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Studies in restaurants show that the tips left by customers who pay th

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Studies in restaurants show that the tips left by customers who pay th  [#permalink]

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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 a given brand of credit card increases when that credit card’s logo is displayed on the tray with which the bill is prepared.

Originally posted by singh_amit19 on 29 Sep 2007, 11:47.
Last edited by Bunuel on 10 Oct 2018, 06:26, edited 4 times in total.
Renamed the topic and edited the question.
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Re: Studies in restaurants show that the tips left by customers who pay th  [#permalink]

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New post 12 Mar 2013, 11:19
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singh_amit19 wrote:
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.

I picked A........views???


Got a PM to respond to this.

I can see some great explanations above. Let me add my two cents to the discussion.

Argument Analysis

My very first observation of the given passage is that it is a causal argument. A causal argument is one in which we attribute the cause of some past event, say X, to some past event or a rule or something else, say Y. In other words, we say that X has caused Y or that X led to Y

In the given argument, we have

Y: 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
X: 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

As we can see, even X has a causal structure and can be written as:
Credit card reminds credit card holders that their spending power exceeds the cash they have immediately available ---->> (leads to) seeing a credit-card logo makes many credit-card holders willing to spend more ---->>> the tips left by customers who pay their bill in cash is larger when the bill is presented on a tray that bears a credit-card logo

In essence, the hypothesis is that that credit card reminds people of their high spending power - this leads them to spend more - this leads in higher tips.

Prethinking

This is a strengthen question, as is clear from the question stem. We need to strengthen the psychologist's hypothesis. Since this is causal argument where we say that X is the reason for Y, we can strengthen it by saying that
1. There is no Z which can be the reason for Y OR
2. If we increase X while keeping everything else same, we'll increase Y - This could be indicated by saying that when customer see the credit card logo of the company they hold credit card of, they tip more than that when they see credit card logos of other companies.
3. IF we remove X while keeping everything else same, we'll not have Y - i.e. if the credit card logo doesn't remind people of their higher purchasing power, they would not tip higher.

With this pre-thinking, let's move over to the option statements:

Analysis of option statements

A. The effect noted in the studies is not limited to patrons who have credit cards. - Ok. But do people who don't have credit cards tip higher or lower than people with credit cards? The option statement doesn't provide this. Without this information, this statement doesn't have an impact on the hypothesis. If it had stated that people without credit cards tip lower than others when presented with trays with credit card logo, then it would have strengthened the hypothesis.

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. - This is interesting. This says that guys under credit card obligations tend to tip less when presented with trays with credit card logo. This kind of guy has lesser spending power than his available cash, exactly opposite to the case considered in the argument and this guy tips less, which is also exactly opposite the case in the argument. This kind of behavior is expected if the hypothesis holds. Since the hypothesis says that credit card logo reminds one of his spending power - a guy with good credit limit and low credit card obligations is expected to spend more and a guy with high credit card obligations is expected to spend less. Therefore, the given statement provides an evidence that the hypothesis holds in a different scenario. Therefore, this is the CORRECT option.

C. In virtually all of the cases in the studies, the patrons who paid bills in cash did not possess credit cards. - This actually weakens the hypothesis. If a guy doesn't have a credit card, how would a credit card logo remind him of his higher spending power?

D. In general, restaurant patrons who pay their bills in cash leave larger tips than do those who pay by credit card. - This is irrelevant comparison. We are not concerned with the payment method here.

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. - Again, we are not concerened how the payment is made.

Therefore, the correct choice is Option B.

Hope this helps :)

Thanks,
Chiranjeev
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Re: Studies in restaurants show that the tips left by customers  [#permalink]

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New post 10 Apr 2018, 13:18
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The passage itself is pretty straightforward:

  • We have the results of the studies: "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." - notice the use of the word "tend". The psychologists are not suggesting that seeing a credit card (CC) logo on the tray will ALWAYS cause an increase in tip amount. In general, seeing a CC logo results in higher tip amounts.
  • And we have an interpretation of those results: "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." - notice that this hypothesis only mentions "credit-card holders"

What the heck does that mean? Well, if you have $100 cash in your pocket and don't have any credit cards, then your "spending power" is limited to that cash amount. If you walk into an electronics store and want to buy a fancy television for $1,000, you'll be out of luck.

But what if, in addition to the $100 cash, you have a CC with a $5,000 spending limit? Now your spending power exceeds the amount of cash in your pocket. Sure, you'll have to pay off that credit card in the future, but right now you can walk into that electronics store and buy FIVE of those fancy televisions! The credit card does not actually give you any money, but it certainly increases your present spending power.

