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Letter to the editor: Our city plans to allow major commerci

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Letter to the editor: Our city plans to allow major commerci  [#permalink]

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New post 06 Feb 2014, 14:01
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Letter to the editor: Our city plans to allow major commercial development along the south waterfront and, in so doing, to increase its tax revenue. But, to succeed commercially, the development would inevitably create far more road traffic than the existing roads to the waterfront can handle, causing serious traffic congestion. Providing enough roads or public transportation to the area would cost far more than the city could gain from the increased tax revenue.

Which of the following, if added to the city’s plan, would be most likely to help solve the problem the letter describes?

(A) Funding construction of new roads to the waterfront with a system of tolls on the new roads to the waterfront

(B) Allowing residential development along the waterfront so that there will be waterfront residents who can walk to the commercial development

(C) Giving tax breaks to developers of businesses along the waterfront to offset any tax levied on them for construction of roads or public recreation

(D) Evaluating the net benefits that the commercial development would bring to the city in terms of improved quality of life for the city’s residents rather than its financial terms

(E) Allowing commercial development in other city neighborhoods whose roads are not seriously congested with traffic

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Re: Letter to the editor: Our city plans to allow major commerci  [#permalink]

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Rock750 wrote:
Letter to the editor: Our city plans to allow major commercial development along the south waterfront and, in so doing, to increase its tax revenue. But, to succeed commercially, the development would inevitably create far more road traffic than the existing roads to the waterfront can handle, causing serious traffic congestion. Providing enough roads or public transportation to the area would cost far more than the city could gain from the increased tax revenue.

Which of the following, if added to the city’s plan, would be most likely to help solve the problem the letter describes?

(A) Funding construction of new roads to the waterfront with a system of tolls on the new roads to the waterfront

(B) Allowing residential development along the waterfront so that there will be waterfront residents who can walk to the commercial development

(C) giving tax breaks to developers of businesses along the waterfront to offset any tax levied on them for construction of roads or public recreation

(D) Evaluating the net benefits that the commercial development would bring to the city in terms of improved quality of life for the city’s residents rather than its financial terms

(E) Allowing commercial development in other city neighborhoods whose roads are not seriously congested with traffic

Dear Rock750,
I'm happy to help. This is a great question. :-)

So, the problem is --- tax revenue from waterfront development won't pay for fixing all the problems caused by this development. The city will wind up with horrible traffic and no financial plan for dealing with it. That's the problem we need to address.
(A) Funding construction of new roads to the waterfront with a system of tolls on the new roads to the waterfront
Toll roads! That magic form of income! Yes, this would have the advantage that more traffic leads to more money, so as long as traffic is a problem, there's money coming in that can solve the problem. Brilliant! This works as a correct answer.

(B) Allowing residential development along the waterfront so that there will be waterfront residents who can walk to the commercial development
Hmmm. Not satisfying. Those residents would still have to drive home and park, adding to traffic, and folks who live elsewhere would still have to drive there. It doesn't sound as if this would do much to solve the problem. This is incorrect.

(C) giving tax breaks to developers of businesses along the waterfront to offset any tax levied on them for construction of roads or public recreation
If the city gives tax breaks, that's even less money coming into the city's coffers, and that exacerbates the problem. This is incorrect.

(D) Evaluating the net benefits that the commercial development would bring to the city in terms of improved quality of life for the city’s residents rather than its financial terms
Hippie cop-out. If the current plan involves tons of traffic, then nobody is a fan of that. This is very weak. This is incorrect.

(E) Allowing commercial development in other city neighborhoods whose roads are not seriously congested with traffic
Hmm. This could create even more traffic elsewhere in the city, so the entire city would be in gridlock. That certainly doesn't sound like something that makes the problem better. This is incorrect.

Does all this make sense?
Mike :-)
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Re: Letter to the editor: Our city plans to allow major commerci  [#permalink]

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New post 06 Feb 2014, 14:43
Hi Mike, Thanks for your response.

I was torn as to decide between A and B and ended with choosing B.

I agree that Answer A wins over B but my problem is that rarely i'm convinced with an answer choice that comes from this type of question.

