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# Studies in restaurants show that the tips left by customers

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Manager
Joined: 17 Mar 2010
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Studies in restaurants show that the tips left by customers [#permalink]

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02 Aug 2010, 06:00
00:00

Difficulty:

65% (hard)

Question Stats:

53% (01:39) correct 47% (01:44) wrong based on 19 sessions

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Studies in restaurants show that the tips left by customers who pay their bill in cash tend to be larger when the bill is presented on a tray that bears a credit-card logo. Consumer psychologists hypothesize that simply seeing a credit-card logo makes many credit-card holders willing to spend more because it reminds them that their spending power exceeds the cash they have immediately available. Which of the following, if true, most strongly supports the psychologists’ interpretation of the studies?

A. The effect noted in the studies is not limited to patrons who have credit cards.

B. Patrons who are under financial pressure from their credit-card obligations tend to tip less when presented with a restaurant bill on a tray with credit-card logo than when the tray has no logo.

C. In virtually all of the cases in the studies, the patrons who paid bills in cash did not possess credit cards.

D. In general, restaurant patrons who pay their bills in cash leave larger tips than do those who pay by credit card.

E. The percentage of restaurant bills paid with given brand of credit card increases when that credit card’s logo is displayed on the tray with which the bill is prepared.
[Reveal] Spoiler: OA

Kudos [?]: 211 [0], given: 9

Director
Status: Impossible is not a fact. It's an opinion. It's a dare. Impossible is nothing.
Affiliations: University of Chicago Booth School of Business
Joined: 26 Nov 2009
Posts: 954

Kudos [?]: 922 [0], given: 36

Location: Singapore
Concentration: General Management, Finance
Schools: Chicago Booth - Class of 2015
Re: Can somebody explain the logic behind the OA?? [#permalink]

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02 Aug 2010, 08:27
Conclusion : The logo reminds the patrons of their credit card standing.

B is true. If there is NO effect of the credit card logo then the psychologist interpretation is potentially useless.

Effect : Can be positive and negative on the tip depending on the financial standing of the patron. If they are stressed they will tip less. In case they are sound they will tip more. In both the cases it confirms the psychologist's interpretation.

X->Y X leads to Y means that X can have a positive as well as negative effect. The argument can ignore the vital assumption that the effect can be negative.

Kudos [?]: 922 [0], given: 36

VP
Joined: 17 Feb 2010
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Re: Can somebody explain the logic behind the OA?? [#permalink]

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02 Aug 2010, 12:57
Can someone explain why E is incorrect?

Kudos [?]: 793 [0], given: 6

Director
Status: Impossible is not a fact. It's an opinion. It's a dare. Impossible is nothing.
Affiliations: University of Chicago Booth School of Business
Joined: 26 Nov 2009
Posts: 954

Kudos [?]: 922 [0], given: 36

Location: Singapore
Concentration: General Management, Finance
Schools: Chicago Booth - Class of 2015
Re: Can somebody explain the logic behind the OA?? [#permalink]

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03 Aug 2010, 01:40
This one is scope shift (shift in the focus). The focus was the amount of the tip NOT the number of tips or the number of bills. It has no bearing on the psychologist's interpretation. E is a different point. To strengthen or weaken argument you have to take 0 deg or 180 deg choice.

Hope this is clear.
seekmba wrote:
Can someone explain why E is incorrect?

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Manager
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Re: Can somebody explain the logic behind the OA?? [#permalink]

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04 Aug 2010, 12:57
B. Patrons who are under financial pressure from their credit-card obligations tend to tip less when presented with a restaurant bill on a tray with credit-card logo than when the tray has no logo.

is correct... because
Psychologists hypothesize that- looking at their credit card logo, customers are reminded that they have more power to spend and therefore they give more tips.
This is the conclusion, which needs to be strengthened.. so .. we would say.. customers who do not leave large tips are those who are reminded that they have large credit card obligations.

This is what B says.
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Intern
Joined: 29 Jul 2010
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Re: Can somebody explain the logic behind the OA?? [#permalink]

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04 Aug 2010, 16:36
The psychologists argument mainly focuses on consumer spending, not on credit card bills/pays.
The question is - "Which of the following, if true, most strongly supports the psychologists’ interpretation of the studies?"
E talks about credit bill increasing not relating anything to the consumer spending. So this is obviously wrong.
Hope this helps a bit.
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"Not everyone who works hard succeeds. But all those who succeeded have worked hard!" ~~ Coach Kamogawa

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ItsNotOver

Kudos [?]: 2 [0], given: 1

Re: Can somebody explain the logic behind the OA??   [#permalink] 04 Aug 2010, 16:36
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# Studies in restaurants show that the tips left by customers

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