So now imagine you are in a restaurant. The bill is $50, and you have $100 cash in your pocket. You decide to leave a 10% tip ($5). But then you notice the credit card logo on the bill tray. This reminds you of the shiny American Express CC in your pocket, and that card has a $5,000 credit limit. You are reminded that your spending power exceeds the $100 cash that you have. So paying a $50 restaurant bill is not going to take away HALF of your spending power. Instead, it will only take away a small portion of your current spending power.

Reminded that you spending power is not limited to the cash, you might decide to leave an even larger tip (maybe $7-10 instead of $5).

Now that we understand the psychologists’ interpretation of the studies, we need something that supports that interpretation:

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

The hypothesis is that the CC logo reminds people that they have a credit card and thus that they have greater spending power. If (A) is true, then the logos cause higher tips even among people who do NOT have credit cards. In that case, the increase can't be explained by the psychologists' hypothesis. (A) weakens the argument, so eliminate this one.

Quote:
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.

According to the psychologists, customers tip more when they are reminded that their spending power exceeds the cash they currently have available. If this is true, then we would expect customers to tip LESS when they are reminded that their spending power is LESS than the cash they currently have available.

Huh? Well, think about a man who is in debt. He might have $100 in his pocket, but he owes his friend $500. He might have been ready to give a $5 tip, but as soon as he remembers that he owes money, he decides to give $3-4 instead.

Although choice (B) presents a scenario that is the opposite of the one presented in the passage, both scenarios support the same theory, which is that being reminded of your spending power can impact how much you tip. Generally, this causes people to tip more because they are reminded that their spending power exceeds the cash they have. However, for people in credit card debt, seeing the logo is a reminder that their spending power is actually lower.

So if choice (B) is true, it would support the psychologists' hypothesis. Keep this one.

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

As with choice (A), this weakens the argument. The whole idea is that the CC logo reminds you that you have a credit card and, thus, that your spending power is not limited to the cash in your pocket. (C) tells us that the logos caused higher tips even though the patrons did NOT have CC's. This contradicts the hypothesis, so eliminate (C).

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

If anything, this might weaken the hypothesis. People who pay with a CC are obviously aware that they have a credit card. If, as the psychologists suggest, having a CC supposedly makes you aware of your expanded spending power, then why don't the people paying with CC's leave larger tips?

The hypothesis can certainly still work even if (D) is true. Maybe cash patrons tend to tip more for some reason that is unrelated to the study. Regardless, if those people tend to tip even more when they see the CC logo because they are reminded of their expanded spending power, then the psychologists' interpretation would be accurate.

At best, (D) has no impact, but it certainly doesn't strengthen the argument. Eliminate (D).

Quote:
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.

This evidence suggests that the logos can be effective as advertising tools. If you see the AMEX logo, you might decide to use your AMEX card instead of cash or instead of your Visa card. But how does that impact your tip amount? The hypothesis is not concerned with whether people actually use CC's. Rather, it is concerned with the cause of the increased tip amounts. (E) is irrelevant.

(B) is the best answer.
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Re: Studies in restaurants show that the tips left by customers who pay th  [#permalink]

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New post 13 Oct 2010, 16:36
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I agree with B.
B) Patrons who are under financial pressure from their credit casd obligations tend to tip less when presented with a restaurant bill on a tray with a credit card logo than when the tray has no logo.

the POINT is that the logo reminds of customer' spending power.

in the question, it says people are willing to tip more when seeing the logo because it reminds of their spending power.

Same thing for B. People are not likely to tip a lot when they see the logo because it reminds of their spending power too. But the power is weak in this case.

so let turn back to the question

see logo when rich -> tip more
see logo when poor -> tip less

it is the logic that connects those two: see logo reminds of your spending power

Hope you can understand what i am trying to illustrate here!
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Re: Studies in restaurants show that the tips left by customers who pay th  [#permalink]

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New post 24 May 2009, 23:41
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Studies in the resturants show that the tips left by cutomers who pay their bill in cash tent 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 becuase it remides 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?

B) Patrons who are under financial pressure from their credit casd obligations tend to tip less when presented with a restaurant bill on a tray with a credit card logo than when the tray has no logo
Now if i understood ques right, the inference is abt the influence of credit card's logo on the psycology of the customer, and that makes a person to give more tip.
B says that logo does have an influence... and gives us with a logic .