While attempting this Q, both A and B were satisfying. In one hand, answer A is proposing new roads with system of tolls that will alleviate traffic congestion with some $$ bonus. Ok, but what if these new roads, regardless of the $$ bonus, will be congested soon after the plan is released. I eliminate this answer choice because i felt that it doesn't bring some additional information about the number of the population that live there ... In the other hand, i choosed B because if we have to allow residential development along the waterfront so that there will be waterfront residents who can walk to the commercial development then if there are too many residential along the waterfront , hence a lot of people who lived far from the waterfront and who are especially pleased with commercial activities will move thereby alleviating traffic congestion.

Another problem is that i'm struggling with my timing for this type of Q, which take me 3min on average to come up with an answer that is not satisfying.

Thanks in advance for your help
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Re: Letter to the editor: Our city plans to allow major commerci  [#permalink]

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New post 06 Feb 2014, 15:20
Rock750 wrote:
Hi Mike, Thanks for your response.

I was torn as to decide between A and B and ended with choosing B.

I agree that Answer A wins over B but my problem is that rarely i'm convinced with an answer choice that comes from this type of question.

While attempting this Q, both A and B were satisfying. In one hand, answer A is proposing new roads with system of tolls that will alleviate traffic congestion with some $$ bonus. Ok, but what if these new roads, regardless of the $$ bonus, will be congested soon after the plan is released. I eliminate this answer choice because i felt that it doesn't bring some additional information about the number of the population that live there ... In the other hand, i choosed B because if we have to allow residential development along the waterfront so that there will be waterfront residents who can walk to the commercial development then if there are too many residential along the waterfront , hence a lot of people who lived far from the waterfront and who are especially pleased with commercial activities will move thereby alleviating traffic congestion.

Another problem is that i'm struggling with my timing for this type of Q, which take me 3min on average to come up with an answer that is not satisfying.

Thanks in advance for your help

Dear Rock750,

I'm happy to respond. :-)

First of all, here's a blog about CR strategy, with links to blogs with strategies for individual question types:
http://magoosh.com/gmat/2012/save-time- ... questions/
Here's the first in a series of articles about some real world issues --- understanding these issues can be good background knowledge on the GMAT CR:
http://magoosh.com/gmat/2012/gmat-supply-and-demand/
Finally, I would recommend: read. Read real-world arguments in all their messiness and complexity. The Wall Street Journal presents excellent arguments, especially in the editorial section, and if you are planning to get an MBA, you probably should be reading this anyway. The Economist Magazine is an even better source of highly sophisticated arguments: if you read the Economist from cover-to-cover every week and understood all the arguments, then GMAT CR would be easy; and, of course, if you are planning to get an MBA, you should be very familiar with this magazine as well. The more you read real-world arguments, they more you will develop intuition for the push-and-pull of force in the real world.

Does all this make sense?
Mike :-)
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Re: Letter to the editor: Our city plans to allow major commerci  [#permalink]

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New post 07 Feb 2014, 09:44
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Hello Rock750, I am not an expert, I will just add my 2 cents worth. Hope it helps.

The question introduces a specific problem with respect to new development at the waterfront. The problem is

"Providing enough roads or public transportation to the area would cost far more than the city could gain from the increased tax revenue."

Our need of the hour then is to just solve this problem of additional cost, while benefiting the city. We have to limit our scope to this extent only. While analyzing A, you expanded this scope to consider future problems that may arise. Also notice we are not to assume there may be future problems. We need not worry about these. in fact there may not be any problems or worse, there may be entirely new set of problems that we don't yet know.

As for B, it is a good contender however, can we assume that the visitors of the new commercial development will be ONLY from that particular new residential area? certainly there will be other external visitors otherwise the city will not be planning to develop the waterfront. For them access roads are necessary, so we cannot do away with roads.

This particular assessment

"hence a lot of people who lived far from the waterfront and who are especially pleased with commercial activities will move "

does not chime well with real world. just because lot of people are pleased with a commercial development/theme park/mall does not necessarily mean they will move to the nearby residential area. This is very unrealistic.

A is a better choice when compared to B. hope it helps.

Rock750 wrote:
Hi Mike, Thanks for your response.

I was torn as to decide between A and B and ended with choosing B.

I agree that Answer A wins over B but my problem is that rarely i'm convinced with an answer choice that comes from this type of question.

While attempting this Q, both A and B were satisfying. In one hand, answer A is proposing new roads with system of tolls that will alleviate traffic congestion with some $$ bonus. Ok, but what if these new roads, regardless of the $$ bonus, will be congested soon after the plan is released. I eliminate this answer choice because i felt that it doesn't bring some additional information about the number of the population that live there ... In the other hand, i choosed B because if we have to allow residential development along the waterfront so that there will be waterfront residents who can walk to the commercial development then if there are too many residential along the waterfront , hence a lot of people who lived far from the waterfront and who are especially pleased with commercial activities will move thereby alleviating traffic congestion.

