Question

Traditionally, the subway system has been subsidized by the state government because revenue from ticket sales is not sufficient to cover operating costs. The governor’s plan proposes to cut financial support of the system. Which of the following follows logically from the passage above? Although a bus fare costs the same as a subway fare, the buses do not travel to all the points that the subway does, so some people cannot travel by bus. If the subway system does not find another way of raising money, it will have to either raise ticket prices or cut back on service. If the price of a subway ticket is raised, some people will no longer be able to afford to ride the subway. If the subway system can find a way to cut costs, the state will maintain its level of support, causing surplus funding for the system. A group of investors is considering privatizing the subway system.

Short answer

The statement 'If the subway system does not find another way of raising money, it will have to either raise ticket prices or cut back on service' logically follows from the passage.

Step-by-step solution

Identify the Relevant Information

The information provided is that the subway system is not financially self-sufficient and relies on state subsidies. Now the governor plans to cut off these subsidies.

Analyze the Implications

This means that the subway system will have less money. This will probably affect their operations, since they need money to function properly. If they can't find another way to generate revenue, they may have to increase ticket prices or reduce services.

Evaluate the Available Options

Looking at the options given, it's clear that some don't logically follow from the given information, such as the one about buses not covering all subway points and the one about privatization by investors.

Choose the Best Option

The option that logically follows from the given information is: 'If the subway system does not find another way of raising money, it will have to either raise ticket prices or cut back on service'. This follows directly from the information that the subway is not generating enough revenue to cover costs, and therefore may need to find additional revenue if state support is decreased, to avoid changes in prices or services.

Key concepts

Logical Implications

Understanding logical implications is crucial for analyzing arguments thoroughly, particularly on the GMAT critical reasoning section. A logical implication is the outcome or conclusion that can be derived from the premises provided, even if it is not explicitly stated. In our exercise, when the government considers cutting subsidies for the subway system, it logically implies that alternative funding must be found, or service adjustments need to be made. To successfully answer these types of questions, focus on the cause-effect relationships established by the facts. Remember, avoid distractions from extraneous details and remain focused on the direct effects of the premises presented.

To draw accurate conclusions, one can use the 'if-then' approach. For instance, if funding is reduced (cause), then the service must adapt (effect), be it through increased fares or reduced operations. The ability to interpret these implications is not only valuable for test-taking but also essential for real-world decision-making scenarios, where understanding consequences can inform better strategic choices.

Argument Analysis

Argument analysis on the GMAT involves evaluating a set of premises to determine the correctness of a conclusion. In the context of our subway system scenario, the argument is that a cut in government funding demands operational changes. On the GMAT, identify the premises (provided facts) and the conclusion (what follows). In argument analysis, look out for assumptions – unstated premises that must be true for the conclusion to hold.

Key to mastering argument analysis is the ability to distinguish between what is explicitly stated and what is merely suggested. Often, test takers must select the option which is most logically sound based on the information given, not what could be true or what one might assume without evidence. This aspect of critical reasoning is about sharpening one’s logical thinking rather than relying on external knowledge or opinions.

GMAT Problem-Solving

The GMAT problem-solving skills involve a systematic approach to tackle quantitative and verbal reasoning problems. The process starts by understanding the problem, identifying relevant information, and analyzing the implications of that information. In our exercise, problem-solving required discerning the core issue (a budget shortfall for the subway) and the potential outcomes (raising ticket prices or cutting services).

To excel in GMAT problem-solving, candidates should practice translating word problems into logical statements, and then use reasoning to infer conclusions. The ability to do this efficiently is enhanced by familiarizing oneself with common GMAT question types and developing a strategy for each. For instance, critical reasoning questions often involve plan/problem-solving formats, requiring candidates to evaluate the impact of changes or proposals, much like the case with the subway system's funding challenge.

Subsidized Transportation Systems

Subsidized transportation systems, like the subway mentioned in our exercise, are often funded by government grants to keep fares affordable and maintain frequent service. These subsidies are essential because farebox revenue (money from ticket sales) often falls short of covering the full cost of operations. This topic directly correlates with public policy and economics, as it highlights how subsidies play a role in transportation accessibility and urban planning.

Understanding the mechanics of subsidized transportation can provide insights into broader societal and governmental priorities. For example, subsidies can be seen as investments in reducing traffic congestion or promoting environmentally friendly travel. GMAT students may encounter arguments centered around the efficiency and necessity of such subsidies, and they should be equipped to evaluate the implications of funding changes on overall system performance and public welfare.

Government Funding for Public Transport

Government funding for public transport is the financial support provided by the state to assist in the operations and maintenance of services like buses, trains, and subways. This funding is central to the exercise under discussion, as it poses a hypothetical scenario where a reduction in support could lead to drastic changes in the subway system’s operation.

From a GMAT perspective, when discussing government funding, it's important to focus on the aspects of financial viability, social equity, and potential consequences of funding adjustments. The analysis should involve a clear understanding of the cause (changes in funding) and its direct effects (service price or quality), and how these impact the stakeholders involved – commuters, the government, and the economy. When looking at this through the lens of critical reasoning, candidates are tested on their ability to logically connect financial decisions and policy changes with plausible outcomes while avoiding deceptive or irrelevant alternatives.