C) In virtually all of the cases in the studies, the patrons who paid bills in cash did not posses s credit card.
If they don't possess credit card where is the talk of influence? an all of the cases funda makes it eligible for elimination

D) In general, resturant patrons who pay their bills in cash leave larger tips than do those who pay by credit card
This also does not fits into my consideration for finding an answer

E) The percentage of resturant bills paid with a given brand of credit card increases when that credit card’s logo is displayed on the tray with which the bill is presented.
Now, this again fits in a bit and says that cc logo on tray influences spendig by that only cc.
but it hits on the influence of brand to use that brand, not on the psycology of spending more

so i guess B

what is OA
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Re: Studies in restaurants show that the tips left by customers who pay th  [#permalink]

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New post 13 Oct 2010, 17:33
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This is B, and I think I see why people are getting confused.

gmatprep09 wrote:
Studies in the resturants show that the tips left by cutomers who pay their bill in cash tent 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 becuase it remides 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?

Customers who pay with cash see the credit card logo on their bill and leave a bigger tip than those who do not see a credit card logo. The hypothesis is that the customers who see the credit card logo subconsciously think, "Hey, that's right, I own a credit card! I can use my cash more freely because my Visa has my back! I'll leave a bigger tip because the cash doesn't matter as much to me!" So what would help support this hypothesis?

A) The effect notes in the studies is not limited to patrons who have credit cards. This would weaken the argument, because the point is that people are reminded of their credit cards and thus leave bigger tips. If people who don't even own credit cards experience the same phenomenon, then that hypothesis pretty much goes right out the window.
B) Patrons who are under financial pressure from their credit casd obligations tend to tip less when presented with a restaurant bill on a tray with a credit card logo than when the tray has no logo. So people who are subconsciously reminded of the extra spending power their credit card provides tend to leave a bigger cash tip, because their cash doesn't mean as much to them. B adds to this, telling us that people who have a lot of credit card debt will leave a SMALLER tip in this same situation. This provides evidence because it shows that it is indeed the credit card logo making the customers think of their credit cards, and affecting the size of their tip.
C) In virtually all of the cases in the studies, the patrons who paid bills in cash did not posses s credit card. This would weaken the hypothesis, because the psychologists claim that the patrons paying in cash are reminded of their credit card spending power.
D) In general, resturant patrons who pay their bills in cash leave larger tips than do those who pay by credit card. This would weaken the hypothesis, because it says that cash customers just leave larger tips in general, regardless of the appearance of a credit card logo.
E) The percentage of resturant bills paid with a given brand of credit card increases when that credit card’s logo is displayed on the tray with which the bill is presented. Irrelevant. We're only discussing customers paying with cash, not with credit cards.
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Re: Studies in restaurants show that the tips left by customers who pay th  [#permalink]

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New post 31 Oct 2012, 19:56
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Quote:
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 a given brand of credit card increases when that credit card’s logo is displayed on the tray with which the bill is prepared.


Let's look at the argument:

Argument: Studies show that cash tips left by customers are larger when the bill is presented on a tray that bears a credit-card logo.

Why would that be? Why would there be a difference when the tray has no logo and when the tray has a credit card logo?

Psychologists' hypothesize that seeing a credit-card logo reminds people of the spending power given by the card they have (and that their spending power exceeds the cash they have right now).

We have to support the psychologists' interpretation.

Say, I change the argument a little and add a line:

Argument: Studies show that cash tips left by customers are larger when the bill is presented on a tray that bears a credit-card logo. Patrons under financial pressure from 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.

Now, does the psychologists' interpretation make even more sense. Understand that the psychologists' interpretation is only that 'seeing a logo reminds people of their own credit card status'. The part 'that their spending power exceeds the cash they have right now' explains the higher tips. If we are given that some tip more on seeing that card logo and some tip less on seeing it, it makes sense, right? Different people have different credit card obligation status. Hence, people are reminded of their own card obligation status and they tip accordingly. Hence, option (B) makes the probability of psychologists' interpretation being true stronger because it tells you that in case of very high card obligations, customers tip less. This is what you would expect if the psychologists' interpretation were correct.

It's something like this:
Me: After 12 hrs of night time sleep, I can't study.
Your theory: Yeah, because your sleep pattern is linked to your level of concentration. After a long sleep, your mind is still muddled and lazy so you cant study.
Me: After 4 hrs of night time sleep, I can't study either.

Does your theory make more sense? Sure! You said 'sleep pattern is linked to your level of concentration'. If I sleep too much, my concentration gets affected. If I sleep too little, again my concentration gets affected. So your theory that 'sleep pattern is linked to your level of concentration' certainly makes more sense.


Option (E) is incorrect.
(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.'

This options supports the hypothesis that card logo reminds people of their own card (not of their card obligations). The psychologists' interpretation talks about the logo reminding people of their card status (high spending power or high obligations).
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Re: Studies in restaurants show that the tips left by customers who pay th  [#permalink]

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New post 27 Apr 2013, 07:02
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Hi,

B supports the argument because it provides more evidence that the credit card logo had an effect.