Another problem is that i'm struggling with my timing for this type of Q, which take me 3min on average to come up with an answer that is not satisfying.

Thanks in advance for your help

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Re: Letter to the editor: Our city plans to allow major commerci  [#permalink]

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New post 23 Dec 2014, 04:11
Which of the following, if added to the city’s plan, would be most likely to help solve the problem the letter describes?

(A) Funding construction of new roads to the waterfront with a system of tolls on the new roads to the waterfront. Correct. Toll system will allow to collect funding and ease the burden on the city

(B) Allowing residential development along the waterfront so that there will be waterfront residents who can walk to the commercial development. The fact that some residents can walk to the development doesn't help to solve financial issues.

(C) giving tax breaks to developers of businesses along the waterfront to offset any tax levied on them for construction of roads or public recreation. Doesn't help to gain additional money to help financing

(D) Evaluating the net benefits that the commercial development would bring to the city in terms of improved quality of life for the city’s residents rather than its financial terms . Irrelevant

(E) Allowing commercial development in other city neighborhoods whose roads are not seriously congested with traffic. Other cities are beyond the scope of the argument
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New post 25 Jan 2016, 08:32
GMAT verbal, I hate you! How do they expect non english speakers to know what "toll" is? I thought is was some sheet metal... :twisted:
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New post 10 Mar 2016, 00:21
souvik101990 wrote:
Letter to the editor: Our city plans to allow major commercial development along the south waterfront and, in so doing, to increase its tax revenue. But, to succeed commercially, the development would inevitably create far more road traffic than the existing roads to the waterfront can handle, causing serious traffic congestion. Providing enough roads or public transportation to the area would cost far more than the city could gain from the increased tax revenue.

Which of the following, if added to the city’s plan, would be most likely to help solve the problem the letter describes?



Problem: Providing enough roads or public transportation to the area would cost far more than the city could gain from the increased tax revenue
This is a financial problem. How do we solve a financial problem? By giving money to the cause of the problem.

We need to find the same in the options and only option A talks about ways in which we can earn money back.
Correct Option: A
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Re: Letter to the editor: Our city plans to allow major commerci  [#permalink]

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New post 07 Oct 2016, 23:56
I have an issue with choice A, increased tolls may discourage people to travel to waterfront and hence the primary objective of making more money will not be met.
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Re: Letter to the editor: Our city plans to allow major commerci  [#permalink]

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New post 08 Oct 2016, 00:13
Hi,
I have an issue with choice A, increased tolls may discourage people to travel to waterfront and hence the primary objective of making more money will not be met.
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New post 18 Oct 2016, 01:29
Icecream87 wrote:
GMAT verbal, I hate you! How do they expect non english speakers to know what "toll" is? I thought is was some sheet metal... :twisted:

:rotate...............sheetmetal....ROFL.............you must have heard regarding toll gates and toll tax you pay at borders of districts or states during your travel times.

Anyways your sheet-metal reminded me of my mechanical engineering subject production technology. :)

Nevertheless even I could not guess that commercial development is a kind of some shopping complex, and assumed it to be some development activity and got misguided. :beer
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New post 18 Oct 2016, 01:41
abhibad wrote:
Hi,
I have an issue with choice A, increased tolls may discourage people to travel to waterfront and hence the primary objective of making more money will not be met.


what if the customers or people who pay the toll are of upper class and do not mind to pay a penny for their comfort or profit? :wink:

Well our objective is here t solve the problem any how. If we are asked to weaken the plan, then can think of something like this.

I hope this helps. :)
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Re: Letter to the editor: Our city plans to allow major commerci  [#permalink]

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New post 18 Oct 2016, 03:13
Nevernevergiveup wrote:
Icecream87 wrote:
GMAT verbal, I hate you! How do they expect non english speakers to know what "toll" is? I thought is was some sheet metal... :twisted:

:rotate...............sheetmetal....ROFL.............you must have heard regarding toll gates and toll tax you pay at borders of districts or states during your travel times.

