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In the past, every ten-percentage-point increase in

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In the past, every ten-percentage-point increase in cigarette prices in the country of Coponia has decreased per capita sales of cigarettes by four percent. Coponia is about to raise taxes on cigarettes by 9 cents per pack. The average price of cigarettes in Coponia is and has been for more than a year 90 cents per pack. So the tax hike stands an excellent chance of reducing per capita sales of cigarettes by four percent.

Which of the following is an assumption on which the argument depends?

A. Tobacco companies are unlikely to reduce their profit per pack of cigarettes to avoid an increase in the cost per pack to consumers in Coponia.
B. Previous increases in cigarette prices in Coponia have generally been due to increases in taxes on cigarettes.
C. Any decrease in per capita sales of cigarettes in Coponia will result mainly from an increase in the number of people who quit smoking entirely.
D. At present, the price of a pack of cigarettes in Coponia includes taxes that amount to less than ten percent of the total selling price.
E. The number of people in Coponia who smoke cigarettes has remained relatively constant for the past several years.

Please justify your answers. thanks
[Reveal] Spoiler: OA

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Last edited by JarvisR on 10 Jul 2015, 07:01, edited 1 time in total.
OA updated
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Re: In the past, every ten-percentage-point increase in [#permalink]

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New post 16 Jun 2008, 17:51
I will go with A. If cigarete companies decided to cut down their profit margin then cost of
cigarate may not decrease by 10 percent and so per capita consumption may not decrease by 4% as concluded in passage.
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A. Tobacco companies are unlikely to reduce their profit per pack of cigarettes to
avoid an increase in the cost per pack to consumers in Coponia.
- correct (note also 9% increase is on existing taxes)
B. Previous increases in cigarette prices in Coponia have generally been due to
increases in taxes on cigarettes.
- previous increase is due to taxes or not is irrelevant to the argument.
C. Any decrease in per capita sales of cigarettes in Coponia will result mainly from
an increase in the number of people who quit smoking entirely.
- no that's not assumed. it's too strong a statement.
D. At present, the price of a pack of cigarettes in Coponia includes taxes that amount
to less than ten percent of the total selling price.
- even if they do, we don't know what impact a 9% percent increase in taxes would manifest into - i mean whether the impact would lead to a 10 % percentage point increase on selling price per pack or less. can't say.
E. The number of people in Coponia who smoke cigarettes has remained relatively
constant for the past several years.
- irrelevant. whether people have increased or remained relatively constant - the impact on sales is in percentage terms - 4% decrease. so number really isn't the game here.
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New post 16 Jun 2008, 18:32
Close between A and E.
I will go with A.
Tobacco companies are reluctant to compromise on profit. so history will repeat itself.
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Re: In the past, every ten-percentage-point increase in [#permalink]

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New post 16 Jun 2008, 18:36
alimad wrote:
In the past, every ten-percentage-point increase in cigarette prices in the country of Coponia has decreased per capita sales of cigarettes by four percent. Coponia is about to raise taxes on cigarettes by 9 cents per pack. The average price of cigarettes in Coponia is and has been for more than a year 90 cents per pack. So the tax hike stands an
excellent chance of reducing per capita sales of cigarettes by four percent.
Which of the following is an assumption on which the argument depends?


A. Tobacco companies are unlikely to reduce their profit per pack of cigarettes to
avoid an increase in the cost per pack to consumers in Coponia.
-not relevant. This states that the companies will not compromise their profits to avoid an increase in the price. This means that the tax rise will go thru, but does not guaranntee anything else.
B. Previous increases in cigarette prices in Coponia have generally been due to
increases in taxes on cigarettes.
-How past increases have been effected is not relevant
C. Any decrease in per capita sales of cigarettes in Coponia will result mainly from
an increase in the number of people who quit smoking entirely.
-Not a required assumption
D. At present, the price of a pack of cigarettes in Coponia includes taxes that amount
to less than ten percent of the total selling price.
-less than 9 percent + 9 percent will move the price cummulatively above 10 percent and will result in an increase and just as before the decrease will kick in.
E. The number of people in Coponia who smoke cigarettes has remained relatively
constant for the past several years.
-Not relevant.