If it can be shown that people who have debts on credit cards pay less, it would support the fact that those with available credit on cards would pay more...

Does that make sense?

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New post 29 Apr 2013, 22:26
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I think I'll add my two cents to the discussion.

Let's start with understanding the passage.

Argument Analysis

My very first observation of the given passage is that it is a causal argument. A causal argument is one in which we attribute the cause of some past event, say X, to some past event or a rule or something else, say Y. In other words, we say that X has caused Y or that X led to Y

In the given argument, we have

Y: 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
X: 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

As we can see, even X has a causal structure and can be written as:
Credit card reminds credit card holders that their spending power exceeds the cash they have immediately available ---->> (leads to) seeing a credit-card logo makes many credit-card holders willing to spend more ---->>> the tips left by customers who pay their bill in cash is larger when the bill is presented on a tray that bears a credit-card logo

In essence, the hypothesis is that that credit card reminds people of their high spending power - this leads them to spend more - this leads in higher tips.

Prethinking

This is a strengthen question, as is clear from the question stem. We need to strengthen the psychologist's hypothesis. Since this is causal argument where we say that X is the reason for Y, we can strengthen it by saying that
1. There is no Z which can be the reason for Y OR
2. If we increase X while keeping everything else same, we'll increase Y - This could be indicated by saying that when customer see the credit card logo of the company they hold credit card of, they tip more than that when they see credit card logos of other companies.
3. IF we remove X while keeping everything else same, we'll not have Y - i.e. if the credit card logo doesn't remind people of their higher purchasing power, they would not tip higher.

With this pre-thinking, let's move over to the option statements:

Analysis of option statements

A. The effect noted in the studies is not limited to patrons who have credit cards. - Ok. But do people who don't have credit cards tip higher or lower than people with credit cards? The option statement doesn't provide this. Without this information, this statement doesn't have an impact on the hypothesis. If it had stated that people without credit cards tip lower than others when presented with trays with credit card logo, then it would have strengthened the hypothesis.

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. - This is interesting. This says that guys under credit card obligations tend to tip less when presented with trays with credit card logo. This kind of guy has lesser spending power than his available cash, exactly opposite to the case considered in the argument and this guy tips less, which is also exactly opposite the case in the argument. This kind of behavior is expected if the hypothesis holds. Since the hypothesis says that credit card logo reminds one of his spending power - a guy with good credit limit and low credit card obligations is expected to spend more and a guy with high credit card obligations is expected to spend less. Therefore, the given statement provides an evidence that the hypothesis holds in a different scenario. Therefore, this is the CORRECT option.

C. In virtually all of the cases in the studies, the patrons who paid bills in cash did not possess credit cards. - This actually weakens the hypothesis. If a guy doesn't have a credit card, how would a credit card logo remind him of his higher spending power?

D. In general, restaurant patrons who pay their bills in cash leave larger tips than do those who pay by credit card. - This is irrelevant comparison. We are not concerned with the payment method here.

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. - Again, we are not concerened how the payment is made.

Therefore, the correct choice is Option B.

Hope this helps :)

Thanks,
Chiranjeev
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Re: Studies in restaurants show that the tips left by customers who pay th  [#permalink]

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New post 07 Sep 2014, 04:48
This question goes beyond normal reasoning. If you don't have money, or have some financial pressure, it's not important wether you see that logo or not, it doesn't change the fact that you're out of money......... just a weird question

Update 2015 :-D :
I still don't like this question, but this time I've picked the correct answer by the method of elimination:

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

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 --> still don't have a 100% understanding for this answer, but other choices had just blatant errors...... It's just not a clear answer, we need to make 1 more assumtion to make it sound....[that person has lesser spending power than his available cash] / if you have -100$ (with 500$ Limit) and 5$ in the pocket, then, your spending power can still exceed your cash in the pocket 400$>100$. I have not found any reasonable explanation for (B) anywhere.[/color]

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

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

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--> nobody talks about a particular brand in the argument.
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Re: Studies in restaurants show that the tips left by customers who pay th  [#permalink]

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New post 16 Apr 2016, 05:01
I have read all the explanation on this forum but still option B does not make sense.

Q) Studies in restaurants show thatthe 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 a credit-card logo than when the tray has no logo.
(0 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 whopay their bills in cash leave larger tips than do those who pay by
credit card.
(E) The percentage of restaurant bills paid with a given brand of credit card increases when that credit card's
logo is displayed on the tray with which the bill is presented.

