examples (your house and your neighbor's house), and both of them are taxed at identical rates (both 1% in the first year). You can argue that 2 houses can hardly be representative of all houses, as I think you are trying to do, but that is not your job here. Your job is to identify what the author is trying to prove.

Focusing on what the question is really asking for helps avoid confusion when answering these types of questions. Again, this question is not asking you to determine whether the author's premises are valid, or whether his assumptions are valid. It's asking you to identify the conclusion that he is likely trying to prove, based on the premises he offered.

Also, regarding your second response (bolded), you are completely lost there, my friend. Look at choice D again: If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates. This answer choice is confined to a situation where Prop 13 is not repealed, and is not referring to the difference between the tax rate under Prop 13 (1% plus 1% increase) and the tax rate if Prop 13 is repealed (3%).
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16 Sep 2010, 05:37
nice explanation
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16 Sep 2010, 07:30
Xmarksthespot wrote:
I think I see what your problem is. Take a step back and determine what the question is asking you to do. The question is NOT asking you to determine the validity or invalidity of the stimulus. It is asking you to determine the conclusion the author is likely trying to prove based on the way he/she has laid out the premises.

I don't know why you've chosen to adopt such a patronizing tone in your response, but I'd appreciate if you did not misrepresent what I've said. I've emphasized this point all along. If you want to determine the conclusion the argument is leading to, you must consider why the passage is structured as it is - that is, why the example of two identical homes is used. Establishing that two homes worth $200,000 will see their tax increase without Prop 13 proves only that homes worth roughly$200,000 will likely see their tax increase. For homes worth $20,000 or$2,000,000, the situation might be markedly different. If you want to think the author is arguing that every homeowner will see his or her tax increase, you have to assume that the author is incompetent at structuring an argument, and that's not an assumption you ever want to make on the GMAT.

Xmarksthespot wrote:
1) Under Prop 13, the tax rate is 1% of purchase price in the first year and a 1% increase in the first year's tax amount in the 2nd year, a 1% tax amount on the 2nd year's tax amount in the 3rd year, and so on. What is the proof of this? Note that the way the author has framed his argument if you had bought your house 11 years ago for $75K, under Prop 13, your tax today would be$914. It goes on to say how the $914 came to be computed as such. Under Prop 13, your neighbor's tax rate on the house he bought today would be 1% of the purchase price of$200K. Do you notice how it's the same tax rate in the first year that applied to your house in the first year?

It's calculated by the same formula, but not at the same rate. Those are quite different things; a formula is not a rate. The only reasonable interpretation I can assign to the phrase 'tax rate' here is 'dollars of tax per dollar of home value' (since "1% plus 2% increase per year" is not a rate). One house is taxed at $914 per$200,000 of value, or 0.46%, the other at $2000 per$200,000 of value, or 1%. If instead you want to interpret 'tax rate' as 'tax per dollar of purchase price', again the tax rate is different for the identical houses.

Xmarksthespot wrote:

2) If Prop 13 is repealed, the tax rate would be 3% of the current market value of the house. As proof of this, the author says that without Prop 13, you and your neighbor will both pay 3% of $200K, which is$6K. This in spite of the fact that you bought your house for only $75K, and 11 years ago at that, while your neighbor bought his house this year for$200K. The author goes on to say that your neighbor's house is identical to yours and located right next to yours. Do you see what he's trying to imply there? He is basically saying that your house has the same value as your neighbor's house, hence you both pay 3% of $200K. Whether or not this is a valid assumption is irrelevant to the question as the question is asking you to determine what the author is trying to prove. I don't understand why you continue to imply that I've somehow questioned the validity of the author's premises and assumptions. I have nowhere done that. The author tells us directly (it's not, as you say, something 'implied') that the two identical houses will be taxed identically if Prop 13 is repealed. As we learned earlier in the passage, the two identical houses are not taxed identically under Prop 13. Xmarksthespot wrote: Look at choice B: If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes. In real life, is there reason to doubt this conclusion, maybe even based on the points you raised? Certainly. But again, the question is not asking you to determine whether the conclusion or premises are valid. It is asking you what the author is likely trying to prove based on the way he has structured his premises and argument. As shown above, this is the likely argument he is trying to prove. See comments above. An author arguing for the conclusion in B would not choose the specific examples in the passage. An author arguing for D would. Xmarksthespot wrote: Also, regarding your second response (bolded), you are completely lost there, my friend. Look at choice D again: If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates. This answer choice is confined to a situation where Prop 13 is not repealed, and is not referring to the difference between the tax rate under Prop 13 (1% plus 1% increase) and the tax rate if Prop 13 is repealed (3%). I have a typo in my previous post: where I wrote '3%', I meant '1%'; that is, I meant to draw a comparison between 1% of the home's current value, and 1% of the eleven-year-old purchase price, increased by 2% each year. _________________ GMAT Tutor in Toronto If you are looking for online GMAT math tutoring, or if you are interested in buying my advanced Quant books and problem sets, please contact me at ianstewartgmat at gmail.com Intern Joined: 15 Sep 2010 Posts: 10 Followers: 0 Kudos [?]: 40 [0], given: 0 Re: Preposition 13 [#permalink] ### Show Tags 16 Sep 2010, 20:40 ,,.... Last edited by Xmarksthespot on 16 Sep 2010, 20:46, edited 1 time in total. Intern Joined: 15 Sep 2010 Posts: 10 Followers: 0 Kudos [?]: 40 [0], given: 0 Re: Preposition 13 [#permalink] ### Show Tags 16 Sep 2010, 20:45 If you want to think the author is arguing that every homeowner will see his or her tax increase, you have to assume that the author is incompetent at structuring an argument, and that's not an assumption you ever want to make on the GMAT. - So I guess there are no such things as questions that ask you to identify an error in the reasoning of the author or to identify a weakness in the argument, right? It's calculated by the same [i]formula, but not at the same rate. Those are quite different things; a formula is not a rate. The only reasonable interpretation I can assign to the phrase 'tax rate' here is 'dollars of tax per dollar of home value' (since "1% plus 2% increase per year" is not a rate). One house is taxed at$914 per $200,000 of value, or 0.46%, the other at$2000 per $200,000 of value, or 1%. If instead you want to interpret 'tax rate' as 'tax per dollar of purchase price', again the tax rate is different for the identical houses.[/i] - You have got it backwards. - Scenario 1 (Prop 13): Tax rate is 1%. Formula is tax rate x purchase price in the first year, 1% increase each year thereafter. - Scenario 2 (No Prop 13): Tax rate is 3%. Formula is tax rate x current value for each year. Tax rates are exactly identical in either scenario. 1% is not a formula. 3% is not a formula. They are both rates. Pretty simple to see this, really. Are different rates given by the author? Obviously. 1% is different from 3%. But within either scenario (Scenario 1 with Prop 13, Scenario 2 Prop 13 is repealed), there are no differences in rates. Either all are taxed at a 1% rate for Scenario 1 (with a 1% increase each year, with the increase based on the tax for the previous year), or all are taxed at a 3% rate each year, the 3% based on the current value. Also, you do not get$914 by multiplying $200K by .46%. You get it by multiplying$75K by 1% = $750 in the first year; in the second year, it will be$750 plus ($750 x 1%) =$757.50; in the 3rd year, it will be $757.50 plus ($757.50 x 1%); and so forth, until you get to the 11th year. .46% is not the tax rate.