Anyways your sheet-metal reminded me of my mechanical engineering subject production technology. :)

Nevertheless even I could not guess that commercial development is a kind of some shopping complex, and assumed it to be some development activity and got misguided. :beer

There are no borders in Europe, Shenghen style. No I had never heard of it :).

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Re: Letter to the editor: Our city plans to allow major commerci  [#permalink]

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New post 18 Oct 2016, 09:21
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Icecream87 wrote:
GMAT verbal, I hate you! How do they expect non english speakers to know what "toll" is? I thought is was some sheet metal... :twisted:

Dear Icecream87,

I see that Nevernevergiveup responded to your query, but I have a few things to say as well. :-)

The GMAT Verbal, and in particular, the GMAT CR, expects students to know an assortment of basic economic ideas. Students have the misconception that they need "no outside knowledge" on the GMAT CR. This is a subtle misconception. It's absolutely true that one does not need to have expert knowledge about any specific topic discussed. In this case, the city is fictional, so no one could be an "expert" about it! Nevertheless, one has to be comfortable with a variety of terms and idea about how money is exchanged in the economy. Think about it: the GMAT is a test about your readiness for business school. Part of that readiness involves being aware of major source of income for governments and businesses. In that sense, you need to know about toll roads. For more real world ideas that could be important on the GMAT, see:
GMAT Critical Reasoning and Outside Knowledge

Think about it: if in business school or in your career, the topic of "toll roads" comes up, and you were to say, "I don't know what those are!" then you would not look very impressive. Knowledge is power. Take every opportunity to learn every economic term, every economic idea, that you possibly can. not only because it could help you on the GMAT, but also because it will help you in everything that comes after the GMAT.

As I indicate in that blog post, the way you acquire all this economic knowledge is to read the business news. Read about what individual businesses are doing. Read about what the governments are doing to regulate their national economies. As much as possible, make yourself an expert in how money changes hands in the world. After all, if you are taking the GMAT, then presumably you are planning to devote your life to the business world. It only would make sense to develop expertise in that world as soon as you can.

Does all this make sense?
Mike :-)
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Re: Letter to the editor: Our city plans to allow major commerci  [#permalink]

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New post 04 Nov 2016, 06:55
mikemcgarry wrote:
Icecream87 wrote:
GMAT verbal, I hate you! How do they expect non english speakers to know what "toll" is? I thought is was some sheet metal... :twisted:

Dear Icecream87,

I see that Nevernevergiveup responded to your query, but I have a few things to say as well. :-)

The GMAT Verbal, and in particular, the GMAT CR, expects students to know an assortment of basic economic ideas. Students have the misconception that they need "no outside knowledge" on the GMAT CR. This is a subtle misconception. It's absolutely true that one does not need to have expert knowledge about any specific topic discussed. In this case, the city is fictional, so no one could be an "expert" about it! Nevertheless, one has to be comfortable with a variety of terms and idea about how money is exchanged in the economy. Think about it: the GMAT is a test about your readiness for business school. Part of that readiness involves being aware of major source of income for governments and businesses. In that sense, you need to know about toll roads. For more real world ideas that could be important on the GMAT, see:
GMAT Critical Reasoning and Outside Knowledge

Think about it: if in business school or in your career, the topic of "toll roads" comes up, and you were to say, "I don't know what those are!" then you would not look very impressive. Knowledge is power. Take every opportunity to learn every economic term, every economic idea, that you possibly can. not only because it could help you on the GMAT, but also because it will help you in everything that comes after the GMAT.

As I indicate in that blog post, the way you acquire all this economic knowledge is to read the business news. Read about what individual businesses are doing. Read about what the governments are doing to regulate their national economies. As much as possible, make yourself an expert in how money changes hands in the world. After all, if you are taking the GMAT, then presumably you are planning to devote your life to the business world. It only would make sense to develop expertise in that world as soon as you can.

Does all this make sense?
Mike :-)


Hi Mike,

This wasn't a knowledge issue, but a language one. I know what a toll road is (péage in French). I just never knew how it was called in english. So discovering a new word like this during a CAT can be really frustrating.
And I don't think that people would hold me accountable for not knowing a particular word in English that is not my first language after all.

And I am done with the GMAT since, so no more frustration :lol: :P
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Letter to the editor: Our city plans to allow major commerci  [#permalink]

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mikemcgarry wrote:
Rock750 wrote:
Letter to the editor: Our city plans to allow major commercial development along the south waterfront and, in so doing, to increase its tax revenue. But, to succeed commercially, the development would inevitably create far more road traffic than the existing roads to the waterfront can handle, causing serious traffic congestion. Providing enough roads or public transportation to the area would cost far more than the city could gain from the increased tax revenue.