Background: OG 15 - in strengthen questions - I have 16 Correct and 1 wrong.

My understanding of this question?

Conclusion says: Credit Card Logo ---> More Tip as compared to one's capacity when presented with a bill with a credit-card logo (because it gives more spending power when they look at logo).

Now look at option B:

X Person: Tip Less -> when presented with a bill with a credit-card logo Vs NO LOGO --> Clearly opposite of the conclusion -> Weakening the argument.

Reasoning: No where in the argument, its mentioned they have financial debt or crises - it simply states people tend to spend more that their capacity when see logo vs no logo.

Can anyone please explain with logical reasoning?
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New post 17 Apr 2016, 23:23
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optmistic2016 wrote:
I have read all the explanation on this forum but still option B does not make sense.

Q) Studies in restaurants show thatthe 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 a credit-card logo than when the tray has no logo.
(0 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 whopay their bills in cash leave larger tips than do those who pay by
credit card.
(E) The percentage of restaurant bills paid with a given brand of credit card increases when that credit card's
logo is displayed on the tray with which the bill is presented.

Background: OG 15 - in strengthen questions - I have 16 Correct and 1 wrong.

My understanding of this question?

Conclusion says: Credit Card Logo ---> More Tip as compared to one's capacity when presented with a bill with a credit-card logo (because it gives more spending power when they look at logo).

Now look at option B:

X Person: Tip Less -> when presented with a bill with a credit-card logo Vs NO LOGO --> Clearly opposite of the conclusion -> Weakening the argument.

Reasoning: No where in the argument, its mentioned they have financial debt or crises - it simply states people tend to spend more that their capacity when see logo vs no logo.

Can anyone please explain with logical reasoning?



You missed one important point in the explanation:

The psychologists' interpretation is this: 'seeing a logo reminds people of their own credit status'

It is not just "seeing a logo reminds people of additional ability to spend". People who have a huge credit card debt will not be reminded of additional ability. In fact, they would know that even the cash they have in pocket belongs to the credit card company. So they will tip less. This is an official 700 level question. At this level, you need to go deeper in the argument and understand it really well.

Let me again quote a simpler example I discussed in the previous post:

It's something like this:
Me: After 12 hrs of night time sleep, I can't study.
Your theory: Yeah, because your sleep pattern is linked to your level of concentration. After a long sleep, your mind is still muddled and lazy so you cant study.

Me: After 4 hrs of night time sleep, I can't study either.

Does your theory make more sense? Sure! You said 'sleep pattern is linked to your level of concentration'. If I sleep too much, my concentration gets affected. If I sleep too little, again my concentration gets affected. So your theory that 'sleep pattern is linked to your level of concentration' certainly makes more sense.
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New post 17 Apr 2016, 23:46
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optmistic2016 wrote:
I have read all the explanation on this forum but still option B does not make sense.

Q) Studies in restaurants show thatthe 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 a credit-card logo than when the tray has no logo.
(0 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 whopay their bills in cash leave larger tips than do those who pay by
credit card.
(E) The percentage of restaurant bills paid with a given brand of credit card increases when that credit card's
logo is displayed on the tray with which the bill is presented.

Background: OG 15 - in strengthen questions - I have 16 Correct and 1 wrong.

My understanding of this question?

Conclusion says: Credit Card Logo ---> More Tip as compared to one's capacity when presented with a bill with a credit-card logo (because it gives more spending power when they look at logo).

Now look at option B:

X Person: Tip Less -> when presented with a bill with a credit-card logo Vs NO LOGO --> Clearly opposite of the conclusion -> Weakening the argument.

Reasoning: No where in the argument, its mentioned they have financial debt or crises - it simply states people tend to spend more that their capacity when see logo vs no logo.

Can anyone please explain with logical reasoning?


Hi,

Consumer psychologists hypothesize that simply seeing a credit-card logo makesmany credit-card holders willing to spend more because it reminds them that their spending power exceeds the cash they have immediately available.

there are two things you are missing in the given argument...
1) The argument never says that ALL customers tend to pay more. It says MANY, so there are few who do not pay extra..
2) The argument is NOT ONLY to do with people spending more seeing the Credit card LOGO, BUT ALSO to do withthe effect this logo on their mind...


so--
A) Many of the card holders are reminded of their status as capable of spending more than what they have in their pockets, so they spend more..
B) choice B tells us that there are few customers, who are in financial pressure towards these credit card companies and get reminded of this by seeing the LOGO and tend to give lesser tip..
YES, as you say these customers do exactly opposite of what is being conveyed in argument BUT it follows the same effect and logic on the mind of the customers in different financial situation..

