CAT Question of the Day The Indemnity Act of 1767, which gave the East India Company a refund of the duty on tea that was re-exported to the colonies, expired in 1772. Parliament passed a new act in 1772 that reduced this refund, effectively leaving a 10% duty on tea imported into Britain. The act also restored the tea taxes within Britain that had been repealed in 1767, and left in place the three pence Townshend duty in the colonies. With this new tax burden driving up the price of British tea, sales plummeted. The company continued to import tea into Great Britain, however, amassing a huge surplus of product that no one would buy. For these and other reasons, by late 1772 the East India Company, one of Britain's most important commercial institutions, was in a serious financial crisis.
Which of the following was least likely to contribute to the East India Company's financial crisis?
| OPTIONS | | |  | 1) | The Townshend duty, which amounted to about 3 pence, wasn't enough. | | | 2) | The expiration of the Indemnity Act reduced the influx of money that came into the East India Company's coffers due to the export of tea to colonies. | | | 3) | The tea taxes cause the price of British tea to rise, causing reduction in its sale. | | | 4) | Tea was still being imported into Britain, despite the sale of tea plummeting. | | | 5) | There are a few more reasons that contributed to the financial crisis in the East India Company – they aren't in the passage. |
Tip of the Day Do not get confused when Critical Reasoning questions have dummy or incorrect facts. This is done because these questions test the understanding of how these facts are related and not how correct they are. Adopt a more mathematical way of tackling these questions. Last year's Question of the day (26-Oct-10) On throwing two ordinary dice, the possible totals include the numbers from 2 to 12. Suppose we are given two dice with blank faces. If we mark the faces of one of them as 1, 2, 2, 3, 3, 4, how should the faces of the other dice be marked such that all totals from 2 to 12 are possible and each total has exactly the same probability as with two ordinary dice?
| OPTIONS | | | | | 1) | 1, 2, 4, 5, 6, 8 | | | 2) | 1, 3, 4, 5, 6, 8 | | | 3) | 1, 2, 3, 5, 6, 8 | | | 4) | 1, 2, 3, 6, 7, 8 |
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