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price of gasoline

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price of gasoline [#permalink] New post 23 Sep 2008, 05:37
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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.

If all of the statements above are true, which of the following is most likely to be damaged by the city council’s plan?


* A local chain of service stations, which will see fewer customers during the daily commute.
* Members of the bus drivers’ union, who will be forced to add more routes and work longer hours.
* The city council’s budget, which will be unbalanced after receiving no revenue from transit fares for three months.
* Commuters who already use public transportation daily and who will face crowded conditions and travel delays.
* Commuters who do not live near public transportation routes and will not be able to take advantage of the suspended fares
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Re: price of gasoline [#permalink] New post 23 Sep 2008, 09:22
Should be D. Close call with C. But I ignored C since it is possible that city council has enough funds in hand,hence no imbalance of budget
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Re: price of gasoline [#permalink] New post 23 Sep 2008, 09:36
elmagnifico wrote:
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.

If all of the statements above are true, which of the following is most likely to be damaged by the city council’s plan?


* A local chain of service stations, which will see fewer customers during the daily commute.
* Members of the bus drivers’ union, who will be forced to add more routes and work longer hours.
* The city council’s budget, which will be unbalanced after receiving no revenue from transit fares for three months.
* Commuters who already use public transportation daily and who will face crowded conditions and travel delays.
* Commuters who do not live near public transportation routes and will not be able to take advantage of the suspended fares


Close between A & C. I think A is better. Because if people start using public transport they ofcourse will stop using their private cars. This will affect the service stations. So it must be A.

please post th OA.
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Re: price of gasoline [#permalink] New post 23 Sep 2008, 12:10
jatinrai wrote:
elmagnifico wrote:
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.

If all of the statements above are true, which of the following is most likely to be damaged by the city council’s plan?


* A local chain of service stations, which will see fewer customers during the daily commute.
* Members of the bus drivers’ union, who will be forced to add more routes and work longer hours.
* The city council’s budget, which will be unbalanced after receiving no revenue from transit fares for three months.
* Commuters who already use public transportation daily and who will face crowded conditions and travel delays.
* Commuters who do not live near public transportation routes and will not be able to take advantage of the suspended fares


Close between A & C. I think A is better. Because if people start using public transport they ofcourse will stop using their private cars. This will affect the service stations. So it must be A.

please post th OA.


I agree it went down to either A or C, but don't agree on the final choice. I rather go for C. If the fares suspended, they have more room to see the services...
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Re: price of gasoline [#permalink] New post 23 Sep 2008, 17:18
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I think it's A.

The council's goal is to increase savings etc, so if the new policy puts the local gas stations out of work, disposable income wouldn't increase.
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Re: price of gasoline [#permalink] New post 23 Sep 2008, 18:24
between a and c, id go for a.
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Re: price of gasoline [#permalink] New post 24 Sep 2008, 04:32
the OA answer is C.
you guys think too much. dont think about possible scenarios.
use only the information given.
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Re: price of gasoline [#permalink] New post 09 Oct 2011, 07:24
Expert's post
nice question....
was initially stuck between A and C..
but chose C finally
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Re: price of gasoline [#permalink] New post 12 Oct 2011, 19:55
I would say the same, A or C, but leaning towards C.
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Re: price of gasoline [#permalink] New post 17 Jan 2012, 07:58
Got confused between C and E and finally chose E. Damn it....the OA is C.

Then I realized the question really is what gets affected IMMEDIATELY MOSTLY...

A --> true to some extent, but they get affected slowly compared to C
E--> we can't say they get affected because, the NEW policy is something a benefit
C--> is the correct answer, because even before the plan came into picture, this would have already been affected.
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Re: price of gasoline [#permalink] New post 18 Jan 2012, 08:59
+1 C
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Re: price of gasoline [#permalink] New post 06 Feb 2012, 03:07
My choice is C. Below is how I evaluated.

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.

If all of the statements above are true, which of the following is most likely to be damaged by the city council’s plan?


* A local chain of service stations, which will see fewer customers during the daily commute. ==> Even though few people commute on their own, the revenue lost at service stations is gained by the expenses made by people at the other sectors. So I didnt go for this option.
* Members of the bus drivers’ union, who will be forced to add more routes and work longer hours. ==> This eventually increases the jobs.
* The city council’s budget, which will be unbalanced after receiving no revenue from transit fares for three months. ==> The govt. has to invest more to normalize the unbalanced revenue. This might eventually lead to increase in taxes which is not good.
* Commuters who already use public transportation daily and who will face crowded conditions and travel delays. ==> Crowded conditions & travel delays are not the concern or those are the minimal outcomes which people might not take into consideration.
* Commuters who do not live near public transportation routes and will not be able to take advantage of the suspended fares. ==> This is eventually lead to adding transportation services to the remote areas.
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Re: price of gasoline [#permalink] New post 06 Feb 2012, 04:29
Guys according to me all 5 are wrong here is my reasoning....................
-----------------------------------------------------------------------
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.

If all of the statements above are true, which of the following is most likely to be damaged by the city council’s plan?


* A local chain of service stations, which will see fewer customers during the daily commute.
Although the local chain may see lesser number of customers but you must also remember that since the gasoline prices have increased so the will not be that much loss; also the gain for commuters is much more.
* Members of the bus drivers’ union, who will be forced to add more routes and work longer hours.
Out of scope.
* The city council’s budget, which will be unbalanced after receiving no revenue from transit fares for three months.
We have to remember that the conclusion is " city’s finances on the whole will not be negatively affected by higher gasoline prices" so i feel that even though the transport department is not receiving funds but on the whole there will not be much effect.
* Commuters who already use public transportation daily and who will face crowded conditions and travel delays.
Out of scope
* Commuters who do not live near public transportation routes and will not be able to take advantage of the suspended fares
Out of scope
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Re: price of gasoline [#permalink] New post 29 Aug 2013, 20:52
Why C? In the last line of the argument "the city’s finances on the whole will not be negatively affected by higher gasoline prices". this means that budget will not be affected by these changes right? Please clarify
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Re: price of gasoline [#permalink] New post 29 Aug 2013, 22:23
The issue is that the gasoline price isn't caused by excess demand, but the higher price of its basic form: crude oil. Of course as the previous answerer mentioned, the demand for gasoline is generally inelastic with no real substitutes.
Re: price of gasoline   [#permalink] 29 Aug 2013, 22:23
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