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Re: Studies in restaurants show that the tips left by customers who pay th  [#permalink]

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New post 15 Jul 2016, 05:59
Answer is B
Premise 1) Show Credit card logo and get more tip.
Conclusion ) Credit card logo reminds "MANY" people about the good state of their financial status. (FROM ARGUMENT:- "many" credit card holders spend more because it reminds them that their spending power exceeds the cash they have immediately available

Support for the conclusion :- OPTION B
Just as seeing credit card logo makes some people realise they have money. It can also make some people realise they don't have enough money.
B) Patrons who are under financial pressure from their credit card obligations tend to tip less when presented with a bill with a credit card logo. (Because they immediately remember that they afford higher tips because they are in debt)


gmatprep09 wrote:
Studies in the restaurants show that the tips left by customers who pay their bill in cash tent 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 notes in the studies is not limited to patrons who have credit cards.
B) Patrons who are under financial pressure from their credit casd obligations tend to tip less when presented with a restaurant bill on a tray with a 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 posses s credit card.
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 a given brand of credit card increases when that credit card’s logo is displayed on the tray with which the bill is presented.

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New post 03 Dec 2017, 12:22
Option B seems to be a total weakener. Please explain.
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Re: Studies in restaurants show that the tips left by customers who pay th  [#permalink]

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New post 17 Dec 2017, 21:55
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monidip1010 wrote:
Option B seems to be a total weakener. Please explain.

Notice the use of the word "tend": "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." So the psychologists are not suggesting that this tactic will ALWAYS work. It works in general, because it generally reminds people "that their spending power exceeds the cash they have immediately available."

If this hypothesis were true, then we would expect customers to tip LESS when they are reminded that their spending power is LESS than the cash they have immediately available, which would be the case if they were in credit card debt.

Although choice (B) presents a scenario that is the opposite of the one presented in the passage, both scenarios support the same theory, which is that being reminded of your spending power can impact how much you tip. Generally, this causes people to tip more because they are reminded that their spending power exceeds the cash they have. However, for people in credit card debt, this reminded causes people to tip less because they are reminded that they are in debt.

So if choice (B) is true, this suggests that the opposite scenario, as described by the psychologists in the passage, would also be true.

I hope that helps!
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Re: Studies in restaurants show that the tips left by customers  [#permalink]

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New post 12 Apr 2018, 06:54
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B it is. My take :

Type of question - Strengthen type

Deconstructing the argument -

Conclusion:
Consumer psychologist hypothesizes 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.

Premise:
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.

Pre-think:
We need to strengthen the link between spending power that exceeds the cash they have and willingness to spend more when they see a credit card logo. What if people are less willing to spend when they have credit card obligations.
In Cause - Effect reasoning ; if you can prove No Cause leads to No effect you strengthen the argument at hand. Use the same logic here.

POE:

a) Irrelevant
b) In line with our pre-thinking
c) Irrelevant
d) Cash payment not important to us - Irrelevant
e) Does not address the link between excess spending power and willingness to spend more - out

Only option B survives - Hence the answer :)
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New post 12 Apr 2018, 12:07
egmat wrote:
I think I'll add my two cents to the discussion.

Let's start with understanding the passage.

Argument Analysis

My very first observation of the given passage is that it is a causal argument. A causal argument is one in which we attribute the cause of some past event, say X, to some past event or a rule or something else, say Y. In other words, we say that X has caused Y or that X led to Y

In the given argument, we have

Y: 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
X: 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

As we can see, even X has a causal structure and can be written as:
Credit card reminds credit card holders that their spending power exceeds the cash they have immediately available ---->> (leads to) seeing a credit-card logo makes many credit-card holders willing to spend more ---->>> the tips left by customers who pay their bill in cash is larger when the bill is presented on a tray that bears a credit-card logo

In essence, the hypothesis is that that credit card reminds people of their high spending power - this leads them to spend more - this leads in higher tips.

Prethinking

This is a strengthen question, as is clear from the question stem. We need to strengthen the psychologist's hypothesis. Since this is causal argument where we say that X is the reason for Y, we can strengthen it by saying that
1. There is no Z which can be the reason for Y OR
2. If we increase X while keeping everything else same, we'll increase Y - This could be indicated by saying that when customer see the credit card logo of the company they hold credit card of, they tip more than that when they see credit card logos of other companies.
3. IF we remove X while keeping everything else same, we'll not have Y - i.e. if the credit card logo doesn't remind people of their higher purchasing power, they would not tip higher.