Please justify your answers. thanks


Between A and D for me. Will go with D.
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New post 18 Jun 2008, 12:06
alimad wrote:
In the past, every ten-percentage-point increase in cigarette prices in the country of
Coponia has decreased per capita sales of cigarettes by four percent. Coponia is about to
raise taxes on cigarettes by 9 cents per pack. The average price of cigarettes in Coponia
is and has been for more than a year 90 cents per pack. So the tax hike stands an
excellent chance of reducing per capita sales of cigarettes by four percent.
Which of the following is an assumption on which the argument depends?


A. Tobacco companies are unlikely to reduce their profit per pack of cigarettes to
avoid an increase in the cost per pack to consumers in Coponia. - profit is irrelevant
B. Previous increases in cigarette prices in Coponia have generally been due to
increases in taxes on cigarettes. - previous increases is irrelevant for current situation
C. Any decrease in per capita sales of cigarettes in Coponia will result mainly from
an increase in the number of people who quit smoking entirely. - how it decreases or as a result of what is irrelevant
D. At present, the price of a pack of cigarettes in Coponia includes taxes that amount
to less than ten percent of the total selling price. - what fraction of the PRESENT price is tax is irrelevant; we are only concered about the FUTURE price
E. The number of people in Coponia who smoke cigarettes has remained relatively
constant for the past several years. - correct. what if the number of people who smoke cigarettes is greater, then even if the sales decrease accordingly to the tax hike, the number of sales will still be the same or even higher

Please justify your answers. thanks
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New post 18 Jun 2008, 14:10
OA Please
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Re: In the past, every ten-percentage-point increase in [#permalink]

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New post 18 Jun 2008, 23:44
IMO - A

The manufacturers do not absorb the increase in taxes and pass it completely to the consumer. Therefore the price would rise by 10 percent and consumption decrease by 4 percent.
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New post 18 Jun 2008, 23:58
A. In a situation when tobacco companies saved the end customers price by reducong theirs profit the planned decrease of per-capita consumption of cigarettes wouldn't occur.
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New post 19 Jun 2008, 00:37
alimad wrote:
In the past, every ten-percentage-point increase in cigarette prices in the country of Coponia has decreased per capita sales of cigarettes by four percent. Coponia is about to raise taxes on cigarettes by 9 cents per pack. The average price of cigarettes in Coponia is and has been for more than a year 90 cents per pack. So the tax hike stands an
excellent chance of reducing per capita sales of cigarettes by four percent.
Which of the following is an assumption on which the argument depends?


A. Tobacco companies are unlikely to reduce their profit per pack of cigarettes to
avoid an increase in the cost per pack to consumers in Coponia.
B. Previous increases in cigarette prices in Coponia have generally been due to
increases in taxes on cigarettes.
C. Any decrease in per capita sales of cigarettes in Coponia will result mainly from
an increase in the number of people who quit smoking entirely.
D. At present, the price of a pack of cigarettes in Coponia includes taxes that amount
to less than ten percent of the total selling price.
E. The number of people in Coponia who smoke cigarettes has remained relatively
constant for the past several years.

Please justify your answers. thanks


IMO A is the answer
here is my reasoning for the same

Premise 1
In the past, every ten-percentage-point increase in cigarette prices in the country of Coponia has decreased per capita sales of cigarettes by four percent.
Premise 2
Coponia is about to raise taxes on cigarettes by 9 cents per pack.

Conclusion
So (the word indicates conclusion) the tax hike stands an excellent chance of reducing per capita sales of cigarettes by four percent.

we are supposed to find the assumption behind this question

now we are told that each time the Company increases the prices, the per capita sales goes down...and now that again Company is proposing a 9 cent increase here then also the per capita sales will further go down
now let us think for a minute what could stop this from happening
if the COmpany reduces its profit margin that it had always claimed as in the past then the prices increase would be off set by that decrease in the profit margin and the per capita sales will not go down
so this should be the assumption here

and A succinctly

HTH

what is the OA for this
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New post 19 Jun 2008, 03:22
I'll pick E.

