When a city experiences a sharp decline in population, the city's tax revenues, which pay for such city services as...

GMAT Critical Reasoning : (CR) Questions

Source: Official Guide

Critical Reasoning

Inference

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When a city experiences a sharp decline in population, the city's tax revenues, which pay for such city services as police protection and maintenance of water lines, also decrease. The area to be policed and the number and length of the water lines to be maintained, however, do not decrease. Attempting to make up the tax revenue lost by raising tax rates is not feasible, since higher tax rates would cause even more residents to leave.

The information given most strongly supports which of the following general claims?

If, in a city with sharply declining population, police protection and water line maintenance do not deteriorate, some other service previously provided by the city will deteriorate or be eliminated.

If a city's tax rates are held stable over a period of time, neither the population nor the levels of city services provided will tend to decline over that period.

If a city's population declines sharply, police protection and water line maintenance are the services that deteriorate most immediately and most markedly.

A city that suffers revenue losses because of a sharp decline in population can make up some of the lost tax revenue by raising tax rates, provided the city's tax rates are low in relation to those of other cities.

A city that is losing residents because tax rates are perceived as too high by those residents can reverse this population trend by bringing its tax rates down to a more moderate level.

Solution

Passage Visualization

Passage Statement	Visualization and Linkage
When a city experiences a sharp decline in population, the city's tax revenues, which pay for such city services as police protection and maintenance of water lines, also decrease.	Establishes: Direct relationship between population and tax revenue Example: City drops from 100,000 to 70,000 residents (-30%) Tax revenue falls from $50M to $35M (-30%) Key insight: Revenue automatically decreases with population Pattern: Fewer taxpayers = Less total tax collection
The area to be policed and the number and length of the water lines to be maintained, however, do not decrease.	Establishes: Infrastructure costs remain constant despite population loss Police must still cover same 500 square miles Water system still requires maintaining 2,000 miles of pipes Critical contrast: Costs stay the same while revenue drops Pattern: Fixed infrastructure creates unchanging expense burden
Attempting to make up the tax revenue lost by raising tax rates is not feasible, since higher tax rates would cause even more residents to leave.	Establishes: Tax rate increases are counterproductive Raising rates from 2% to 3% causes additional 10,000 residents to leave Result: Even less total revenue despite higher rates Eliminates the obvious solution to budget shortfall Pattern: Tax increases accelerate the underlying problem
Overall Implication	The Declining City Paradox: Cities experiencing population decline face an unsolvable budget crisis Revenue decreases while expenses remain constant The standard solution (raising taxes) makes the problem worse Result: Inevitable deterioration in city services Mathematical Reality: $35M revenue cannot adequately fund services that previously required $50M

Valid Inferences

Inference: Cities experiencing sharp population decline will inevitably face deteriorating public services.

Supporting Logic: Since tax revenues decrease proportionally with population while infrastructure costs remain constant, and since raising tax rates to compensate would only accelerate population loss, declining cities cannot maintain their previous level of services. The passage establishes a mathematical impossibility: fewer taxpayers cannot adequately fund the same level of services that previously required more taxpayers, and the obvious solution is explicitly ruled out as counterproductive.

Clarification Note: The passage supports the inevitability of service deterioration, but does not specify which services will decline first or by how much. The inference is about the general trend, not specific outcomes for particular services.

Answer Choices Explained

If, in a city with sharply declining population, police protection and water line maintenance do not deteriorate, some other service previously provided by the city will deteriorate or be eliminated.

This choice correctly captures the logical consequence of the passage. The passage establishes that declining cities face reduced revenue but constant infrastructure costs, with no viable solution through tax increases. If police protection and water maintenance don't deteriorate (despite the budget shortfall), the city must reduce spending somewhere else - meaning other services will inevitably suffer. This follows logically from the constraints presented.

If a city's tax rates are held stable over a period of time, neither the population nor the levels of city services provided will tend to decline over that period.

This choice makes an unsupported claim about what happens when tax rates are held stable. The passage doesn't discuss scenarios where tax rates remain stable over time, nor does it suggest that stable tax rates prevent population or service decline. The passage focuses specifically on cities already experiencing sharp population decline, not on preventing such decline.

If a city's population declines sharply, police protection and water line maintenance are the services that deteriorate most immediately and most markedly.

This choice incorrectly identifies which services deteriorate first. The passage mentions police protection and water line maintenance as examples of city services but doesn't suggest these deteriorate "most immediately and most markedly." In fact, the passage implies these services have fixed costs that are difficult to reduce, potentially making them more resilient than other services.

This directly contradicts the passage, which explicitly states that "attempting to make up the tax revenue lost by raising tax rates is not feasible, since higher tax rates would cause even more residents to leave." The passage doesn't suggest this depends on how the city's tax rates compare to other cities - it presents raising tax rates as universally counterproductive for declining cities.

A city that is losing residents because tax rates are perceived as too high by those residents can reverse this population trend by bringing its tax rates down to a more moderate level.

This choice discusses reversing population trends by lowering tax rates, but the passage doesn't address this scenario. The passage focuses on cities already experiencing decline and explains why raising taxes makes things worse, but it doesn't discuss whether lowering taxes can reverse an existing decline trend.

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