Which of the following, if added to the city’s plan, would be most likely to help solve the problem the letter describes?

(A) Funding construction of new roads to the waterfront with a system of tolls on the new roads to the waterfront

(B) Allowing residential development along the waterfront so that there will be waterfront residents who can walk to the commercial development

(C) giving tax breaks to developers of businesses along the waterfront to offset any tax levied on them for construction of roads or public recreation

(D) Evaluating the net benefits that the commercial development would bring to the city in terms of improved quality of life for the city’s residents rather than its financial terms

(E) Allowing commercial development in other city neighborhoods whose roads are not seriously congested with traffic

Dear Rock750,
I'm happy to help. This is a great question. :-)

So, the problem is --- tax revenue from waterfront development won't pay for fixing all the problems caused by this development. The city will wind up with horrible traffic and no financial plan for dealing with it. That's the problem we need to address.
(A) Funding construction of new roads to the waterfront with a system of tolls on the new roads to the waterfront
Toll roads! That magic form of income! Yes, this would have the advantage that more traffic leads to more money, so as long as traffic is a problem, there's money coming in that can solve the problem. Brilliant! This works as a correct answer.

(B) Allowing residential development along the waterfront so that there will be waterfront residents who can walk to the commercial development
Hmmm. Not satisfying. Those residents would still have to drive home and park, adding to traffic, and folks who live elsewhere would still have to drive there. It doesn't sound as if this would do much to solve the problem. This is incorrect.

(C) giving tax breaks to developers of businesses along the waterfront to offset any tax levied on them for construction of roads or public recreation
If the city gives tax breaks, that's even less money coming into the city's coffers, and that exacerbates the problem. This is incorrect.

(D) Evaluating the net benefits that the commercial development would bring to the city in terms of improved quality of life for the city’s residents rather than its financial terms
Hippie cop-out. If the current plan involves tons of traffic, then nobody is a fan of that. This is very weak. This is incorrect.

(E) Allowing commercial development in other city neighborhoods whose roads are not seriously congested with traffic
Hmm. This could create even more traffic elsewhere in the city, so the entire city would be in gridlock. That certainly doesn't sound like something that makes the problem better. This is incorrect.

Does all this make sense?
Mike :-)


Hi mikemcgarry, GMATNinja
I need help in understanding how we could eliminate A & C

I was stuck between A and C This is what was going in my mind when i did hold on to these two options

The way the argument is constructed (not argument since no conclusion)
Aim: to increase tax revenue
PLan: Commercial Development along South waterfront.
Road Block: Increased traffic that road can't handle and cost of providing any roads or transport would cost far more than it would gain from increased tax revenue


Now Option A says Funding road with collection of toll : But aren't we told that proving for roads would offset any increased in tax revenue ( Yes because of the increased traffic and toll you would have revenue but still you would initially pay out of revenue which is far more than you would gain from increased tax revenue)

While option C says : give tax benefits for developers who provide road on that rout. ( now locally its plan for increased revenue would be achieved since it doesn't have to spend out of their revenue to fund roads, and they would earn because commercial development would still attract more traffic)

Now the only difference in A & C is in the long term Plan A would get them more revenue. But we aren't sure how long since its mentioned that proving roads would cost city far more than city would gain from the increased tax revenue

So why not C? You are meeting your goal to increase tax revenue immediately

What am i missing ?
Probus

Originally posted by Probus on 03 Oct 2018, 23:51.
Last edited by Probus on 04 Oct 2018, 11:35, edited 1 time in total.
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Re: Letter to the editor: Our city plans to allow major commerci  [#permalink]

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New post 04 Oct 2018, 00:57
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My 2 cents,

There are 2 main problems here,

1. Traffic
2. Tax Revenue

Point B says 'allowing residential construction'. How does this solves the traffic issue, there's an entire city which will still need to move smoothly to the waterfront and however big the residential project is, it will not compensate for the revenue that can be generated from different parts of city. So infact both the problems still stand.

Point 'C'- There's no mention of public recreation being built in the original argument. Additionally, in point 'A' apart from tax revenue city will also get toll revenue and in point 'C' the city in effect looses money because of tax benefits given (I agree this may or may not off set road construction cost) plus it will not receive the revenue flow from tolls.

