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# Critical Reasoning :In the year following an 8-cent increase

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Critical Reasoning :In the year following an 8-cent increase [#permalink]

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08 Aug 2012, 03:06
In the year following an 8-cent increase in the federal tax on a pack of cigarettes, sales of cigarettes fell 10%. In contrast, in the year prior to the tax increase, sales had fallen 1%. The volume of cigarette sales is therefore strongly related to the after-tax price of a pack of cigarettes.

The argument above requires which of the following assumptions?

A. During the year following the tax increase, the pretax price of a pack of cigarettes did not increase by as much as it had during the year prior to the tax increase.

B. The one percent fall in cigarette sales in the year prior to tax increase was due to a smaller tax increase.

C. The pretax price of a pack of cigarettes gradually decreased throughout the year before and the year after the tax increase.

D. For the year following the tax increase, the pretax price of a pack of cigarettes were not eight or more cents lower than it had been the previous year.

E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.

OA is D.
Kindly explain how?
I had reasoned it to be B. please tell me what's wrong there.

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Re: Critical Reasoning :In the year following an 8-cent increase [#permalink]

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08 Aug 2012, 10:24
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thebigr002 wrote:
In the year following an 8-cent increase in the federal tax on a pack of cigarettes, sales of cigarettes fell 10%. In contrast, in the year prior to the tax increase, sales had fallen 1%. The volume of cigarette sales is therefore strongly related to the after-tax price of a pack of cigarettes.

The argument above requires which of the following assumptions?

A. During the year following the tax increase, the pretax price of a pack of cigarettes did not increase by as much as it had during the year prior to the tax increase.

B. The one percent fall in cigarette sales in the year prior to tax increase was due to a smaller tax increase.

C. The pretax price of a pack of cigarettes gradually decreased throughout the year before and the year after the tax increase.

D. For the year following the tax increase, the pretax price of a pack of cigarettes were not eight or more cents lower than it had been the previous year.

E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.

OA is D.
Kindly explain how?
I had reasoned it to be B. please tell me what's wrong there.

Hi thebigr,

Step 1: Identify the question type.

The word "assumption" makes it clear that we are dealing with, appropriately enough, an assumption question! This is a member of the "Argument" question family, so knowing this helps up read and plan strategically.

Step 2: Untangle the stimulus.

Because this is an argument question, we know that the assumption the unstated gap between the authors main conclusion and his cited evidence. So, we'll start with his conclusion: that the tax increase is responsible for the reduction of cigarette sales. And his evidence? Well, there was an 8 cent tax boost, and that 8 cent increase correlated to a steep decrease in cigarett sales.

So what's missing? Well, a tax is only part of the story when it comes to cigarette prices! After all, the cigarettes themselves cost money, too. Who knows how much people are paying out-of-pocket for cigarettes today. This is a classic GMAT critical reasoning pattern, and we know the assumption: that the base price of the cigarettes has not dropped enough to offset the tax increase!

Step 3: Make a prediction.

For Assumption questions, the assumption is our predictions. We predict an answer choice that says that the untaxed price of cigarettes hes stayed constant or risen.

Step 4: Evaluate the answer choices.

That's (D). And one of the great things about making a prediction in step 3 is that we don't get distracted by (B) here! Of course, we could rule out (B) for being out of scope--the cause of the 1% decrease last year is irrelevant to the argument at hand. But it's much easier to spot 1 match than to rule out 4 wrong choices, so that's what we should aim for.

Hope this helps!
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Re: Critical Reasoning :In the year following an 8-cent increase   [#permalink] 08 Aug 2012, 10:24
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# Critical Reasoning :In the year following an 8-cent increase

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