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# A law passed in Rockville three years ago allows a 30% tax

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Re: A law passed in Rockville three years ago allows a 30% tax  [#permalink]

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27 May 2017, 09:52
Hello expert, could you please explain why option 'e' is wrong?
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Re: A law passed in Rockville three years ago allows a 30% tax  [#permalink]

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02 Jun 2017, 13:53
VKat wrote:
Hello expert, could you please explain why option 'e' is wrong?

Quote:
(E) Tax credits for specific purchases are usually ineffective in influencing consumers to make those purchases.

The question asks, "Which of the following must be true if the above conclusion is to be properly drawn?" The conclusion is that the tax credit has had little or no effect on the sale of newly constructed homes. It doesn't matter whether tax credits are usually ineffective. If, on the other hand, tax credits are usually effective but do not influence consumers to purchase homes, the conclusion can still be properly drawn.
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Re: A law passed in Rockville three years ago allows a 30% tax  [#permalink]

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22 May 2018, 11:29
But conclusion says: Obviously, this law has had little or no effect on the sale of newly constructed homes. So, presence or absence of the law doesn't matter. Then why absence of the law would yield positive result i.e sales wouldn't drop significantly? According to D presence or absence of the law DOES matter that presence of the law generates negative consequence. What I am missing here? GMATNinja, your help would be much appreciated.
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Re: A law passed in Rockville three years ago allows a 30% tax  [#permalink]

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31 May 2018, 06:24
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Re: A law passed in Rockville three years ago allows a 30% tax  [#permalink]

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31 May 2018, 07:05
1
Only option D 'Without the tax credit, new house sales would not have been significantly lower' eliminates the weakness (the alternate explanation for the decrease in sales) in the argument and thus it must be true in order to draw the conclusion that 'law has had little or no effect on the sale of newly constructed homes'.
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Re: A law passed in Rockville three years ago allows a 30% tax  [#permalink]

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01 Jun 2018, 21:21
2
swathiallumalla wrote:

Quote:
E. Tax credits for specific purchases are usually ineffective in influencing consumers to make those purchases.

We don't care about what tax credits USUALLY do to consumers. We only care about whether this tax credit helped or hurt new home sales.

Even if tax credits are usually effective, the author would claim that they were not effective in this case, citing the decline in growth. The author's argument does not rely on (E), so it can be eliminated.

Mehemmed wrote:
But conclusion says: Obviously, this law has had little or no effect on the sale of newly constructed homes. So, presence or absence of the law doesn't matter. Then why absence of the law would yield positive result i.e sales wouldn't drop significantly? According to D presence or absence of the law DOES matter that presence of the law generates negative consequence. What I am missing here? GMATNinja, your help would be much appreciated.

We are told that "since the law was passed, the growth in sales of newly constructed homes has dropped each year, from 15% to 10% to 5%." According to the author, this is evidence that "the law has had little or no effect on the sale of newly constructed homes."

Now imagine if the law had not been passed. In that case, what if growth in sales of new homes was significantly lower? What if growth, in that case, went from 15% to 5% to 1%? Maybe without the law, sales of newly constructed homes would have even DECREASED (i.e. 15% to 0% to -15%).

Even though growth decreased each year, the law may have prevented new home sales from plummeting. If (D) were not true, then new house sales would have been significantly lower without the law, and the numbers would have been much worse than 15%-10%-5%. That would imply that the law DID have a significant effect.
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A law passed in Rockville three years ago allows a 30% tax  [#permalink]

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01 Jul 2018, 04:30
bschool83 wrote:
A law passed in Rockville three years ago allows a 30% tax credit to consumers who purchase a newly constructed home. The tax credit was intended to stimulate the local economy by creating a higher demand for new houses and spurring the creation of jobs in construction and design. However, since the law was passed, the growth in sales of newly constructed homes has dropped each year, from 15% to 10% to 5%. Obviously, this law has had little or no effect on the sale of newly constructed homes.

Which of the following must be true if the above conclusion is to be properly drawn?

A. New house sales are directly tied to personal income.
B. New house sales cannot increase by more than 6% next year.
C. If the tax credit had been 50%, there would have been a larger increase in new house sales
D. Without the tax credit, new house sales would not have been significantly lower.
E. Tax credits for specific purchases are usually ineffective in influencing consumers to make those purchases.

hey everyone

here is my reasoning

Between D and E, i went for D, because we dont talk about specific purchases. moreover there is no a hint that credit is offered to one product out of # of products. hence E is out. try to avoid such extremes options like E

Option D, says that Without the tax credit,new house sales would not have been significantly lower. in other words, credits didnt influence the sales volume of new houses. And that is true because 30% credit didnt have effect on sales.

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Re: A law passed in Rockville three years ago allows a 30% tax  [#permalink]

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04 Aug 2018, 02:11
Quote:
A law passed in Rockville three years ago allows a 30% tax credit to consumers who purchase a newly constructed home. The tax credit was intended to stimulate the local economy by creating a higher demand for new houses and spurring the creation of jobs in construction and design. However, since the law was passed, the growth in sales of newly constructed homes has dropped each year, from 15% to 10% to 5%. Obviously, this law has had little or no effect on the sale of newly constructed homes.

This is a Cause and Effect case
The argument says "law" is not the cause for the effect "drop in sale of newly constructed homes"

So if we can further provides support for this relation, that will the answer.

Quote:
D. Without the tax credit, new house sales would not have been significantly lower.

This means even if the "law" was not there, the effect "drop in sales" would have been still there.
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Re: A law passed in Rockville three years ago allows a 30% tax  [#permalink]

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05 Aug 2018, 09:42
bschool83 wrote:
A law passed in Rockville three years ago allows a 30% tax credit to consumers who purchase a newly constructed home. The tax credit was intended to stimulate the local economy by creating a higher demand for new houses and spurring the creation of jobs in construction and design. However, since the law was passed, the growth in sales of newly constructed homes has dropped each year, from 15% to 10% to 5%. Obviously, this law has had little or no effect on the sale of newly constructed homes.

Which of the following must be true if the above conclusion is to be properly drawn?

A. New house sales are directly tied to personal income.
B. New house sales cannot increase by more than 6% next year.
C. If the tax credit had been 50%, there would have been a larger increase in new house sales
D. Without the tax credit, new house sales would not have been significantly lower.
E. Tax credits for specific purchases are usually ineffective in influencing consumers to make those purchases.

Conclusion of the argument : "this law has had little or no effect on the sale of newly constructed homes."

My interpretation with option D
Option D means that without tax credit, new houses sales would not have been lower, which means that tax credit had a negative effect on house sales and hence it weakens the conclusion.

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Joined: 11 Apr 2018
Posts: 1
Re: A law passed in Rockville three years ago allows a 30% tax  [#permalink]

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07 Aug 2018, 09:19
zuberahmed wrote:
Can some one please explain why E is incorrect?

because it picks up an instance and generalizes it, which is not acceptable
Re: A law passed in Rockville three years ago allows a 30% tax &nbs [#permalink] 07 Aug 2018, 09:19

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