80% of the government revenue from the tobacco sector comes from cigar

Question

80% of the government revenue from the tobacco sector comes from cigarettes. But only 15% of the tobacco users constitute cigarette smokers because of the high tax rates levied on cigarettes. Beginning last year, with the aim to increasing this tax base, the government lowered the taxes on cigarettes by 8%. At the end of last year, the tax collected from the sale of cigarettes remained same as that of the year before. Clearly, more tobacco users have shifted to smoking cigarettes.

Which of the following is an assumption on which the argument depends?

(A) While reducing the taxes, the government has ensured that there is an adequate program to make the users aware of the hazards of smoking.
(B) The cost levied by tobacco companies for each cigarette was not significantly higher last year than they had the year before.
(C) The average number of cigarettes smoked per smoker did not decrease significantly last year than the year before.
(D) The revenue from advertising on cigarette cartons was higher last year than the year before.
(E) Tobacco used in any form including cigarettes gives the same experience that a tobacco user expects and pays for.

AndrewN · Accepted Answer

Hello,  GDT . Good job on a tough question. I, too, considered (C) before I opted for (B). Why? Because the basis for the conclusion at the end of passage is that

the tax collected from the sale of cigarettes remained   same as that of the year before .

It is because of this fact that the conclusion of the argument follows:

more tobacco users have shifted to smoking cigarettes .

To put a finger on the assumption that must be made for the argument to remain intact, then, we have to see how the premise leads to the conclusion. We can thus anticipate that the correct answer will tie into the money that is generated via taxes on cigarettes. What difference would it make if (C) were true? We are not trying to weaken the argument, but to find something that must necessarily be true for the argument to operate. In (B), if the cost levied per cigarette  had been  significantly higher, then an alternative explanation to the argument provided would exist. The financial paradox would be resolved, and it would have had nothing to do necessarily with the number of cigarette smokers in a year-to-year comparison.

I hope that helps. If you have further questions, please let me know.

- Andrew

GDT · Answer

I arrived at B for the answer but just got confused in what forms the basis to eliminate C

Pls shed light on this aspect. Thanks in advance

sayantika20 · Answer

Please give proper reason why to eliminate optn C

ayushgarg32 · Answer

First of All please try and understand this is an assumption question not a Strengthening one, where in, in order to Strengthen the conclusion we need to remove all the aspects which might have raised the doubt on it. 
So C is eliminated in that context and for B it is self clear.

P.S: I eliminated option C in the first round only because of it strengthening the entire thing.

GptShubham · Answer

Let me try this...

As per option (C) The average number of cigarettes smoked per smoker did not decrease significantly last year than the year before.

By this statement, we can understand that smokers did not decrease their consumption of cigarettes but it does not imply that they haven't increased their consumption.  The increase in revenue could be not because the no. of smokers has increased but because of the increase in consumption of individual smokers.

So this can not be our assumption.

Hope it makes sense.

fireagablast · Answer

The problem states that the tax was lowered, but the revenue stayed the same. And that therefore more people were smoking.

C states that the number of cigarettes smoked per person did not DECREASE. This leaves the door open for the suggestion that the number of cigarettes smoked per person INCREASED, and if the number increased, then it's fully possible that the SAME NUMBER of people were smoking, only smoking MORE than they were before. This cuts against the conclusion that MORE PEOPLE were smoking.

B states that the cost per cig was not changed significantly. If the cost was maintained, and the revenue stayed the same despite a lower tax - it's reasonable to assume that more cartons of cigs were bought. If the price per cig was maintained, it's reasonable to assume the original people purchasing stayed the same. So if the original purchasing stayed the same, but the revenue was maintained through the lower tax, then it's reasonable to assume that more people were buying than before.

iPrasad · Answer

The process of eliminations comes down to choosing between B & C.

(C) The average number of cigarettes smoked per smoker did not decrease significantly last year than the year before.

This option says number of cigarettes per smoker did not decrease. It means it either remained same or increased. If remained same, this justifies the conclusion but if it increased it weakens the conclusion. Hence this can not be an assumption.

(B) The cost levied by tobacco companies for each cigarette was not significantly higher last year than they had the year before.

lets try to analyse this one.
Question says the tax was reduced by 8% on cigarette.
Assume a packet of cigarette is 100 bucks and the previous year the tax were 10% hence the total price on a packet of cigarette was 110. That means Government received 10 bucks against each packet.
After the reduction on the tax by 8% the new tax became 9.2%

If option B were not true, manufacturers increased the cost of by 9 bucks (new cost 109 bucks). The government will receive 9.2% of 109 which is approximately equal to 10 bucks.

This implies that number of cigarette users did not increase. Hence option B is a necessary assumption for a conclusion to hold true.

omersoylu · Answer

hello,

can you explain how to eliminate option D please

thank you

AndrewN · Answer

Hello,  omersoylu . Answer (D) is an easier one to eliminate: revenue  from advertising  is not a part of the argument presented, which is based on the premise that  the tax collected from the sale of cigarettes remained same as that of the year before . Although it could be true that such advertising could weigh into the outcome and make the tax collected the same from year to year, it is not a  necessary  assumption  on which the argument depends . Be careful on CR questions (and RC questions, for that matter) not to confuse a could-be-true answer with a must-be-true, or else you will find the going tough from start to finish.