Hope I was able to help !

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Re: Letter to the editor: Our city plans to allow major commerci  [#permalink]

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New post 04 Oct 2018, 11:34
Sarjaria84 wrote:
My 2 cents,

There are 2 main problems here,

1. Traffic
2. Tax Revenue

Point B says 'allowing residential construction'. How does this solves the traffic issue, there's an entire city which will still need to move smoothly to the waterfront and however big the residential project is, it will not compensate for the revenue that can be generated from different parts of city. So infact both the problems still stand.

Point 'C'- There's no mention of public recreation being built in the original argument. Additionally, in point 'A' apart from tax revenue city will also get toll revenue and in point 'C' the city in effect looses money because of tax benefits given (I agree this may or may not off set road construction cost) plus it will not receive the revenue flow from tolls.

Hope I was able to help !

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HiSarjaria84,

Well If i may , point out to your analysis of Point C is. Its not necessary that public recreation should be there in original stem.

Point 'C'- There's no mention of public recreation being built in the original argument.
Its not necessary that public recreation should be there in original stem.Well we are looking for new information ( obv) along the lines of question stem that helps to solve problem .
So any new information ( in scope of argument) that would address the issue will help.

On the same lines you could have rejected option A ( stem doesn't mention about toll collection)

Additionally, in point 'A' apart from tax revenue city will also get toll revenue
Yes they do get toll revenue , but last line of the question stem "Providing enough roads or public transportation to the area would cost far morethan the city could gain from the increased tax revenue. '

This is where i am stuck on my thinking . When the stem mentions that cost of providing for roads would be far more than gains from increased tax revenue .

and in point 'C' the city in effect looses money because of tax benefits given
But if you look other way round , The city doesn't have to invest money for roads ( we are already told that this investment was too high and would be more than the city would gain from increased revenue) , and we are just giving tax benefits to developers of roads. So we get roads without using city funding and city earns by the original plan as the roads can handle increased traffic volume and they receive increased tax revenue form people coming to waterfront).

(I agree this may or may not off set road construction cost, since we don't know what kind of benefit) plus it will not receive the toll flow , but in Choice C alt least it earns revenue from Day 1, while in option A city has to first wait to recover the cost incurred for funding roads , then will it earn revenue.

In light of all this my problem with C is something related to meaning ( if i take this literal meaning into consideration then Option A is the best among 5 Choices)

" Hey tax benefits to companies who build roads or other public recreation along the water front.
Now the issue for this is because of usage of 'or' , As long as companies build roads or roads and public recreationits fine but saying
roads or public recreation that is a problem . Say they get tax benefits for roads that solves the issue , say they get tax benefits for public recreation this worsens the issue.


Probus

Hi GMATNinja,
Can you help to resolve my issue with this question.
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Re: Letter to the editor: Our city plans to allow major commerci  [#permalink]

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New post 10 Oct 2018, 00:16
Probus wrote:
mikemcgarry wrote:
Rock750 wrote:
Letter to the editor: Our city plans to allow major commercial development along the south waterfront and, in so doing, to increase its tax revenue. But, to succeed commercially, the development would inevitably create far more road traffic than the existing roads to the waterfront can handle, causing serious traffic congestion. Providing enough roads or public transportation to the area would cost far more than the city could gain from the increased tax revenue.

Which of the following, if added to the city’s plan, would be most likely to help solve the problem the letter describes?

(A) Funding construction of new roads to the waterfront with a system of tolls on the new roads to the waterfront

(B) Allowing residential development along the waterfront so that there will be waterfront residents who can walk to the commercial development

(C) giving tax breaks to developers of businesses along the waterfront to offset any tax levied on them for construction of roads or public recreation

(D) Evaluating the net benefits that the commercial development would bring to the city in terms of improved quality of life for the city’s residents rather than its financial terms

(E) Allowing commercial development in other city neighborhoods whose roads are not seriously congested with traffic

Dear Rock750,
I'm happy to help. This is a great question. :-)

So, the problem is --- tax revenue from waterfront development won't pay for fixing all the problems caused by this development. The city will wind up with horrible traffic and no financial plan for dealing with it. That's the problem we need to address.
(A) Funding construction of new roads to the waterfront with a system of tolls on the new roads to the waterfront
Toll roads! That magic form of income! Yes, this would have the advantage that more traffic leads to more money, so as long as traffic is a problem, there's money coming in that can solve the problem. Brilliant! This works as a correct answer.

