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bhanu29
GMAT Forum Director
Joined: 02 Oct 2024
Last visit: 03 Sep 2026
Posts: 801
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Location: India
Schools: Anderson '27 Booth '27 Foster '27 Haas '27 Ross '27 Tepper '27 Stanford '27 CBS '27 NYU Stern Johnson (Cornell) McCombs '27 Kellogg '27 Sloan '27
GMAT Focus 1: 675 Q87 V85 DI79 
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Products:
Schools: Anderson '27 Booth '27 Foster '27 Haas '27 Ross '27 Tepper '27 Stanford '27 CBS '27 NYU Stern Johnson (Cornell) McCombs '27 Kellogg '27 Sloan '27
GMAT Focus 2: 715 Q87 V84 DI86
Posts: 801
09 Feb 2026, 03:15
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Excerpts from report from consultant to city official, dated August 12
The pilot program to install credit card readers and LCD screens in a small number of city taxis has been a qualified success. Initially, drivers worried about the 3% processing fee per transaction (levied on both fare and tip), while the taxi companies were concerned about the ability of riders to contest charges, as well as possible reliability issues leading to high maintenance costs.
Nevertheless, once the systems were in place, drivers were pleased by the average increase in tips from 10% to 25% (added to the fare), while the potential for additional advertising revenue (via the screens) thrilled the companies.
Since the pilot program paid for installation, it's unclear how taxi companies will react to the $450 installation cost once they must pay it. I would hazard that this cost will pose a significant obstacle to widespread adoption, despite the eventual economic benefits of the readers and screens. It should be noted, though, that none of the pilot participants returned the systems after the program; all signed up for zero-interest plans to pay back the installation cost over 6 months.
The pilot program to install credit card readers and LCD screens in a small number of city taxis has been a qualified success. Initially, drivers worried about the 3% processing fee per transaction (levied on both fare and tip), while the taxi companies were concerned about the ability of riders to contest charges, as well as possible reliability issues leading to high maintenance costs.
Nevertheless, once the systems were in place, drivers were pleased by the average increase in tips from 10% to 25% (added to the fare), while the potential for additional advertising revenue (via the screens) thrilled the companies.
Since the pilot program paid for installation, it's unclear how taxi companies will react to the $450 installation cost once they must pay it. I would hazard that this cost will pose a significant obstacle to widespread adoption, despite the eventual economic benefits of the readers and screens. It should be noted, though, that none of the pilot participants returned the systems after the program; all signed up for zero-interest plans to pay back the installation cost over 6 months.
200
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
75%
(hard)
Question Stats:
42% (03:52) correct
58%
(03:31)
wrong
based on 359
sessions
History
Date
Time
Result
Not Attempted Yet
How many $20 fares would cover the cost of installation solely from the increase in tips (pre-tax but after transaction fees)?
| 200 | |
| 225 | |
| 250 | |
| 275 | |
| 300 |
In making his or her case to subsidize installations, the city official cites none of the benefits described in the report.: YES
The potential use of the LCD screens as an advertising medium is of interest to both drivers and taxi companies.: NO
Both the city official and the commissioner expect that tax reporting of tips would improve with the new systems.: YES
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
95%
(hard)
Question Stats:
12% (01:34) correct
88%
(01:42)
wrong
based on 687
sessions
History
Date
Time
Result
Not Attempted Yet
For each of the following statements, select Yes if the statement can be shown to be true using the information provided. Otherwise, select No.
| YES | NO | |
| In making his or her case to subsidize installations, the city official cites none of the benefits described in the report. | ||
| The potential use of the LCD screens as an advertising medium is of interest to both drivers and taxi companies. | ||
| Both the city official and the commissioner expect that tax reporting of tips would improve with the new systems. |
ShowHide Answer
Official Answer
In making his or her case to subsidize installations, the city official cites none of the benefits described in the report.: YES
The potential use of the LCD screens as an advertising medium is of interest to both drivers and taxi companies.: NO
Both the city official and the commissioner expect that tax reporting of tips would improve with the new systems.: YES
Even after deduction of the transaction fee, the average pre-tax revenue per fare (including tips) is more than 11% higher with the new card readers than before.: NO
For a taxi fare to be legal, the meter must be turned on.: YES
The average fleet size per company is greater than 15 taxis.: NO
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
85%
(hard)
Question Stats:
45% (01:48) correct
55%
(01:50)
wrong
based on 477
sessions
History
Date
Time
Result
Not Attempted Yet
For each of the following statements, select Yes if the statement can be shown to be true using the information provided. Otherwise, select No.
| YES | NO | |
| Even after deduction of the transaction fee, the average pre-tax revenue per fare (including tips) is more than 11% higher with the new card readers than before. | ||
| For a taxi fare to be legal, the meter must be turned on. | ||
| The average fleet size per company is greater than 15 taxis. |
ShowHide Answer
Official Answer
Even after deduction of the transaction fee, the average pre-tax revenue per fare (including tips) is more than 11% higher with the new card readers than before.: NO
For a taxi fare to be legal, the meter must be turned on.: YES
The average fleet size per company is greater than 15 taxis.: NO
suburbMBA
Joined: 02 Dec 2025
Last visit: 25 Mar 2026
Posts: 12
Given Kudos: 16
Location: India
Schools: Booth '27 CBS '27 Kellogg '27 Haas '27 INSEAD Aug '27 Judge '28 LBS '27 Ross '27 Anderson '27 FT MBA '27 Stern '27 Yale '27
GPA: 3.95/4
09 Feb 2026, 05:39
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For Question 2(c), does the commissioner not explicitly say that he has doubts over the ability of card readers to improve tax reporting of fares? Why is the answer YES? Is there something to be inferred from his next sentence that I've missed?
09 Feb 2026, 07:02
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bhanu29 Could you post the solution for Question 1?