For your neighbor, the taxes under Prop 13 will be as follows: $200K x 1% =$2K in the first year; $2K plus ($2K x 1%) = $2,020 in the 2nd year; and so forth. Again, notice how in the first year, under Prop 13, both you and your neighbor will pay tax equivalent to 1% of the purchase price. Although the author does not explicitly state anything about what the neighbor will pay in the 2nd year and onwards, it can easily be inferred from the way he presents his premises that he will also be subject to the 1% increase each year under Prop 13. That is essentially what he is trying to prove by comparing your taxes with his. So, what the author is essentially arguing for is this: If Prop 13 is repealed, not only will your tax rate increase from 1% (with annual increases of 1% of the previous year's tax amount) to 3%, it will also increase because the 3% will be applied to current value of the property each year. So, a house that was bought for$75K 11 years ago but is worth $200K (current fair market value) today will be taxed based not on$75k, but on $200K. Under Prop 13, the tax for that house will be only$914 this year. If Prop 13 is repealed, the tax for that same house will be \$6K. Your tax will increase. B captures the essence of this argument.

I don't understand why you continue to imply that I've somehow questioned the validity of the author's premises and assumptions. I have nowhere done that. The author tells us directly (it's not, as you say, something 'implied') that the two identical houses will be taxed identically if Prop 13 is repealed. As we learned earlier in the passage, the two identical houses are not taxed identically under Prop 13.

- The bolded is what I was referring to when I said the author was implying that the houses will be taxed identically, even under Prop 13, which is the exact opposite of what you're saying. 1% of the purchase price in the first year, 1% increase each year. See previous explanation above.

Also, regarding your second response (bolded), you are completely lost there, my friend. Look at choice D again: If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates. This answer choice is confined to a situation where Prop 13 is not repealed, and is not referring to the difference between the tax rate under Prop 13 (1% plus 1% increase) and the tax rate if Prop 13 is repealed (3%).[/quote]

I have a typo in my previous post: where I wrote '3%', I meant '1%'; that is, I meant to draw a comparison between 1% of the home's current value, and 1% of the eleven-year-old purchase price, increased by 2% each year.

Nope, you can't attribute this to a typo. I have reproduced our exchange below:

Xmarksthespot wrote:
D is wrong because regardless of whether Prop 13 is repealed or not, all properties, whether identical or not, will be taxed at identical tax rates: either 1% of historical cost/purchase price in the first year plus 1% increase each year, or 3% of the current value each year (be careful not to confuse tax amounts, which can vary, with tax rates, which will be the same for all).

You wrote:
You've just explained why D is the right answer: the tax rates are not identical. 3% of the current value is not the same as 1% plus the annual increase. There is no confusion here between amounts and rates.

Anyway, this will be my final post on this topic. I'm moving on. Good luck.
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09 Mar 2012, 17:56
Could someone please explain OA as B and not D?

I myself choose B but confused from the discussions above
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07 May 2015, 18:40
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22 Aug 2016, 08:44
I liked B but when I saw D, I felt D was better.

'Every' threw me off in B. I understand that D is not really a conclusion but by saying 'every', is not the author of the argument making an assumption which GMAT always warns you not to make?
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06 Sep 2016, 00:35
The reason i went for B was that it was the only option that did not have an undertone of any bias towards any profit to anyone.

Going through the premise, there is not a single word that seems to convey the author's agreement/disagreement towards the Proposition 13. This means, I need to select a conclusion wherein the author does not show any bias towards whether or not the proposition 13 should be repealed but makes a generic observation, which eventually would be profit to some while loss to someone else. Another way of looking at it is that the author could belong to one of the scenarios - 75,000 or 200,000. No bias or word that proves author's contempt/respect makes it a generic statement rather than a biased one.
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Re: Preposition 13   [#permalink] 06 Sep 2016, 00:35

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