amoghhlgr wrote:
Wrong answer... D cannot be right. The author is clearly under the assumption that the price itself did not increase separately along with the increase in tax.
New Price = Old Price + Tax....
Now, the author claims that the tax increased, so the new price increased and the sales dropped.
But, the assumption here is that the Old Price did not increase simultaneously from its previous year's value.
Option D, states that the Old Price was not less than 8 cents or more than the previous year's price. This is the same as saying that the Old Price was in fact 8 cents or more than the previous price. It is contrary to the explanation we are seeking.
A is the right answer because it talks about the price increase.
Please verify this
GMATNinja BunuelThe author concludes that the "volume of cigarette sales" is "strongly related to the after-tax price of a pack of cigarettes." The fact that an eight-percent tax increase lead to a ten percent drop in sales is cited to support this conclusion. The author also notes that the previous year, sales dropped by only one percent.
We are looking for an
assumption required by the argument. In other words, we are looking for something
necessary for the argument to hold. In general, an assumption should also
strengthen an argument.
Let's consider (A):
Quote:
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.
The argument is concluding that the "volume of cigarette sales" is "strongly related to the after-tax price of a pack of cigarettes." To support this conclusion, the author suggests that the larger drop in sales after the eight-cent tax increase was due to a larger increase in the after-tax price of the cigarettes. So is the above
necessary to reach this conclusion?
Well, if "the pretax price of a pack of cigarettes did not increase by as much as they had the previous year," then the overall price increase might NOT have been greater than it was the previous year. In fact, if the "pretax price of a pack of cigarettes did not increase by as much as they had the previous year," it's possible the previous's year's after-tax price increase was greater then the following year's. And if that were the case, the argument would fall apart, because the greater drop in sales would NOT be accompanied by a greater price increase.
So if anything, (A)
weakens the argument. And because an assumption should
strengthen an argument, we can eliminate (A).
Let's now consider (D):
Quote:
(D) For the year following the tax increase, the pretax price of a pack of cigarettes was not eight or more cents lower than it had been in the previous year.
What if the pretax price of cigarettes WAS eight or more cents lower than it had been in the previous year? In other words, what if this assumption weren't true?
If that were the case, then the eight-cent tax increase would be
canceled out by the eight-or-more-cent decrease in the pre-tax price. So overall, the after-tax price would either be the
same or lower than the previous year's. And if the after-tax price doesn't increase, then the argument falls apart. Because the argument depends on the idea that an
increase in after-tax price is causing a
decrease in sales. But if there is no increase in after-tax price, then we have no evidence to conclude that the "volume of cigarette sales" is "strongly related to the after-tax price of a pack of cigarettes."
So because we
need to assume that "the pre-tax price of cigarettes was NOT eight or more cents lower than it had been the previous year," (D) is an assumption on which the argument depends, and it's correct.
I hope that helps!
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