Canadians now increasingly engage in "out-shopping," which : GMAT Critical Reasoning (CR)
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# Canadians now increasingly engage in "out-shopping," which

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14 Apr 2004, 19:14
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Canadians now increasingly engage in "out-shopping," which is shopping across the national border, where prices are lower. Prices are lower outside of Canada in large part because the goods-and-services tax that pays for Canadian social services is not applied.
Which one of the following is best supported on the basis of the information above?
(A)If the upward trend in out-shopping continues at a significant level and the amounts paid by the government for Canadian social services are maintained, the Canadian goods-and-services tax will be assessed at a higher rate.
(B)If Canada imposes a substantial tariff on the goods bought across the border, a reciprocal tariff on cross-border shopping in the other direction will be imposed, thereby harming Canadian businesses.
(C)The amounts the Canadian government pays out to those who provide social services to Canadians are increasing.
(D)The same brands of goods are available to Canadian shoppers across the border as are available in Canada.
(E)Out-shopping purchases are subject to Canadian taxes when the purchaser crosses the border to bring them into Canada.
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14 Apr 2004, 19:27
This is a good one.

I would go with C
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14 Apr 2004, 20:41
I might sound weird, but I will go with A.
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15 Apr 2004, 06:07
It is A for me.

If people continue to shop outside canada more and more then tax on good and services is reduced. If canada wants to pay the same amount money towards social services then it has to increase the tax to compensate for the loss of tax. This is what A says. All the choices are possibilities.
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15 Apr 2004, 06:29
with A.....

Some are very tempting..But may be out of scope...
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15 Apr 2004, 06:50
With A
In C, although it may be more difficult to meet social services expenses because of lost taxes, it does not necessarily mean that the amount paid out to social services is increasing
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15 Apr 2004, 06:52
hmmm i'd go with D).

A) requires a big assumption. If the 'out shopping' trend continues perhaps the government will decide to tax something else.

B) is of little relevance and completely out of scope.

C) C says two to unstubstantiated things. 1) the costs of social security is increasing (need not be) and someone else other than the government provides social services (might be true but unsubstantiated)>

E) mentions a solution

D) is the only choice which gives a clue why canadians 'out shop'. They get everything at lower price ...*and* they get the things they like using.

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15 Apr 2004, 06:57
it was difficult for me. OA is A. Paul and Anand has explained it.
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15 Apr 2004, 07:06
Version2, what if Canadians are shopping out of border to find items that are not to be found in Canada? That we do not know and D cannot be then. The only most inferable conclusion is A
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Last edited by Paul on 15 Apr 2004, 07:23, edited 2 times in total.
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15 Apr 2004, 07:08
As Version2 pointed out, the information can support the *contrary* to A, that is, the govt can tax others.
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15 Apr 2004, 07:17
I think D is an assumption. That is the reason I excluded it.
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15 Apr 2004, 07:23
assumption to which conclusion?
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15 Apr 2004, 07:34
The author is saying canadians are shpiing across the border where prices are lowe,r instead of shopping inside the country - Observation
Because to avoid canadian tax - Reason
If the good available were different then the autho'rs reasoning is not supported. Hence the assumption that same kind of products are available. I just noticed that D is taking about brands of goods and not the same kinds of goods.

The stem is asking for a reasonable conclusion. I thought A is most reasanable if no other outside factors ( like taxing other commodities ) are assumed.
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15 Apr 2004, 07:44
Unless there is a conclusion(argument), there is no question of assumption. Of course, assumption is consistent with the argument; so is the inference--a special case of the former is a conclusion--with a set of facts/propositions. When the contrarian statement is also consistent with a set of facts, such is not inference per se.

Basically, I am not into why A is better than D, or D, A.
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15 Apr 2004, 07:49
HI hallelujah1234,

D is taking about the brand of goods and not the kind of goods.
This is a very strong reason to root out D.

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15 Apr 2004, 08:12
I find it a bit of a stretch to believe A but <shrug>

Paul you said ' what if Canadians are shopping out of border to find items that are not to be found in Canada?'

However the passage clearly says ' Canadians engage in shopping across the national border, where prices are lower' . From this i infer that the only reason they shop outside is because of lower prices and nothing else. It would appear that everything else about the products is similar.

A) is on shaky ground since it draws a conclusion for the future. If the trend continues the government might decide to do D).
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15 Apr 2004, 08:45
IMO, D is an assumption which can potentially make the argument valid. However, we are not looking for an assumption but an inference. We take the argument as true and see what can be infered from that argument. D, seen as an inference, can or cannot be valid. Canadians could, as Anandnk said, be shopping for other kind of products or might as well be shopping for products which are not at all offered within their own country, Canada. We need not necessarily know that both countries are offering the same product for prices to be lower because prices, in general, my be lower simply because no taxes are imposed on various kind of products.

A is a stronger inference in the sense that it if the out-shopping trend continues, Canada will have to charge higher taxes for goods and services because, according to the premise, the latter is what pays for the social services and makes the government lose income. Within the scope of the argument and with the specific information given, A is stronger although I do agree that government can also tax other products. But again, the logic of taxing other products while the very loss the government is incurring comes from the very product it currently not taxing makes that way of thinking dubious.
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15 Apr 2004, 08:58
You didn't rebut Version2's remarks on A. Forget about how D is chosen.
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15 Apr 2004, 10:38
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I was in the middle of typing my answer as Version2 posted his.
I think I gave a good case for A already. But I can try to add a little bit to it. Given all the elements in the argument, we can definitely infer that the government will have to charge more taxes in the future in order to maintain social services at the same level. Let's say X is level of social services and Y is the the taxes collected to pay for those services. If you want to pay for X using Y and that Y is decreasing, what you have to do is either decrease X or do something to increase Y to keep a right balance. Now, A says that X is to be kept at the same level; hence Y has to be increased as A says.

I cannot but again rebut D. Let's say you want to buy a car (the product). Yet, you only have Lexus in Canada but you have Toyotas in the U.S., will Canadians not engage in out of border shopping to get a cheaper car(price) while the brands are totally different? I think my example just rebutted D. Given that D can clearly be rebutted, A stands as best
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15 Apr 2004, 11:13
This is a funny one. I know why Paul chose A and i agree with halle that its not easy to make a case of either A or D. I hope i don't get such a question in the real GMAT.

Paul,
While i agree with your reasons for A, your rebuttal of D doesn't seem right.

You say "
Quote:
I cannot but again rebut D. Let's say you want to buy a car (the product). Yet, you only have Lexus in Canada but you have Toyotas in the U.S., will Canadians not engage in out of border shopping to get a cheaper car(price) while the brands are totally different?
"

But this isn't whats being told. Your example goes outside the scope. You are bringing into this the possibilty that some products are not available in Canada. The statement is merely saying that customers shifted because of price not because they had a wider choice available (which you relate with lower price).

http://www.cnn.com/2004/HEALTH/01/19/generic.drugs.ap/

Anways ... i can see why you chose A.

--Cheers
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[/quote]
15 Apr 2004, 11:13

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