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V06-25

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V06-25  [#permalink]

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New post 16 Sep 2014, 01:27
00:00
A
B
C
D
E

Difficulty:

  65% (hard)

Question Stats:

57% (01:19) correct 43% (02:44) wrong based on 113 sessions

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Due to a sharp rise in the price of gasoline, commuters who drive to work in the center of the city are facing a large increase in transportation expenses that will limit the funds they have available to spend in other areas. In order to forestall a slowdown in the local economy, the city council has decided that fares on all forms of public transportation will be suspended for the next three months. Clearly, if commuters can get to work more cheaply, they will have more money left over to spend in other sectors of the economy, and the city’s finances on the whole will not be negatively affected by higher gasoline prices. If all of the statements above are true, which of the following is most likely to be damaged by the city council’s plan?

A. A local chain of service stations, which will see fewer customers during the daily commute.
B. Members of the bus drivers’ union, who will be forced to add more routes and work longer hours.
C. The city council’s budget, which will be unbalanced after receiving no revenue from transit fares for three months.
D. Commuters who already use public transportation daily and who will face crowded conditions and travel delays.
E. Commuters who do not live near public transportation routes and will not be able to take advantage of the suspended fares.

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Re V06-25  [#permalink]

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New post 16 Sep 2014, 01:27
Official Solution:

Due to a sharp rise in the price of gasoline, commuters who drive to work in the center of the city are facing a large increase in transportation expenses that will limit the funds they have available to spend in other areas. In order to forestall a slowdown in the local economy, the city council has decided that fares on all forms of public transportation will be suspended for the next three months. Clearly, if commuters can get to work more cheaply, they will have more money left over to spend in other sectors of the economy, and the city’s finances on the whole will not be negatively affected by higher gasoline prices. If all of the statements above are true, which of the following is most likely to be damaged by the city council’s plan?

A. A local chain of service stations, which will see fewer customers during the daily commute.
B. Members of the bus drivers’ union, who will be forced to add more routes and work longer hours.
C. The city council’s budget, which will be unbalanced after receiving no revenue from transit fares for three months.
D. Commuters who already use public transportation daily and who will face crowded conditions and travel delays.
E. Commuters who do not live near public transportation routes and will not be able to take advantage of the suspended fares.


Situation: The city council has responded to an increase in gasoline prices by making public transportation free. The council hopes that people will spend the money they do not pay for expensive gasoline in other sectors of the local economy.

Reasoning: Which of the following is the council’s plan most likely to harm? The council’s plan is concerned primarily with preserving the fluidity of the local economy and, to a lesser extent, maintaining the comfort of individual residents. The plan does not, however, contain provisions for preserving the city’s role in the local economy. If revenue from public transportation fares stops suddenly, the city will face a budget shortfall, which could ultimately be more damaging to the local economy than a reduction in consumer spending.
  1. Although service stations would likely see some reduction in business, this is not the entity most likely to be damaged.
  2. The passage is concerned mostly with economic damage; the inconvenience to bus drivers is both outside the scope of the passage and not actual damage.
  3. This option correctly identifies the potential for the city council’s plan to backfire. Without revenue from public transportation, the council’s budget could easily become unbalanced and have a very negative impact on the local economy.
  4. This option does not discuss an economic consequence of the plan, and it discusses more inconvenience than damage.
  5. These commuters may not be able to take advantage of the free transportation, but they will not sustain any actual damage.

Answer: C
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Resources:
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Collection of Questions:
PS: 1. Tough and Tricky questions; 2. Hard questions; 3. Hard questions part 2; 4. Standard deviation; 5. Tough Problem Solving Questions With Solutions; 6. Probability and Combinations Questions With Solutions; 7 Tough and tricky exponents and roots questions; 8 12 Easy Pieces (or not?); 9 Bakers' Dozen; 10 Algebra set. ,11 Mixed Questions, 12 Fresh Meat

DS: 1. DS tough questions; 2. DS tough questions part 2; 3. DS tough questions part 3; 4. DS Standard deviation; 5. Inequalities; 6. 700+ GMAT Data Sufficiency Questions With Explanations; 7 Tough and tricky exponents and roots questions; 8 The Discreet Charm of the DS; 9 Devil's Dozen!!!; 10 Number Properties set., 11 New DS set.


What are GMAT Club Tests?
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Re: V06-25  [#permalink]

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New post 07 Feb 2016, 14:58
I think the wording here should be changed. You cannot damage something that is not an object. For instance, you can damage a building, but you cannot damage a thought. To make an analogy, I don't think you can damage a budget, but you can impact/alter a budget.

Just my 2c
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Re: V06-25  [#permalink]

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New post 21 Feb 2016, 10:50
1
Not sure this is a GMAT problem. It sounds more like an Economics problem.

Any 'damage' to city finances may be offset by the increased spending of people on commodities and services that have a domino effect on the economy (rather than the money being burnt as fuel). Increased spending + domino effect of the spending means more income as taxes.

IMO, A (assuming the service stations are primarily petrol stations) will most sure be 'damaged'.
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Re V06-25  [#permalink]

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New post 12 Aug 2018, 03:23
I think this is a poor-quality question and I don't agree with the explanation.
GMAT Club Bot
Re V06-25 &nbs [#permalink] 12 Aug 2018, 03:23
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