Per capita factors in the population size and I believe the assumption here is that the pop size is constant.

What is the OA?
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New post 19 Jun 2008, 03:43
OA is A.
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alimad wrote:
In the past, every ten-percentage-point increase in cigarette prices in the country of
Coponia has decreased per capita sales of cigarettes by four percent. Coponia is about to
raise taxes on cigarettes by 9 cents per pack. The average price of cigarettes in Coponia
is and has been for more than a year 90 cents per pack. So the tax hike stands an
excellent chance of reducing per capita sales of cigarettes by four percent.
Which of the following is an assumption on which the argument depends?


A. Tobacco companies are unlikely to reduce their profit per pack of cigarettes to
avoid an increase in the cost per pack to consumers in Coponia.
B. Previous increases in cigarette prices in Coponia have generally been due to
increases in taxes on cigarettes.
C. Any decrease in per capita sales of cigarettes in Coponia will result mainly from
an increase in the number of people who quit smoking entirely.
D. At present, the price of a pack of cigarettes in Coponia includes taxes that amount
to less than ten percent of the total selling price.
E. The number of people in Coponia who smoke cigarettes has remained relatively
constant for the past several years.

Please justify your answers. thanks



I go for A. My reasoning below;

Evidence: In the past, every ten-percentage-point increase in cigarette prices in the country of Coponia has decreased per capita sales of cigarettes by four percent

EVidence Coponia is about to raise taxes on cigarettes by 9 cents (10%) per pack. The average price of cigarettes in Coponia is and has been for more than a year 90 cents per pack.

The conclusion: So the tax hike stands an excellent chance of reducing per capita sales of cigarettes by four percent


Underlying assumption is that Tobacco companies are unlikely to reduce their profit (which equates to increased price) per pack of cigarettes to avoid an increase in the cost per pack to consumers in Coponia. If they were willing to reduce their prices which translates to reduced profits then reduced per capita sales is more likely to be increased and not the opposite as a result the conclusion will be weakened.
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I agree that (A) is correct but can someone explain why (D) is incorrect?
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New post 13 Aug 2013, 09:27
Confused between A and E...Can someone explain please?
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One important tool to use in assumption questions is the negation technique. If you negate the correct answer choice, it should weaken the argument. It's useful tool when you stuck between two answer choices. So let's try negating choice (D). "At the present, the price of a pack of cigarettes in Coponia DOES NOT include taxes that amount to less than ten percent of the total selling price" If this is the case, the current taxes and the additional 9 cents would increase the total price. Thus, this further strengthens the argument instead of WEAKENING it. Hope this helps ^^
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every ten-percentage-point increase in cigarette prices in the country of Coponia has decreased per capita sales of cigarettes by four percent. Coponia is about to raise taxes on cigarettes

Conclusion:
Tax hike stands an excellent chance of reducing per capita sales of cigarettes by four percent.
A. Tobacco companies are unlikely to reduce their profit per pack of cigarettes to avoid an increase in the cost per pack to consumers in Coponia.
E. The number of people in Coponia who smoke cigarettes has remained relatively constant for the past several years.

A vs E:
With option E there can be multiple combinations, which would give different results. e.g.
# of smokers may go high or low Or it may be that each smoker by more packets etc. Whereas A is very straight in answering the assumption after negation.
Also option E doesnt mention about the tax hike. Infact it introduces another factor that can impact the per capita consumption and we are not not concerned about that.
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Using the MGMAT answer from a forum here, for everyone's benefit.

Question Type: Assumption.
Conclusion: The tax hike stands an excellent chance of reducing per capita sales of cigarettes by four percent.
Tactic: Negation

alimad wrote:
In the past, every ten-percentage-point increase in cigarette prices in the country of Coponia has decreased per capita sales of cigarettes by four percent. Coponia is about to raise taxes on cigarettes by 9 cents per pack. The average price of cigarettes in Coponia is and has been for more than a year 90 cents per pack. So the tax hike stands an excellent chance of reducing per capita sales of cigarettes by four percent.

