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sales of cigarettes fell ten percent. In contrast, in the

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sales of cigarettes fell ten percent. In contrast, in the  [#permalink]

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25 Sep 2008, 11:11
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sales of cigarettes fell ten percent. In contrast, in the year prior to the tax increase, sales
had fallen one percent. The volume of cigarette sales is therefore strongly related to the
after-tax price of a pack of cigarettes.
The argument above requires which of 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.
B. The one percent fall in cigarette sales in the year prior to tax increase was due to a
smaller tax increase.
C. The pretax price of a pack of cigarettes gradually decreased throughout the year
before and the year after the tax increase.
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 the previous year.
E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.

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Joined: 27 Aug 2008
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Re: CR - sales of cigarettes  [#permalink]

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25 Sep 2008, 11:35
vivektripathi wrote:
sales of cigarettes fell ten percent. In contrast, in the year prior to the tax increase, sales
had fallen one percent. The volume of cigarette sales is therefore strongly related to the
after-tax price of a pack of cigarettes.
The argument above requires which of 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.
B. The one percent fall in cigarette sales in the year prior to tax increase was due to a
smaller tax increase.
C. The pretax price of a pack of cigarettes gradually decreased throughout the year
before and the year after the tax increase.
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 the previous year.
E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.

Answer seems to be correct is B. The author concludes that sales are strongly related to after tax price. He doesnt mention any tax increases in the year prior to the current hike. But sales did fall in that year as well. There is no indication that sales are generally towards a downward trend so the slump in the prior year must have been because of a tax rise. But no tax rise has been explicitly stated, implying that it is assumed.
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Re: CR - sales of cigarettes  [#permalink]

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25 Sep 2008, 11:45
jatinrai wrote:
vivektripathi wrote:
sales of cigarettes fell ten percent. In contrast, in the year prior to the tax increase, sales
had fallen one percent. The volume of cigarette sales is therefore strongly related to the
after-tax price of a pack of cigarettes.
The argument above requires which of 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.
B. The one percent fall in cigarette sales in the year prior to tax increase was due to a
smaller tax increase.
C. The pretax price of a pack of cigarettes gradually decreased throughout the year
before and the year after the tax increase.
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 the previous year.
E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.

Answer seems to be correct is B. The author concludes that sales are strongly related to after tax price. He doesnt mention any tax increases in the year prior to the current hike. But sales did fall in that year as well. There is no indication that sales are generally towards a downward trend so the slump in the prior year must have been because of a tax rise. But no tax rise has been explicitly stated, implying that it is assumed.

If we apply the negation test to B, conclusion falls apart. If the 1% fall in CS was NOT due to a smaller TI, it must be some thing else that controls the CS volume. Then the CS volume and TI are not strongly related. Hence it has to be B.
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Re: CR - sales of cigarettes  [#permalink]

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25 Sep 2008, 11:53
vivektripathi wrote:
sales of cigarettes fell ten percent. In contrast, in the year prior to the tax increase, sales
had fallen one percent. The volume of cigarette sales is therefore strongly related to the
after-tax price of a pack of cigarettes.
The argument above requires which of 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.
B. The one percent fall in cigarette sales in the year prior to tax increase was due to a
smaller tax increase.
C. The pretax price of a pack of cigarettes gradually decreased throughout the year
before and the year after the tax increase.
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 the previous year.
E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.

Argument here is there is a strong correlation between after-tax price and cigarette saels. Evidence is cigarette sales dropped after a tax increase. But what if the pretax price affected the change in sales? I don't think the question here is talking on the size of the tax increase (i.e. smaller or larger). I think the Pre-tax price (maybe wholesale price?) should remain unchanged to make the argument valid. Otherwise the argument gets weakened.
ANS is A.
Manager
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Re: CR - sales of cigarettes  [#permalink]

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25 Sep 2008, 12:04
Richardson wrote:
vivektripathi wrote:
sales of cigarettes fell ten percent. In contrast, in the year prior to the tax increase, sales
had fallen one percent. The volume of cigarette sales is therefore strongly related to the
after-tax price of a pack of cigarettes.
The argument above requires which of 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.
B. The one percent fall in cigarette sales in the year prior to tax increase was due to a
smaller tax increase.
C. The pretax price of a pack of cigarettes gradually decreased throughout the year
before and the year after the tax increase.
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 the previous year.
E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.

Argument here is there is a strong correlation between after-tax price and cigarette saels. Evidence is cigarette sales dropped after a tax increase. But what if the pretax price affected the change in sales? I don't think the question here is talking on the size of the tax increase (i.e. smaller or larger). I think the Pre-tax price (maybe wholesale price?) should remain unchanged to make the argument valid. Otherwise the argument gets weakened.
ANS is A.

