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# Over the past decade, the total market value of entertainment

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25 Aug 2017, 10:31
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45% (01:52) correct 55% (02:13) wrong based on 163 sessions

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Over the past decade, the total market value of entertainment properties in Romanshorn has steadily declined. This slump led to a cascading effect in that the overall figure on which the city's entertainment tax is based, the assessed value of the city's entertainment properties, has also declined. Nevertheless, the percentage of assessed value that was paid as entertainment taxes to the city did not change from year to year during this period. Romanshorn will soon require entertainment property owners to pay a higher percentage of the assessed value of their earnings as entertainment tax.

The information above most strongly supports which of the following?

A. The percentage of Romanshorn's yearly revenue that comes from money collected in entertainment taxes has steadily declined over the past decade.
B. The amount of revenue that Romanshorn collected from entertainment taxes was lower last year than it was decade ago.
C. Money collected from entertainment taxes provided most of Romanshorn's revenue during the past decade
D. The percentage of Romanshorn's yearly revenue that comes from money collected in entertainment taxes did not change over the past decade.
E. During the past decade, Romanshorn officials increased tax rates on other sources of revenue such as retail sales and business profits.

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Updated on: 02 Oct 2017, 07:04
Over the past decade, the total market value of entertainment properties in Romanshorn has steadily declined. This slump led to a cascading effect in that the overall figure on which the city's entertainment tax is based, the assessed value of the city's entertainment properties, has also declined. Nevertheless, the percentage of assessed value that was paid as entertainment taxes to the city did not change from year to year during this period. Romanshorn will soon require entertainment property owners to pay a higher percentage of the assessed value of their earnings as entertainment tax.

The information above most strongly supports which of the following?
-- Given this question, we need an inference about the information provided.
https://gmatclub.com/forum/more-strongl ... 40980.html

A. The percentage of Romanshorn's yearly revenue that comes from money collected in entertainment taxes has steadily declined over the past decade. -- No way of knowing if this is accurate, or if the percentage has gone down.

B. The amount of revenue that Romanshorn collected from entertainment taxes was lower last year than it was decade ago. -- Value has gone down on the property -- tax remains the same -- result: less money. Answer!

C. Money collected from entertainment taxes provided most of Romanshorn's revenue during the past decade -- This is never mentioned, and is completely out of scope.

D. The percentage of Romanshorn's yearly revenue that comes from money collected in entertainment taxes did not change over the past decade. -- Percentage collected is something we cannot infer. What if every business and person had to pay more/less tax. This difference for everyone and every business would cause the percentage of revenue from entertainment to vary.
E. During the past decade, Romanshorn officials increased tax rates on other sources of revenue such as retail sales and business profits. -- Never mentioned in the passage, so it is out of scope.
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Originally posted by nightblade354 on 02 Oct 2017, 05:23.
Last edited by nightblade354 on 02 Oct 2017, 07:04, edited 2 times in total.
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Re: Over the past decade, the total market value of entertainment  [#permalink]

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02 Oct 2017, 06:48

A. The percentage of Romanshorn's yearly revenue that comes from money collected in entertainment taxes has steadily declined over the past decade. -- Opposite, the question says tax percentage has not decreased.

B. The amount of revenue that Romanshorn collected from entertainment taxes was lower last year than it was decade ago. -- Value has gone down on the property -- tax remains the same -- result: less money. Answer!

C. Money collected from entertainment taxes provided most of Romanshorn's revenue during the past decade -- This is never mentioned, and is completely out of scope.

D. The percentage of Romanshorn's yearly revenue that comes from money collected in entertainment taxes did not change over the past decade. -- Percentage collected has gone down, but this could be the same for everyone and every business. We cannot infer this.

E. During the past decade, Romanshorn officials increased tax rates on other sources of revenue such as retail sales and business profits. -- Never mentioned in the passage, so it is out of scope.

