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# The people of Prohibitionland are considering banning the

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The people of Prohibitionland are considering banning the [#permalink]

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28 Jun 2010, 10:22
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75% (hard)

Question Stats:

58% (03:02) correct 42% (02:14) wrong based on 116 sessions

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The people of Prohibitionland are considering banning the service of alcoholic beverages in restaurants to curb unruly behavior on the part of its residents. Proprietors of restaurants in Prohibitionland are protesting the ban on the grounds that it will reduce their revenues and profits. However, several provinces in Prohibitionland enacted restrictions on alcoholic beverages last year, and the sales taxes paid by the restaurants in those provinces rose by an average of 50 percent. In contrast, the sales taxes paid by restaurants located in areas of Prohibitionland that did not have any restrictions rose by an average of 30 percent.

Which of the following, if true, supports the restaurant proprietors’ economic stance against the ban?

A In the provinces that restricted alcoholic beverages, there was a short-term negative impact on restaurant visitation in the beginning of last year.

B The sales tax in Prohibitionland is lower on food and beverages than it is on other consumer goods, such as clothing.

C The consumption of alcoholic beverages in Prohibitionland has been on a gradual decline the last 20 years.

D The restrictions on alcoholic beverages enacted last year allowed for the service of drinks beginning around dinnertime each evening.

E Overall sales tax revenue did not increase at a substantially higher rate in the provinces that enacted the restrictions on alcoholic beverages than in the rest of Prohibitionland last year.

QA to come soon .
[Reveal] Spoiler: OA

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28 Jun 2010, 11:25
Profits could have been either higher or lower in alcohol selling restricted areas.

IMO D

So what the owners are saying is that, yes there were restrictions, but these restaurants were still able to sell alcohol…. We wouldn’t with a ban.
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28 Jun 2010, 13:18
A In the provinces that restricted alcoholic beverages, there was a short-term negative impact on restaurant visitation in the beginning of last year.

--This is weakening the argument. Hence A is not a correct answer choice.

B The sales tax in Prohibitionland is lower on food and beverages than it is on other consumer goods, such as clothing.

-- Irrelevant information. We are not concerned with the comparison of sales tax between different commodities.

C The consumption of alcoholic beverages in Prohibitionland has been on a gradual decline the last 20 years.

-- This again is irrelevant information. Hence C cannot be a correct answer choice.

D The restrictions on alcoholic beverages enacted last year allowed for the service of drinks beginning around dinnertime each evening.

-- The only reason of increase in sales tax in provinces where alcohol is restricted is because restaurants were allowed to serve drink at dinner time. Hence D is a correct answer choice.

E Overall sales tax revenue did not increase at a substantially higher rate in the provinces that enacted the restrictions on alcoholic beverages than in the rest of Prohibitionland last year.

-- This is against what is said in the argument. Hence E cannot be a correct answer choice.

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Akhil M.Parekh
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30 Jun 2010, 18:45
D for me as it says that the higher sales revenue in restricted areas was because alcohol was sold at the peak time (in the evening). Hence if ban is put in place it will hurt the restaurant sales and in turn the profits.
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30 Jun 2010, 20:08
D
since drinks were served around dinner time therefore sales not negatively impacted
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Re: The people of Prohibitionland are considering banning the [#permalink]

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03 Jun 2015, 11:14
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Re: The people of Prohibitionland are considering banning the [#permalink]

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03 Jun 2015, 23:08
D
Clearly if they can serve around dinner time then that explains the increase in sales tax
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Re: The people of Prohibitionland are considering banning the [#permalink]

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10 Oct 2015, 03:43
Hi ,

can someone explain why E isnot the right option?

It gives an alternate explanation why the increase in revenue tax doesnt equate to increase in revenue earned,Which correlates to the reason that the ban of liquor has resulted in loss of income(revenue)
Re: The people of Prohibitionland are considering banning the   [#permalink] 10 Oct 2015, 03:43
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