Which of the following is an assumption on which the argument depends?

A. Tobacco companies are unlikely to reduce their profit per pack of cigarettes to avoid an increase in the cost per pack to consumers in Coponia.

Negate: Tobacco companies are LIKELY to reduce their profit per pack of cigarettes to avoid an increase in the cost per pack to consumers in Coponia.

If tobacco companies will reduce their profit by not increasing the price of cigarettes, then smokers will not reduce their smoking and per capita sales of cigarettes will NOT fall by four percent. Conclusion is falls apart, so this is an assumption.


B. Previous increases in cigarette prices in Coponia have generally been due to increases in taxes on cigarettes.

Previous increases are irrelevant.
Negate: Previous sales have not been due to increase in taxes.
This doesnt imply that the conclusion will no longer be valid.


C. Any decrease in per capita sales of cigarettes in Coponia will result mainly from an increase in the number of people who quit smoking entirely.

Not addressing the conclusion
Negate: Decrease in per capita sales of cigarettes is not due to people quitting smoking entirely.
This also doesnt imply that the conclusion will no longer be valid.


D. At present, the price of a pack of cigarettes in Coponia includes taxes that amount to less than ten percent of the total selling price.



Negate: Taxes is greater than 10% of total selling price
Even if the taxes > 10% before the tax hike, it doesnt imply that the conclusion will no longer be true. The conclusion is clear in that a 10 perc point increase will lead to reduced per capita sales. It doesnt mention specific limits on the proportion of taxes v/s total selling price.


E. The number of people in Coponia who smoke cigarettes has remained relatively constant for the past several years.

Negate: The number of people in Coponia who smoke cigarettes has NOT remained relatively constant for the past several years.

Per capita sales of cigarettes may be different for each year.
Say last year per capita sales of cigarettes was 10 and this year per capita sales of cigarettes is 12. If this year cigarette prices is increased by ten-percentage-point then per capita sales of cigarettes will still fall by four percent. Conclusion is still intact, so rule out E.


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alimad wrote:
In the past, every ten-percentage-point increase in cigarette prices in the country of Coponia has decreased per capita sales of cigarettes by four percent. Coponia is about to raise taxes on cigarettes by 9 cents per pack. The average price of cigarettes in Coponia is and has been for more than a year 90 cents per pack. So the tax hike stands an excellent chance of reducing per capita sales of cigarettes by four percent.

Which of the following is an assumption on which the argument depends?

A. Tobacco companies are unlikely to reduce their profit per pack of cigarettes to avoid an increase in the cost per pack to consumers in Coponia.
B. Previous increases in cigarette prices in Coponia have generally been due to increases in taxes on cigarettes.
C. Any decrease in per capita sales of cigarettes in Coponia will result mainly from an increase in the number of people who quit smoking entirely.
D. At present, the price of a pack of cigarettes in Coponia includes taxes that amount to less than ten percent of the total selling price.
E. The number of people in Coponia who smoke cigarettes has remained relatively constant for the past several years.

Please justify your answers. thanks



Premise : 10% increase in selling price reduces smoking by 4%. The 10% hike in taxes will reduce smoking by 4%.

Assumption: There is a wide gap between selling price and increasing taxes. The argument has facts based on selling price but it depends on tax hike.

So the perfect assumption would be " Increased tax hike = increased selling price"

A says that the companies won't cut back on profit for negating the tax hike. So ja, it does mean that sp will increase by 10% ( hold on)

For other confusing option :

he number of people in Coponia who smoke cigarettes has remained relatively constant for the past several years.

This is not an assumption, this is breaking the argument. Assumption holds the argument together.

According to E: past several years smokers constant. So changing the selling price won't affect it anyway.

Please let me know if you have doubts in other options.
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