(B) Allowing residential development along the waterfront so that there will be waterfront residents who can walk to the commercial development
Hmmm. Not satisfying. Those residents would still have to drive home and park, adding to traffic, and folks who live elsewhere would still have to drive there. It doesn't sound as if this would do much to solve the problem. This is incorrect.

(C) giving tax breaks to developers of businesses along the waterfront to offset any tax levied on them for construction of roads or public recreation
If the city gives tax breaks, that's even less money coming into the city's coffers, and that exacerbates the problem. This is incorrect.

(D) Evaluating the net benefits that the commercial development would bring to the city in terms of improved quality of life for the city’s residents rather than its financial terms
Hippie cop-out. If the current plan involves tons of traffic, then nobody is a fan of that. This is very weak. This is incorrect.

(E) Allowing commercial development in other city neighborhoods whose roads are not seriously congested with traffic
Hmm. This could create even more traffic elsewhere in the city, so the entire city would be in gridlock. That certainly doesn't sound like something that makes the problem better. This is incorrect.

Does all this make sense?
Mike :-)


Hi mikemcgarry, GMATNinja
I need help in understanding how we could eliminate A & C

I was stuck between A and C This is what was going in my mind when i did hold on to these two options

The way the argument is constructed (not argument since no conclusion)
Aim: to increase tax revenue
PLan: Commercial Development along South waterfront.
Road Block: Increased traffic that road can't handle and cost of providing any roads or transport would cost far more than it would gain from increased tax revenue


Now Option A says Funding road with collection of toll : But aren't we told that proving for roads would offset any increased in tax revenue ( Yes because of the increased traffic and toll you would have revenue but still you would initially pay out of revenue which is far more than you would gain from increased tax revenue)

While option C says : give tax benefits for developers who provide road on that rout. ( now locally its plan for increased revenue would be achieved since it doesn't have to spend out of their revenue to fund roads, and they would earn because commercial development would still attract more traffic)

Now the only difference in A & C is in the long term Plan A would get them more revenue. But we aren't sure how long since its mentioned that proving roads would cost city far more than city would gain from the increased tax revenue

So why not C? You are meeting your goal to increase tax revenue immediately

What am i missing ?
Probus



Hey Probus!
Think of it this way:
Problem: plan will cost more than it makes in revenue.
We are looking to solve this problem - i.e. something that ensures that revenue will in fact be greater than expenses.
(C) does the opposite - giving tax breaks is forgoing revenue, giving up money - this means revenue will be smaller, which will only make the problem worse!
(A) on the other hand provides an additional revenue stream (tolls), which should increase the overall revenue

Does this help?
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Re: Letter to the editor: Our city plans to allow major commerci  [#permalink]

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New post 10 Oct 2018, 21:05
Letter to the editor[/u]: Our city plans to allow major commercial development along the south waterfront and, in so doing, to increase its tax revenue. But, to succeed commercially, the development would inevitably create far more road traffic than the existing roads to the waterfront can handle, causing serious traffic congestion. Providing enough roads or public transportation to the area would cost far more than the city could gain from the increased tax revenue.

Which of the following, if added to the city’s plan, would be most likely to help solve the problem the letter describes?

(A) Funding construction of new roads to the waterfront with a system of tolls on the new roads to the waterfront

(B) Allowing residential development along the waterfront so that there will be waterfront residents who can walk to the commercial development

(C) giving tax breaks to developers of businesses along the waterfront to offset any tax levied on them for construction of roads or public recreation

(D) Evaluating the net benefits that the commercial development would bring to the city in terms of improved quality of life for the city’s residents rather than its financial terms

(E) Allowing commercial development in other city neighborhoods whose roads are not seriously congested with traffic[/quote]
Dear Rock750,
I'm happy to help. This is a great question. :-)

So, the problem is --- tax revenue from waterfront development won't pay for fixing all the problems caused by this development. The city will wind up with horrible traffic and no financial plan for dealing with it. That's the problem we need to address.
(A) Funding construction of new roads to the waterfront with a system of tolls on the new roads to the waterfront
Toll roads! That magic form of income! Yes, this would have the advantage that more traffic leads to more money, so as long as traffic is a problem, there's money coming in that can solve the problem. Brilliant! This works as a correct answer.