With this pre-thinking, let's move over to the option statements:

Analysis of option statements

A. The effect noted in the studies is not limited to patrons who have credit cards. - Ok. But do people who don't have credit cards tip higher or lower than people with credit cards? The option statement doesn't provide this. Without this information, this statement doesn't have an impact on the hypothesis. If it had stated that people without credit cards tip lower than others when presented with trays with credit card logo, then it would have strengthened the hypothesis.

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. - This is interesting. This says that guys under credit card obligations tend to tip less when presented with trays with credit card logo. This kind of guy has lesser spending power than his available cash, exactly opposite to the case considered in the argument and this guy tips less, which is also exactly opposite the case in the argument. This kind of behavior is expected if the hypothesis holds. Since the hypothesis says that credit card logo reminds one of his spending power - a guy with good credit limit and low credit card obligations is expected to spend more and a guy with high credit card obligations is expected to spend less. Therefore, the given statement provides an evidence that the hypothesis holds in a different scenario. Therefore, this is the CORRECT option.

C. In virtually all of the cases in the studies, the patrons who paid bills in cash did not possess credit cards. - This actually weakens the hypothesis. If a guy doesn't have a credit card, how would a credit card logo remind him of his higher spending power?

D. In general, restaurant patrons who pay their bills in cash leave larger tips than do those who pay by credit card. - This is irrelevant comparison. We are not concerned with the payment method here.

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. - Again, we are not concerened how the payment is made.

Therefore, the correct choice is Option B.

Hope this helps :)

Thanks,
Chiranjeev


I am only quoting Payal as I think she gives a great, detailed response. But my critique of the reasoning here could equally apply to VeritasPrepKarishma and GMATNinja who also provide great answers and I have always found to provide great insights.

I believe I answered this Q correctly when I first saw it but answered incorrectly today now that I am much more advanced in my studies. Ah, the beauty of the GMAT journey! :)

E seems much more appropriate to me in light of everyone's explanations (and I say that knowing it is an OG official Q). My reasoning is as follows.
The argument has two basic assumptions. A. The credit card logo is recognized (whether consciously or subconsciously) by the patron. And B. that such recognition "reminds them that their spending power exceeds the[ir] cash.." There's also 2 more assumptions embedded in the latter (let's say C and D) that a credit card is equivalent to "spending power exceeding one's cash position" (C) and when spending power exceeds a cash position, one is likely to tip more (D).
I feel E (The percentage of restaurant bills paid with a given brand of credit card increases when that credit card’s logo is displayed on the tray with which the bill is prepared.) strengthens the reasoning by strengthening Assumption A with a new data point- credit card logos may be consciously or subconsciously recognized.

The reasoning posed to support B seems far more tenuous and convoluted to me (albeit the OA :). It appears to logically be asserting (although no one phrased exactly in these terms so please let me know if I am mischaracterizing), that:
If X =>(implies) Y, then ~X =>(implying) ~Y strengthens our causal assumption. (Experts: Is this a rule we should remember for the GMAT?) However, since we cannot assume anything about what ~X implies toward "Y", this reasoning seems inapposite. It strikes me as more appropriate for a Method of Reasoning Q, but NOT for a strengthening Q. In fact, it seems to me to weaken the psychologists' interpretation since being reminded about the patron's credit card DOES NOT necessarily imply more spending power NOR does more spending power imply larger tipping. I guess I am saying that a good deal of abstraction (and what I see as convolution) is required to get there. For instance, many experts have interpreted "under financial pressure from their credit-card obligations" to mean that their spending power does NOT exceed their cash position, and such a situation is therefore the opposite of the premise, however, governed by the same reasoning. This assertion is NOT clear to me. It could mean they are late on their bills or they may have debt but it does not exceed their cash position. It's just not well defined and therefore could be addressing a very different group, that we cannot logically make implications from.

For these reasons, E seems like a better response to me because it clearly strengthens one assumption (A) and in no way weakens any other part and requires no new assumptions. I know I am going against the conventional wisdom here, but would love to hear any expert insights. For instance, knowing that ~X=>~Y is a slight strengthener would be incredibly helpful.

Thank you, Payal!
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Re: Studies in restaurants show that the tips left by customers  [#permalink]

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New post 25 Apr 2018, 03:58
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Quote:
So now imagine you are in a restaurant. The bill is $50, and you have $100 cash in your pocket. You decide to leave a 10% tip ($5). But then you notice the credit card logo on the bill tray. This reminds you of the shiny American Express CC in your pocket, and that card has a $5,000 credit limit. You are reminded that your spending power exceeds the $100 cash that you have. So paying a $50 restaurant bill is not going to take away HALF of your spending power. Instead, it will only take away a small portion of your current spending power.


Does not the argument and your example need to have an implicit assumption that:
the bill amount (including tip) I need to pay and the cash I have in my pocket needs to be equal?