Richardson, if the pretax price rose much more in the previous year then why was the fall only 1%. It should have been more? It doesnt make sense.
Director
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Re: CR - sales of cigarettes  [#permalink]

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25 Sep 2008, 23:35
IMO A.
If the price of cig has increased considerably, it is evident that final price with new tax will be sufficient to increase the net price and hence sales will decline. Otherwise if the pretax price of cig was not so higher compare with that of previous year, blame can be given to increased tax only.
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Re: CR - sales of cigarettes  [#permalink]

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26 Sep 2008, 01:08
IMO "B"
whts the OA
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Re: CR - sales of cigarettes  [#permalink]

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26 Sep 2008, 01:35
To me, it was a tough fight between A and B. I choose B for the following reason.

A mentions that increase in pre-tax price during the year of tax increase was lower than the increase prior to tax increase. This means, 1% decline in sales during prior year can be attributed to higher increase in pre-tax price. And, this weakens the conclusion that says that volume of sales is strongly related to tax increase.

Hence, A cannot be the answer.
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Re: CR - sales of cigarettes  [#permalink]

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26 Sep 2008, 19:23
jatinrai wrote:
Richardson wrote:
vivektripathi wrote:
sales of cigarettes fell ten percent. In contrast, in the year prior to the tax increase, sales
had fallen one percent. The volume of cigarette sales is therefore strongly related to the
after-tax price of a pack of cigarettes.
The argument above requires which of 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.
B. The one percent fall in cigarette sales in the year prior to tax increase was due to a
smaller tax increase.
C. The pretax price of a pack of cigarettes gradually decreased throughout the year
before and the year after the tax increase.
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 the previous year.
E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.

Argument here is there is a strong correlation between after-tax price and cigarette saels. Evidence is cigarette sales dropped after a tax increase. But what if the pretax price affected the change in sales? I don't think the question here is talking on the size of the tax increase (i.e. smaller or larger). I think the Pre-tax price (maybe wholesale price?) should remain unchanged to make the argument valid. Otherwise the argument gets weakened.
ANS is A.

Richardson, if the pretax price rose much more in the previous year then why was the fall only 1%. It should have been more? It doesnt make sense.

The 1% drop had occurred before there was a tax increase...
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Joined: 24 Sep 2008
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Schools: MIT / INSEAD / IIM - ABC
Re: CR - sales of cigarettes  [#permalink]

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26 Sep 2008, 19:55
vivektripathi wrote:
sales of cigarettes fell ten percent. In contrast, in the year prior to the tax increase, sales
had fallen one percent. The volume of cigarette sales is therefore strongly related to the
after-tax price of a pack of cigarettes.
The argument above requires which of 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.
B. The one percent fall in cigarette sales in the year prior to tax increase was due to a
smaller tax increase.
C. The pretax price of a pack of cigarettes gradually decreased throughout the year
before and the year after the tax increase.
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 the previous year.
E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.

A: Can't say - so gone
B: Stating the same fact
C: Can't say - out of scope
D: Can't say - out of scope
E: Conclusion is basic assumption - tax increases the after tax prices so overall prices go up - so, E after-tax price of a pack of cigarettes rises, the pretax price also rises
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Re: CR - sales of cigarettes  [#permalink]

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26 Sep 2008, 20:08
Another vote for A

vivektripathi wrote:
Sales of cigarettes fell ten percent. In contrast, in the year prior to the tax increase, sales had fallen one percent. The volume of cigarette sales is therefore strongly related to the after-tax price of a pack of cigarettes.

The argument above requires which of 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.
B. The one percent fall in cigarette sales in the year prior to tax increase was due to a smaller tax increase.
C. The pretax price of a pack of cigarettes gradually decreased throughout the year before and the year after the tax increase.
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 the previous year.
E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.

The author concludes that the sales volume of cigarettes has fallen due to the after-tax increase. What if the sales volume had actually fallen due to pre-tax increase ? This would clearly destroy the argument.

