In the country of Bunrose, the government has a monopoly on tobacco products. Thirty years ago, in response to a rise in tobacco-related illnesses, the government decided to limit its sale of tobacco products. Despite the loss in tobacco-related revenue, the government’s net revenue was no less this year than it was 30 years ago.
Which of the following, if true, best explains why the government’s net revenue did not decrease since it limited the sale of tobacco products?
A. In addition to limiting its sale of tobacco products, the government also ran advertisements highlighting the dangers of tobacco use.
B. Many members of the government’s legislature were in favor of the government’s decision to limit tobacco use.
C. Twenty years ago, most of the people using tobacco were aware of its health risks.
D. All health care in Bunrose is government-funded.
E. Consumers who saved money on tobacco products spent the majority of that money on private goods.
Verbal Expert
Joined: 18 Apr 2015
Posts: 30470
Given Kudos: 26100
Re: In the country of Bunrose, the government has a monopoly on tobacco pr
[#permalink]
06 May 2024, 03:11
OE
First, understand the situation. By limiting the sale of tobacco products, the government decreased a revenue source. Despite that, the government’s net revenues stayed the same since the laws limiting tobacco sales were put into effect. The correct answer will provide a piece of information that explains how the government ended up making more money, despite the ban.
Choice A: If the government ran advertisements, then it spent money, meaning its net revenue would have been even less. You want to explain why the revenue went up. Choice A is incorrect.
Choice B: How members of the legislature felt about the law would not affect the government’s net revenues. Choice B is incorrect.
Choice C: People’s awareness of the health risks of tobacco is irrelevant. Choice C is incorrect.
Choice D: If tobacco use went down, then there were probably fewer tobacco-related illnesses. Fewer tobacco-related illnesses would result in an overall decline in the country’s health care expenditures. If all health care in the country is government funded, then Bunrose’s loss in tobacco-related revenue would be offset by the decrease in its health care expenses. Choice D explains the discrepancy.
Choice E: If consumers spent the money they saved on private goods, then that money was not going back to the government. Thus no information is given about how the government could have recouped the money it lost by limiting tobacco sales. Choice E is incorrect.
45% (01:46) correct