Why is highlighted portion crucial?
I do have still $50$ more in my cash pocket to pay $7 instead of $5
after paying bill of $50 without tip?

Would (E) be the correct choice if it said:

The percentage of restaurant bills paid with credit card increases when that credit card’s logo is displayed on the tray with which the bill is prepared.
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Re: Studies in restaurants show that the tips left by customers  [#permalink]

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New post 26 Apr 2018, 21:45
GMATNinja wrote:
The passage itself is pretty straightforward:

  • We have the results of the studies: "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." - notice the use of the word "tend". The psychologists are not suggesting that seeing a credit card (CC) logo on the tray will ALWAYS cause an increase in tip amount. In general, seeing a CC logo results in higher tip amounts.
  • And we have an interpretation of those results: "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." - notice that this hypothesis only mentions "credit-card holders"

What the heck does that mean? Well, if you have $100 cash in your pocket and don't have any credit cards, then your "spending power" is limited to that cash amount. If you walk into an electronics store and want to buy a fancy television for $1,000, you'll be out of luck.

But what if, in addition to the $100 cash, you have a CC with a $5,000 spending limit? Now your spending power exceeds the amount of cash in your pocket. Sure, you'll have to pay off that credit card in the future, but right now you can walk into that electronics store and buy FIVE of those fancy televisions! The credit card does not actually give you any money, but it certainly increases your present spending power.

So now imagine you are in a restaurant. The bill is $50, and you have $100 cash in your pocket. You decide to leave a 10% tip ($5). But then you notice the credit card logo on the bill tray. This reminds you of the shiny American Express CC in your pocket, and that card has a $5,000 credit limit. You are reminded that your spending power exceeds the $100 cash that you have. So paying a $50 restaurant bill is not going to take away HALF of your spending power. Instead, it will only take away a small portion of your current spending power.

Reminded that you spending power is not limited to the cash, you might decide to leave an even larger tip (maybe $7-10 instead of $5).

Now that we understand the psychologists’ interpretation of the studies, we need something that supports that interpretation:

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

The hypothesis is that the CC logo reminds people that they have a credit card and thus that they have greater spending power. If (A) is true, then the logos cause higher tips even among people who do NOT have credit cards. In that case, the increase can't be explained by the psychologists' hypothesis. (A) weakens the argument, so eliminate this one.

Quote:
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.

According to the psychologists, customers tip more when they are reminded that their spending power exceeds the cash they currently have available. If this is true, then we would expect customers to tip LESS when they are reminded that their spending power is LESS than the cash they currently have available.

Huh? Well, think about a man who is in debt. He might have $100 in his pocket, but he owes his friend $500. He might have been ready to give a $5 tip, but as soon as he remembers that he owes money, he decides to give $3-4 instead.

Although choice (B) presents a scenario that is the opposite of the one presented in the passage, both scenarios support the same theory, which is that being reminded of your spending power can impact how much you tip. Generally, this causes people to tip more because they are reminded that their spending power exceeds the cash they have. However, for people in credit card debt, seeing the logo is a reminder that their spending power is actually lower.

So if choice (B) is true, it would support the psychologists' hypothesis. Keep this one.

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

As with choice (A), this weakens the argument. The whole idea is that the CC logo reminds you that you have a credit card and, thus, that your spending power is not limited to the cash in your pocket. (C) tells us that the logos caused higher tips even though the patrons did NOT have CC's. This contradicts the hypothesis, so eliminate (C).

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

If anything, this might weaken the hypothesis. People who pay with a CC are obviously aware that they have a credit card. If, as the psychologists suggest, having a CC supposedly makes you aware of your expanded spending power, then why don't the people paying with CC's leave larger tips?

The hypothesis can certainly still work even if (D) is true. Maybe cash patrons tend to tip more for some reason that is unrelated to the study. Regardless, if those people tend to tip even more when they see the CC logo because they are reminded of their expanded spending power, then the psychologists' interpretation would be accurate.

At best, (D) has no impact, but it certainly doesn't strengthen the argument. Eliminate (D).

Quote:
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.

This evidence suggests that the logos can be effective as advertising tools. If you see the AMEX logo, you might decide to use your AMEX card instead of cash or instead of your Visa card. But how does that impact your tip amount? The hypothesis is not concerned with whether people actually use CC's. Rather, it is concerned with the cause of the increased tip amounts. (E) is irrelevant.

(B) is the best answer.


Hi GMATNinja

Great explanation as usual .
I have one more possible reason to reject E .
People have multiple credit cards so this choice is irrelevant .
Please share your thoughts on this .
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