I think option A and option B are very close. I eventually eliminated option A because I cannot "strongly" infer that the decline was steady. However option B i can "strongly" say that the collection was lower last year compared to what it was 10 years ago because the decline was observed over the period and there is no positive seen in the trend over a decade.

Also for Option D, I didn't think about other business. The option D statement is opposite of what is mentioned in the scenario.

Is my thought correct?
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Re: Over the past decade, the total market value of entertainment  [#permalink]

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02 Oct 2017, 07:01
mahu101 wrote:

A. The percentage of Romanshorn's yearly revenue that comes from money collected in entertainment taxes has steadily declined over the past decade. -- Opposite, the question says tax percentage has not decreased.

B. The amount of revenue that Romanshorn collected from entertainment taxes was lower last year than it was decade ago. -- Value has gone down on the property -- tax remains the same -- result: less money. Answer!

C. Money collected from entertainment taxes provided most of Romanshorn's revenue during the past decade -- This is never mentioned, and is completely out of scope.

D. The percentage of Romanshorn's yearly revenue that comes from money collected in entertainment taxes did not change over the past decade. -- Percentage collected has gone down, but this could be the same for everyone and every business. We cannot infer this.

E. During the past decade, Romanshorn officials increased tax rates on other sources of revenue such as retail sales and business profits. -- Never mentioned in the passage, so it is out of scope.

I think option A and option B are very close. I eventually eliminated option A because I cannot "strongly" infer that the decline was steady. However option B i can "strongly" say that the collection was lower last year compared to what it was 10 years ago because the decline was observed over the period and there is no positive seen in the trend over a decade.

Also for Option D, I didn't think about other business. The option D statement is opposite of what is mentioned in the scenario.

Is my thought correct?

Hi mahu101,

For these types of questions, any time you need an inference, the statement needs to be 100% true. In A, as I explained (and edited), this might not be true. There are scenarios where this argument doesn't hold up.

In D, the same thing occurs. I wouldn't say it's the opposite of the argument. The argument says taxes are X, based on property value Y. D says that the city's income from entertainment has not changed. What if other business lost more value? What if taxes increased on everyone but entertainment? The percentage would then change.

B says something we cannot refute given the information.

Does this help?
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Re: Over the past decade, the total market value of entertainment  [#permalink]

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05 Oct 2017, 01:56
Breaking down stimulus into pieces.. we get..
1.In the last 10 years the market value of entertainment properties has steadily declined.
2.City's entertainment tax is based on the assessed value or market value of entertainment properties.
3.From above 1 and 2 we get that the tax also steadily declined.
4.The entertainment tax is calculated as percentage of the value of entertainment properties. This percentage remained same.

Eg: Value of entertainment properties say 10 years earlier was 100000 dollars and 10 percent of 100000 dollars was entertainment tax; which equals to 10000.
after 10 years the value of the entertainment properties declined to 10000 dollars. again the entertainment tax is the same 10 percentage of the value. which equals to 1000.
so the the net value of tax has also reduced.

Checking the options
A) From the stimulus we have that the percentage did not change. But option A says Percentage declined. This option is wrong.
A is wrong.

B) Yes this is the answer. Proven in the last lines of the stimulus explanation above. This option is correct.
B is correct.

C) Okay but this information is irrelevant.
C is wrong.
D) Proven in the last lines of the stimulus explanation above. This option contradicts the proof. This option is wrong.
D is wrong.
E) Okay once again irrelevant information.
E is wrong.

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Re: Over the past decade, the total market value of entertainment  [#permalink]

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01 Nov 2017, 03:56
Percentage of accessed value remains same

so accessed value/entertainment = constant, now and a decade ago,
but now accessed value has decreased, now to maintain the constant above, entertainment tax has to decrease => revenue to the government via entertainment tax must be less than the revenue a decade ago => Answer (B)
Re: Over the past decade, the total market value of entertainment &nbs [#permalink] 01 Nov 2017, 03:56
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