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cesar.rodriguez.blanco
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A law passed in Rockville three years ago allows

by cesar.rodriguez.blanco Fri Aug 28, 2009 12:13 pm

How to discard wrong answer choices?
Source: gmatclub

A law passed in Rockville three years ago allows a 30% tax credit to consumers who purchase a newly constructed home. The tax credit was intended to stimulate the local economy by creating a higher demand for new houses and spurring the creation of jobs in construction and design. However, since the law was passed, the growth in sales of newly constructed homes has dropped each year, from 15% to 10% to 5%. Obviously, this law has had little or no effect on the sale of newly constructed homes.

Which of the following must be true if the above conclusion is to be properly drawn?

New house sales are directly tied to personal income.
New house sales cannot increase by more than 6% next year.
If the tax credit had been 50%, there would have been a larger increase in new house sales
Without the tax credit, new house sales would not have been significantly lower.
Tax credits for specific purchases are usually ineffective in influencing consumers to make those purchases.
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Re: A law passed in Rockville three years ago allows

by Kweku.Amoako Fri Aug 28, 2009 12:55 pm

is the answer E?
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Re: A law passed in Rockville three years ago allows

by cesar.rodriguez.blanco Fri Aug 28, 2009 1:20 pm

No, the answer is not E.
In fact, I chose E too but it is wrong and I do not know why!!
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Re: A law passed in Rockville three years ago allows

by Kweku.Amoako Fri Aug 28, 2009 2:17 pm

I can understand why E is wrong

The conclusion: Obviously, this law has had little or no effect on the sale of newly constructed homes.

In answer choice E, tax credit was never applied to "SPECIFIC PURCHASES" (Which I consider the general case. According the stem, Tax credits were give to consumers who PURCHASE A NEWLY CONSTRUCTED HOME( which I consider more specific)


B - We can not prove that. We know figures dropped but nothing increases
C - We can not prove would have happened based on the information in the stem
D - We don't know this neither. A causes B does not necessarily mean Not A causes means Not B (in this case A = 30% tax credit and B = drop in new house sales)

I debated between A and E. Couldn't prove or disprove A but I can eliminate the other answer choices. Let me know

Someone else should chip in if the answer is not A
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Re: A law passed in Rockville three years ago allows

by cesar.rodriguez.blanco Fri Aug 28, 2009 2:24 pm

The answer is not A.
I do not understand the logic behind this CR....
If you want to know now the OA, let me know
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Re: A law passed in Rockville three years ago allows

by cesar.rodriguez.blanco Wed Sep 02, 2009 9:13 pm

The answer is D.
But why D and not the others????
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Re: A law passed in Rockville three years ago allows

by sunny.jain Wed Sep 02, 2009 10:05 pm

I just missed to answer your question and you posted the OA, anyway this was a difficult one to choose from D and E, but if you follow the GMAT pattern it is quite easy, understand the following:

Conclusion here: New law has little effect on the sale of newly constructed home.

Facts:
1) After the implementation of law(30% tax credit), the sales of new houses have declined.
2) gov implemented tax credit scheme to stimulate the house sale and to create jobs in industry.

Typical GMAT style:

X(law) ---> Y(decline)

2 Golden rule to understand here:
If X---> Y then
1) Y doesn't lead to X.
2) no thing other than X can cause Y.

In order to strength the conclusion we have to always look for second option.
and for assumption we can look for either.

here D:

we can say that:
if NOT X ----> should be NO Y

NOT Y : no law
no Y : sales will not be lower.

so we can say that:
if there were no law, sales would not have been lower.
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Re: A law passed in Rockville three years ago allows

by RonPurewal Wed Sep 23, 2009 7:15 am

cesar.rodriguez.blanco Wrote:How to discard wrong answer choices?
Source: gmatclub

A law passed in Rockville three years ago allows a 30% tax credit to consumers who purchase a newly constructed home. The tax credit was intended to stimulate the local economy by creating a higher demand for new houses and spurring the creation of jobs in construction and design. However, since the law was passed, the growth in sales of newly constructed homes has dropped each year, from 15% to 10% to 5%. Obviously, this law has had little or no effect on the sale of newly constructed homes.

Which of the following must be true if the above conclusion is to be properly drawn?

New house sales are directly tied to personal income.
New house sales cannot increase by more than 6% next year.
If the tax credit had been 50%, there would have been a larger increase in new house sales
Without the tax credit, new house sales would not have been significantly lower.
Tax credits for specific purchases are usually ineffective in influencing consumers to make those purchases.


this argument is assuming that, because new home sales have dropped, the new tax credit has not had any significant effect AT ALL in the opposite direction.

this argument is rather silly.
analogy: it's like saying that, if i exercise regularly but my weight still goes up by a few pounds, then my exercise must be having no significant effect at all.

to fix this problem, we need an assumption that the drop wouldn't have been EVEN WORSE WITHOUT the tax credit. that's what (d) does.
(analogy: i need to assume that i wouldn't have gained EVEN MORE weight without exercising to draw this conclusion.)

--

(e) is irrelevant, because we don't care what usually happens. all that matters is this single instance.

(a) is irrelevant, because income levels play no part in the argument.
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Re: A law passed in Rockville three years ago allows

by Kweku.Amoako Wed Sep 23, 2009 11:43 am

Hi Ron,

Tx for the explanation....after reading your response I think the trick in this question for me is in the way the question is framed. I misinterpreted the question to be an inference question whereas you treated as an assumption question. So would you agree this is an assumption rather than an inference question?

Kweku
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Re: A law passed in Rockville three years ago allows

by RonPurewal Thu Oct 01, 2009 8:28 am

Kweku.Amoako Wrote:Hi Ron,

Tx for the explanation....after reading your response I think the trick in this question for me is in the way the question is framed. I misinterpreted the question to be an inference question whereas you treated as an assumption question. So would you agree this is an assumption rather than an inference question?

Kweku


yes.

check out the prompt:
Which of the following must be true if the above conclusion is to be properly drawn?

the words in boldface are an EXACT definition of "assumption".

--

also remember that "inference" / "conclusion" questions DON'T HAVE CONCLUSIONS YET.
since this argument already has a conclusion, you know that this is not a "draw the conclusion" question.