(B) Allowing residential development along the waterfront so that there will be waterfront residents who can walk to the commercial development
Hmmm. Not satisfying. Those residents would still have to drive home and park, adding to traffic, and folks who live elsewhere would still have to drive there. It doesn't sound as if this would do much to solve the problem. This is incorrect.

(C) giving tax breaks to developers of businesses along the waterfront to offset any tax levied on them for construction of roads or public recreation
If the city gives tax breaks, that's even less money coming into the city's coffers, and that exacerbates the problem. This is incorrect.

(D) Evaluating the net benefits that the commercial development would bring to the city in terms of improved quality of life for the city’s residents rather than its financial terms
Hippie cop-out. If the current plan involves tons of traffic, then nobody is a fan of that. This is very weak. This is incorrect.

(E) Allowing commercial development in other city neighborhoods whose roads are not seriously congested with traffic
Hmm. This could create even more traffic elsewhere in the city, so the entire city would be in gridlock. That certainly doesn't sound like something that makes the problem better. This is incorrect.

Does all this make sense?
Mike :-)[/quote]

Hi mikemcgarry, GMATNinja
I need help in understanding how we could eliminate A & C

I was stuck between A and C This is what was going in my mind when i did hold on to these two options

The way the argument is constructed (not argument since no conclusion)
Aim: to increase tax revenue
PLan: Commercial Development along South waterfront.
Road Block: Increased traffic that road can't handle and cost of providing any roads or transport would cost far more than it would gain from increased tax revenue


Now Option A says Funding road with collection of toll : But aren't we told that proving for roads would offset any increased in tax revenue ( Yes because of the increased traffic and toll you would have revenue but still you would initially pay out of revenue which is far more than you would gain from increased tax revenue)

While option C says : give tax benefits for developers who provide road on that rout. ( now locally its plan for increased revenue would be achieved since it doesn't have to spend out of their revenue to fund roads, and they would earn because commercial development would still attract more traffic)

Now the only difference in A & C is in the long term Plan A would get them more revenue. But we aren't sure how long since its mentioned that proving roads would cost city far more than city would gain from the increased tax revenue

So why not C? You are meeting your goal to increase tax revenue immediately

What am i missing ?
Probus[/quote]


Hey Probus!
Think of it this way:
Problem: plan will cost more than it makes in revenue.
We are looking to solve this problem - i.e. something that ensures that revenue will in fact be greater than expenses.
(C) does the opposite - giving tax breaks is forgoing revenue, giving up money - this means revenue will be smaller, which will only make the problem worse!
(A) on the other hand provides an additional revenue stream (tolls), which should increase the overall revenue

Does this help?[/quote]


Hi David, DavidTutorexamPAL,

Thanks for your reply.
But i do want to understand one thing since we are given below information
Aim: to increase tax revenue
Plan: Commercial Development along South waterfront.
Road Block: Increased traffic that road can't handle and cost of providing any roads or transport would cost far more than it would gain from increased tax revenue

Now as per Choice 'A' apart from tax revenue city will also get toll revenue
Yes they do get toll revenue , but last line of the question stem "Providing enough roads or public transportation to the area would cost far more than the city could gain from the increased tax revenue. '

So does't this defeat our aim.
Will the city get increase tax revenue . Yes but this goes against the last line mentioned in the question stem.

This is where i am stuck on my thinking . When the stem mentions that cost of providing for roads would be far more than gains from increased tax revenue .

and in Choice 'C' the city in effect looses money because of tax benefits given (only for construction roads)
But if you look other way round , The city doesn't have to invest money for roads ( we are already told that this investment was too high and would be more than the city would gain from increased revenue) , and we are just giving tax benefits to developers of roads. So we get roads without using city funding and city earns by the original plan as the roads can handle increased traffic volume and they receive increased tax revenue form people coming to waterfront).

(I agree this we don't have information about tax benefits . would it be more than cost for providing roads or less , since we don't know what kind of benefit) plus it will not receive the toll flow , but in Choice C alt least it earns revenue from Day 1, while in option A city has to first wait to recover the cost incurred for funding roads , then will it earn revenue.

This is where i am stuck.

Generally, ( not always true) in most developing countries, the general scenario is is to give tax befits for developer to construct roads. Which is called BOOT Model.

Probus
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Re: Letter to the editor: Our city plans to allow major commerci &nbs [#permalink] 10 Oct 2018, 21:05

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