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# Although Ackerburg’s subway system is currently operating at a deficit

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Although Ackerburg’s subway system is currently operating at a deficit  [#permalink]

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Updated on: 18 Sep 2018, 03:27
5
8
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Difficulty:

5% (low)

Question Stats:

91% (01:10) correct 9% (01:15) wrong based on 1488 sessions

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Although Ackerburg’s subway system is currently operating at a deficit, the transit authority will lower subway fares next year. The authority projects that the lower fares will result in a ten percent increase in the number of subway riders. Since the additional income from the larger ridership will more than offset the decrease due to lower fares, the transit authority actually expects the fare reduction to reduce or eliminate the subway system’s operating deficit for next year.

Which of the following, if true, provides the most support for the transit authority’s expectation of reducing the subway system’s operating deficit?

A. Throughout the years that the subway system has operated, fares have never before been reduced.

B. The planned fare reduction will not apply to students, who can already ride the subway for a reduced fare.

C. Next year, the transit authority will have to undertake several large-scale track maintenance projects.

D. The subway system can accommodate a ten percent increase in ridership without increasing the number of trains it runs each day.

E. The current subway fares in Ackerburg are higher than subway fares in other cities in the region.

CR03129

Originally posted by keats on 24 Nov 2015, 02:56.
Last edited by Bunuel on 18 Sep 2018, 03:27, edited 1 time in total.
Renamed the topic and edited the question.
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Re: Although Ackerburg’s subway system is currently operating at a deficit  [#permalink]

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24 Nov 2015, 12:48
1
Steinbeck wrote:
Although Ackerburg’s subway system is currently operating at a deficit, the transit authority will lower subway fares next year. The authority projects that the lower fares will result in a ten percent increase in the number of subway riders. Since the additional income from the larger ridership will more than offset the decrease due to lower fares, the transit authority actually expects the fare reduction to reduce or eliminate the subway system’s operating deficit for next year.

Which of the following, if true, provides the most support for the transit authority’s expectation of reducing the subway system’s operating deficit?

A Throughout the years that the subway system has operated, fares have never before been reduced.
B The planned fare reduction will not apply to students, who can already ride the subway for a reduced fare.
C Next year, the transit authority will have to undertake several large-scale track maintenance projects.
D The subway system can accommodate a ten percent increase in ridership without increasing the number of trains it runs each day.
E The current subway fares in Ackerburg are higher than subway fares in other cities in the region.

A is out of scope,it doesn't explain why fare reduction will lead to higher profit
B weakens since students already ride for reduced fare and hence no increase in profit or reduction in costs
C weakens since large-scale projects require more costs
D is our winner. No increase in trains = no increase in costs. If authorities expect that additional income from larger ridership more than offset the decrease due to lower fares then D strengthens
E is out of scope. E just says about comparison
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Re: Although Ackerburg’s subway system is currently operating at a deficit  [#permalink]

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11 Sep 2016, 17:52
The first thing we need to do is find the assumption.
How we find the assumption is by the looking at the three things:
1. There is no other way to achieve the conclusion.
2. the conclusion is possible
3.Relevance to the conclusion

Only Answer choice D falls in one of the 3. That is point 2. Only if 10 percent increase can be handled. It will be possible to increase the revenue.

Throughout the years that the subway system has operated, fares have never before been reduced. This does not even imply that okay now i decrease fare more people come more will be revenue.
B The planned fare reduction will not apply to students, who can already ride the subway for a reduced fare. - So? does the possibility of new people coming in increase.
C Next year, the transit authority will have to undertake several large-scale track maintenance projects. This says there will be loss.
D The subway system can accommodate a ten percent increase in ridership without increasing the number of trains it runs each day. Yea hold this option
E The current subway fares in Ackerburg are higher than subway fares in other cities in the region.- Other regions - No not interested
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Re: Although Ackerburg’s subway system is currently operating at a deficit  [#permalink]

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19 Mar 2017, 23:25
3
Argument Evaluation

Situation Ackerburg's transit authority plans to lower subway fares, projecting that this will increase ridership by 10 percent and thereby reduce or eliminate the subway system's
operating deficit.

Reasoning What evidence would support the expectation that lowering subway fares will reduce the operating deficit? The passage says the additional income from the projected
increase in ridership will more than offset the decrease due to the lowered fares. The claim that lowering fares will reduce the operating deficit could be supported either
by additional evidence that lowering the fares will increase ridership at least as much as projected or by evidence that the plan will not increase overall operating expenses.

A The fact that fares have never been reduced provides no evidence about what would happen if they were reduced.

B This suggests that the planned fare reduction would not affect revenue from student riders, but it does not suggest how it would affect revenue from all other riders.

C These maintenance projects will probably increase the operating deficit, making it less likely that the fare reduction will reduce or eliminate that deficit.
D Correct. This indicates that the plan will not involve extra operating expenses for running trains and thus increases the likelihood that the plan will reduce the operating deficit.

E Ackerburg may differ from other cities in the region in ways that make the higher fares optimal for Ackerburg's subway system.

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Re: Although Ackerburg’s subway system is currently operating at a deficit  [#permalink]

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14 Dec 2018, 20:48
Putting it in the simplest way.

1) there has been deficit. Deficit = operating cost - revenue.

2) the proponents presume that if the number is increased by 10% the revenue will increase.

And they conclude that it will help reduce or offset the deficit next year.

As per the formula, what must be done so that the proponents are true ?

Next year operating costs should not increase in any way.

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Re: Although Ackerburg’s subway system is currently operating at a deficit &nbs [#permalink] 14 Dec 2018, 20:48
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