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# The government should stop permitting tobacco companies to

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VP
Joined: 18 May 2008
Posts: 1176
The government should stop permitting tobacco companies to  [#permalink]

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26 Mar 2009, 01:55
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Question Stats:

80% (01:09) correct 20% (00:44) wrong based on 40 sessions

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The government should stop permitting tobacco companies to subtract advertising expenses from their revenues in calculating taxable income. Tobacco companies would then have to pay more taxes. As a consequence, they would raise the prices of their products and this price increase would raise the prices of their products and this price increase would discourage tobacco use.

Which of the following is an additional premise required by the argument above?
(A) Tobacco companies would not offset the payment of extra taxes by reducing costs in other areas.
(B) Tobacco companies would not continue to advertise if they were forced to pay higher taxes.
(C) People would not continue to buy tobacco products if these products were no longer advertised.
(D) The money the government would gain as a result of the increase in tobacco companies’ taxable income would be used to educate the
public about the dangers of tobacco use.
(E) The increase in taxes paid by tobacco companies would be equal to the additional income generated by raising prices.
Director
Joined: 04 Jan 2008
Posts: 818
Re: CR : tobacco companies  [#permalink]

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26 Mar 2009, 04:19
Good Q
I feel its A

Say , you are the CEO of Tobacco company
yr corporate Income Tax go up

Conclusion saying "Co. would raise the prices of their products and this price increase would discourage tobacco use."
assuming that "(A) Tobacco companies would not offset the payment of extra taxes by reducing costs in other areas."

dont know abt E though
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Director
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Re: CR : tobacco companies  [#permalink]

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27 Mar 2009, 00:15
Good question. Agree with A.
This is an assumption or strengthen question.
Director
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Re: CR : tobacco companies  [#permalink]

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27 Mar 2009, 06:00
I guess it's an assumption question though the "additional premises" in question stem generally refers to Strengthen type. Logically assumption, justify and strengthen questions are similar in their types. In all three types we find the justification to hold the conclusion firmly.
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Re: CR : tobacco companies  [#permalink]

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28 Oct 2009, 00:05
priyankur_saha@ml.com wrote:
I guess it's an assumption question though the "additional premises" in question stem generally refers to Strengthen type. Logically assumption, justify and strengthen questions are similar in their types. In all three types we find the justification to hold the conclusion firmly.

I think it should be the assumption question too because it asks to fill the gap in the reasoning (additional premise). A is correct ans because "subtract advertising expenses from their revenues" is equal to "reducing costs in other areas" to reduce the taxable income
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Re: The government should stop permitting tobacco companies to  [#permalink]

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13 Dec 2011, 18:37
Good explanation priyankur. Thx.
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Re: The government should stop permitting tobacco companies to  [#permalink]

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14 Dec 2011, 01:53
The government should stop permitting tobacco companies to subtract advertising expenses from their revenues in calculating taxable income. Tobacco companies would then have to pay more taxes. As a consequence, they would raise the prices of their products and this price increase would raise the prices of their products and this price increase would discourage tobacco use.

Which of the following is an additional premise required by the argument above?
(A) Tobacco companies would not offset the payment of extra taxes by reducing costs in other areas. => this is the answer. If tobacco companies offset the payment of extra taxes by reducing costs in other area. They will no longer increase price that offer to regular customer
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Re: The government should stop permitting tobacco companies to  [#permalink]

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03 Jan 2012, 02:08
A is the clear answer here. If tobacco companies reduce costs in other areas, then the companies will still have some money to advertise and thus, the use of tobacco will not be discouraged.
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Re: The government should stop permitting tobacco companies to &nbs [#permalink] 03 Jan 2012, 02:08
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