If you have further questions or concerns about (D), I would be happy to address them. I have already written about (B) and (C) above. Good luck with your studies.

- Andrew

omersoylu · Answer

MentorTutoring  
Thank you for your reply. Actually I wanted to learn about option E, not D. Sorry about the typo.
In option E : Since conclusion says tobacco users have shifted to smoking cigarettes, option E must be assumed. Because if the experience was not the same, the users would not shifted.
What is wrong with my logic?

Thank you

AndrewN · Answer

Glad to help,  omersoylu . Choice (E) is another easy one to eliminate. What if the experience were  not  the same, but better for users who switched from one type of tobacco product to another? Then, choice (E) would be inaccurate. Also, watch out for overreaching language such as  all ,  any ,  never ,  always , and so on. This sort of definitive or absolute language often appears in incorrect answer choices, and this one proves no exception. The passage concerns itself with  cigarettes , not with every possible form of tobacco. Choice (E) could encompass a comparison between chewing tobacco and e-cigarettes, for example, and that would have nothing to do with the passage. We are only interested in figuring out how the argument assumes something in saying that  more tobacco users have shifted to  smoking cigarettes  .

I hope that helps clarify the matter. Good luck with your studies.

- Andrew

ngochuyen1904 · Answer

Argument analysis:

Premise:

Goal : Increase tax revenue from sales of cigarrette
 Action : Government lowered the taxes on cigarettes by 8%
 Result : Tax from sales of cigarettes remained the same as that of the year before

Conclusion:    
More tobacco users have shifted to smoking cigarettes =>   Imply  : sales of cigarettes increased

Pre-think:

This action did not achieve its goal since tax revenue from sales of cigarettes remained unchanged, what did happen? 
From what argument says in the premise, there are 2 possibilities that could lead to this result:
(1) Price per cigarette increased that led to decrease of the sales of cigarettes
(2) Increase of the sales of cigarettes to the enough amount that could kept the total tax revenue from sales of cigarettes stayed the same as previous year

(2) is what our conclusion says, so this argument still has flaw because it does not rule out the 1st possibility.

B is telling us that “The cost levied by tobacco companies for each cigarette was not significantly higher last year than they had the year before”. Because the cost was not significantly higher, so the price per cigarette is likely kept unchanged, hence (1) is unlikely to happen

GDT · Answer

VeritasKarishma

Just a small doubt
in option C, there is still a chance that avg cigarettes per person could have decreased but not significantly, Correct?

KarishmaB · Answer

GDT  - (C) is not the assumption because the actual assumption is that the avg number of cigarettes smoked per smoker did not INCREASE significantly.

Only 15% of the tobacco users constitute cigarette smokers because of the high tax rates levied on cigarettes. 
Plan: Last year the government lowered the taxes on cigarettes by 8%
Aim: To increase tax base of cigarette smokers
Result: the tax collected from the sale of cigarettes remained same

Conclusion: Clearly, more tobacco users have shifted to smoking cigarettes.

The argument is concluding that since reduction of tax rate did not lead to reduction of tax, more people have started smoking cigarettes.
To conclude this, we are assuming a few things:
- That cost of cigarettes has not gone up significantly (Increased cost would lead to higher tax and hence would make up the deficit)
- Same cigarette users have not started smoking more cigarettes (Same users increasing consumption would make up the deficit)
- Non tobacco users have not started smoking cigarettes (New users would make up the deficit)

We are concluding that the reason for no deficit is that tobacco users have shifted to smoking cigarettes, not some other reason.

Hence all three points above are our assumptions. 
Option (B) reflects the first one and is our answer.

ymba2020 · Answer

Hi,

Probably you can also think of solving this question mathematically. 
Revenue = (Cost of Cig) x ( Number of users) x (Average Cigs).

There can be various other various, but let's go ahead with these 3.

Option C states 'The average number of cigarettes smoked per smoker did not decrease significantly last year than the year before.'

We can use the negate rule to test if this is the assumption or not. In the original form, it says the average number of cigs smoked per smoker did not decrease. If that's the case, then according to the formula that we have, the third variable remains the same for last year and the year before. The premise mentions that Tax was dropped, so the cost could have dropped too. In that case the number of users, increases, thus satisfying the conclusion.

If we negate the statement, we get 'The average number of cigarettes smoked per smoker did decrease significantly last year than the year before'. If it did decrease, then too, it's supporting the conclusion saying that the number of users increased.

Since in both the cases, Option C is supporting the conclusion, it fails the negation test.

Now, the easiest way to eliminate Option C is that we just can't assume that price of cigs will go down because tax was decreased. It's wrong to assume a Necessary condition with a sufficient one.

Decreasing tax can/may not have any affect on the price. If the company itself decides to hike the prices, a tax reduction might not bring the price down. This is what comes out properly in the Option B.

VerbalBot · Answer

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80% of the government revenue from the tobacco sector comes from cigar

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