So A. What is the OA?
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Re: CR - sales of cigarettes  [#permalink]

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26 Sep 2008, 20:59
vivektripathi wrote:
sales of cigarettes fell ten percent. In contrast, in the year prior to the tax increase, sales
had fallen one percent. The volume of cigarette sales is therefore strongly related to the
after-tax price of a pack of cigarettes.
The argument above requires which of 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. -> This is apt ,since it says that the pre tax price did not change much ,hence only reason that can led to drop in the sale is tax increase .Negate this then argument falls apart since if pre tax price were higher what if %share is equal in absalute amount
B. The one percent fall in cigarette sales in the year prior to tax increase was due to a smaller tax increase. -> this is irrelevant,negate this argument is not affected
C. The pretax price of a pack of cigarettes gradually decreased throughout the year before and the year after the tax increase. -> this weakens since it says since pretax price decreasing sales increased hence concl falls apart
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 the previous year. -> this is\just a data not useful here even if the price is noit > 8 cents how the argument gets affected
E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises. -> this is not useful info

IMO A
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Re: CR - sales of cigarettes  [#permalink]

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26 Sep 2008, 21:09
jatinrai wrote:
vivektripathi wrote:
sales of cigarettes fell ten percent. In contrast, in the year prior to the tax increase, sales
had fallen one percent. The volume of cigarette sales is therefore strongly related to the
after-tax price of a pack of cigarettes.
The argument above requires which of 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.
B. The one percent fall in cigarette sales in the year prior to tax increase was due to a
smaller tax increase.
C. The pretax price of a pack of cigarettes gradually decreased throughout the year
before and the year after the tax increase.
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 the previous year.
E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.

Answer seems to be correct is B. The author concludes that sales are strongly related to after tax price. He doesnt mention any tax increases in the year prior to the current hike. But sales did fall in that year as well. There is no indication that sales are generally towards a downward trend so the slump in the prior year must have been because of a tax rise. But no tax rise has been explicitly stated, implying that it is assumed.

As u said here author says : The author concludes that sales are strongly related to after tax price.
hence its not an argument for whether any decrease in sale is due to small or large tax-increase ,its about whether the decrease is due to tax-increase alone and no other factor

When we look at A and B ,A is better since it says pre-tax price is constant throught and hence has no role in the decrease of sales ....

B says previous years sales were due to small tax-increase,no where
the argument says this year the tax-increase was small or large!!!!
Clearly A
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Re: CR - sales of cigarettes  [#permalink]

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26 Sep 2008, 21:55
This is a causal relationship. The volume of cigarette sales is therefore strongly related to the after-tax price of a pack of cigarettes.

A is confirming that there was no alternate cause.
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Re: CR - sales of cigarettes  [#permalink]

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28 Sep 2008, 07:48
vivektripathi wrote:
sales of cigarettes fell ten percent. In contrast, in the year prior to the tax increase, sales
had fallen one percent. The volume of cigarette sales is therefore strongly related to the
after-tax price of a pack of cigarettes.
The argument above requires which of 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.
B. The one percent fall in cigarette sales in the year prior to tax increase was due to a
smaller tax increase.
C. The pretax price of a pack of cigarettes gradually decreased throughout the year
before and the year after the tax increase.
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 the previous year.
E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.

Sorry for delayed post. OA is "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 the previous year"
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28 Sep 2008, 08:23
vivektripathi wrote:
Sorry for delayed post. OA is "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 the previous year"

Are you sure that the OA is D ????? Doesn't make much sense to me !!
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Re: CR - sales of cigarettes  [#permalink]

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28 Sep 2008, 08:34
I will go with (A)

Are you sure, OA is (D)?
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 the previous year.- This means that the pre-tax price was equal or greater the next year. Equal is justified, however, if the pre-tax price is greater, then the cigarrete sales is not strongly related to the after-tax price of a pack of cigarettes.
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Re: CR - sales of cigarettes  [#permalink]

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28 Sep 2008, 12:39
amitdgr wrote:
Another vote for A

vivektripathi wrote:
Sales of cigarettes fell ten percent. In contrast, in the year prior to the tax increase, sales had fallen one percent. The volume of cigarette sales is therefore strongly related to the after-tax price of a pack of cigarettes.

The argument above requires which of 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.
B. The one percent fall in cigarette sales in the year prior to tax increase was due to a smaller tax increase.
C. The pretax price of a pack of cigarettes gradually decreased throughout the year before and the year after the tax increase.
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 the previous year.
E. As the after-tax price of a pack of cigarettes rises, the pretax price also rises.

The author concludes that the sales volume of cigarettes has fallen due to the after-tax increase. What if the sales volume had actually fallen due to pre-tax increase ? This would clearly destroy the argument.

So A. What is the OA?

Why are you looking at something that destroys/weakens the argument? This is an assumption Q and not weaken the Q.
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Re: CR - sales of cigarettes  [#permalink]

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28 Sep 2008, 13:56
i will go with A..OA as D is totally off..
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Re: CR - sales of cigarettes  [#permalink]

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28 Sep 2008, 20:34
A for me also. How could D be the OA? I cannot find any argument to support D :-s What's the source of this Q?
Re: CR - sales of cigarettes &nbs [#permalink] 28 Sep 2008, 20:34

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