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# The government should stop permitting tobacco companies to

Author Message
Manager
Status: Its Wow or Never
Joined: 11 Dec 2009
Posts: 205

Kudos [?]: 289 [0], given: 7

Location: India
Concentration: Technology, Strategy
GMAT 1: 670 Q47 V35
GMAT 2: 710 Q48 V40
WE: Information Technology (Computer Software)
The government should stop permitting tobacco companies to [#permalink]

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31 Jan 2010, 06:53
00:00

Difficulty:

(N/A)

Question Stats:

50% (01:23) correct 50% (01:38) wrong based on 12 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
(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.
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Kudos [?]: 289 [0], given: 7

Joined: 20 Aug 2009
Posts: 305

Kudos [?]: 161 [0], given: 69

Location: Tbilisi, Georgia
Schools: Stanford (in), Tuck (WL), Wharton (ding), Cornell (in)

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01 Feb 2010, 00:48
Argument relies on the assumption that there will be no other choice for tobacco companies except to raise prices. But if they can reduce some other costs, prices may remain the same. IMO (A)

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Manager
Joined: 19 Jan 2009
Posts: 75

Kudos [?]: 63 [0], given: 2

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01 Feb 2010, 04:00
shalva wrote:
Argument relies on the assumption that there will be no other choice for tobacco companies except to raise prices. But if they can reduce some other costs, prices may remain the same. IMO (A)

IMO A, for the same reason

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Manager
Joined: 14 Apr 2010
Posts: 218

Kudos [?]: 235 [0], given: 1

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06 Aug 2010, 20:32
a

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VP
Joined: 17 Feb 2010
Posts: 1476

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07 Aug 2010, 12:43
A for me too.

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Re: CR Resource   [#permalink] 07 Aug 2010, 12:43
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