The government should stop permitting tobacco companies to : GMAT Critical Reasoning (CR)
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The government should stop permitting tobacco companies to

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The government should stop permitting tobacco companies to [#permalink]

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New post 04 Mar 2007, 17:45
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The government should stop permitting tobacco companies to subtract advertising expenses from their revenues in calculating taxable income. Tobacco companies would then have to pay more taxes. As a consequence, they would raise the prices of their products and this price increase would raise the prices of their products and this price increase would discourage tobacco use.
Which of the following is an additional premise required by the argument above?
(A) Tobacco companies would not offset the payment of extra taxes by reducing costs in other areas.
(B) Tobacco companies would not continue to advertise if they were forced to pay higher taxes.
(C) People would not continue to buy tobacco products if these products were no longer advertised.
(D) The money the government would gain as a result of the increase in tobacco companies’ taxable income would be used to educate the public about the dangers of tobacco use.
(E) The increase in taxes paid by tobacco companies would be equal to the additional income generated by raising prices.
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New post 04 Mar 2007, 17:57
(A)

Overall cost/benefit method wouldn't balance if extra tax amount is not covered by reducing other expenses. Therefore Govt's plan would be successful.
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New post 04 Mar 2007, 19:37
rdg wrote:
(A)

Overall cost/benefit method wouldn't balance if extra tax amount is not covered by reducing other expenses. Therefore Govt's plan would be successful.


Nicey explained. A it is!
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New post 04 Mar 2007, 22:29
(A)
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"Education is what remains when one has forgotten everything he learned in school."

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