Statement — The government has decided to levy a congestion tax on passengers traveling by air to and from metro cities.\n\nAssumptions —\nI. The tax collected will be adequate to meet part of the expenses for providing additional resources to handle heavy traffic.\nII. Air travelers on these routes can afford to pay the extra amount by way of congestion tax.

Difficulty: Medium

Correct Answer: if both Assumption I and II are implicit

Explanation:


Introduction / Context:
Introducing a congestion tax seeks to raise targeted revenue and to manage demand or fund capacity. For such a measure to be coherent, policymakers must assume that the levy will produce meaningful receipts toward the identified costs and that the payer base can bear the additional charge without making the policy self-defeating. These two assumptions concern fiscal adequacy and payer affordability, respectively.



Given Data / Assumptions:


  • Policy: congestion tax on air travel to and from metro cities.
  • I: revenue sufficiency to offset part of capacity costs.
  • II: travelers can and will pay the surcharge.


Concept / Approach:
Taxes intended for service improvement presume two things: a base that can pay and revenue that can help fund the solution. If either fails, the rationale collapses: the tax would either not be collectible at the needed level or would not finance the intended resources. Hence both I and II are minimally required.



Step-by-Step Solution:


1) Link problem (congestion) to instrument (tax) and goal (resources/capacity).2) Instrument requires collections at a meaningful scale (I).3) Collections require payers who can bear the surcharge (II).4) Conclude both I and II are implicit.


Verification / Alternative check:
If collections were trivial, or if travelers could not pay, the measure would not help address congestion-related costs, contradicting the stated purpose.



Why Other Options Are Wrong:


Only I or only II: each alone leaves a crucial link unsupported.Either: still incomplete.Neither: contradicts the policy logic.


Common Pitfalls:
Assuming the tax must fully fund all costs; the assumption is partial adequacy, not total coverage.



Final Answer:
Both Assumption I and II are implicit.

More Questions from Statement and Assumption

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