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Strengthening and Weakening Statements

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Q. To avoid a hostile takeover attempt, the board of directors of Wellco, Inc., a provider of life and health insurance, planned to take out large loans and use them to purchase a publishing company, a chocolate factory, and a nationwide chain of movie theaters. The directors anticipated that these purchase initially would plunge the corporation deep into debt, rendering it unattractive to those who wanted to take it over, but that steadily rising insurance rates would allow the company to pay off the debt within five years. Meanwhile, revenues from the three new businesses would enable the corporation as a whole to continue to meet its increased operating expenses. Ultimately, according o the directors’ plan, the diversification would strengthen the corporation by varying the sources and schedules of its annual revenues.

Which of the following, assuming that all are equally possible, would most enhance the chances of the plan’s success?

(A) A widespread drought decreases the availability of cacao beans, from which chocolate is manufacture, diving up chocolate prices worldwide.

(B) New government regulations require a 30 percent across-the-board rate rollback of all insurance companies, to begin immediately and to be completed within a five-year period.

(C) Congress enacts a statute, effective after six months, making it illegal for any parent not to carry health insurance coverage for his or her child.

(D) Large-screen televisions drop dramatically in price due to surprise alterations in trade barriers with Japan; movie theater attendance dwindles as a consequence.

(E) A new, inexpensive process is discovered for making paper pulp, and paper prices fall to 60 percent of their former level.

TG.Team Topic starter 19/07/2018 12:18 pm

Option C is the answer. It supports the conclusion directly. The Congress's statute will ensure an increase in insure coverage rates thereby boosting the revenue and profit of the insurance division of Wellco Inc., which can be used pay off the company's debt.

 

 

Option E does not support the company's plan directly and may not even support it at all. A fall in paper prices would certainly decrease the expenses of Wellco's publishing division, though it may not necessarily result in higher profits. If the publishing industry as a whole decreases prices, Wellco may have to follow the trend. One cannot even say with certainty that decreased prices for Wellco's publishing products will result in higher sales for the company. 

14 questions & discussions are there under this sub-topic
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Topic starter

Companies considering new cost-cutting manufacturing processes often compare the projected results of making the investment against the alternative of not making the investment with costs, selling prices, and share of market remaining constant.

Which of the following, assuming that each is a realistic possibility, constitutes the most serious disadvantage for companies of using the method above for evaluating the financial benefit of new manufacturing processes?

(A) The costs of materials required by the new process might not be known with certainty.

(B) In several years interest rates might go down, reducing the interest costs of borrowing money to pay for the investment.

(C) Some cost-cutting processes might require such expensive investments that there would be no net gain for many years, until the investment was paid for by savings in the manufacturing process.

(D) Competitors that do invest in a new process might reduce their selling prices and thus take market share away from companies that do not.

(E) The period of year chosen for averaging out the cost of the investment might be somewhat longer or shorter, thus affecting the result.

TG.Team Topic starter 19/07/2018 12:19 pm

The answer is A. It directly attacks the companies' method of evaluating a new manufacturing process. If the costs of materials required by the new process may not be known with certainty, the company will not be able to compute the results (profits) of the new process accurately.

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A program instituted in a particular state allows parents to prepay their children’s future college tuition at current rates. The program then pays the tuition annually for the child at any of the state’s public colleges in which the child enrolls. Parents should participate in the program as a means of decreasing the cost for their children’s college education.
Which of the following, if true, is the most appropriate reason for parents not to participate in the program?
(A) The parents are unsure about which pubic college in the state the child will attend.
(B) The amount of money accumulated by putting the prepayment funds in an interest-bearing account today will be greater than the total cost of tuition for any of the pubic colleges when the child enrolls.
(C) The annual cost of tuition at the state’s pubic colleges is expected to increase at a faster rate than the annual increase in the cost of living.
(D) Some of the state’s public colleges are contemplating large increases in tuition next year.
(E) The prepayment plan would not cover the cost of room and board at any of the state’s public colleges.

Why wouldn't the answer be option 'C'?

TG.Team Topic starter 11/08/2018 5:02 pm
This post was modified 6 years ago by TG.Team

One does not know the relevance of the increase in cost of living here. It cannot be said with certainty that this point weakens the argument as there is no clear link it has with the evidence or the conclusion provided due to the ‘cost of living variable’. It does not promote or construct a robust alternative possibility either.

 

TG.Team Topic starter 11/08/2018 5:56 pm

Slight mistake, Richa. Your previous question is of the inference type. I've placed it under the 'Inferences' topic in the Critical Reasoning section of the forum.

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Topic starter

Q. A recent spate of launching and operating mishaps with television satellites led to a corresponding surge in claims against companies underwriting satellite insurance. As a result, insurance premiums shot up, making satellites more expensive to launch and operate. This, in turn, has added to the pressure to squeeze more performance out of currently operating satellites.

Which of the following, if true, taken together with the information above, best supports the conclusion that the cost of television satellites will continue to increase?

(A) Since the risk to insurers of satellites is spread over relatively few units, insurance premiums are necessarily very high.
(B) When satellites reach orbit and then fail, the causes of failure are generally impossible to pinpoint with confidence.
(C) The greater the performance demands placed on satellites, the more frequently those satellites break down.
(D) Most satellites are produced in such small numbers that no economies of scale can be realized.
(E) Since many satellites are built by unwieldy international consortia, inefficiencies are inevitable.

TG.Team Topic starter 14/08/2018 4:50 pm

The main premise for the conclusion that the cost of television satellites will continue to increase is that there is added pressure to squeeze more performance out of currently operating satellites.

The assumption for this argument is that attempts to squeeze more performance out of current satellites will lead to more operational mishaps of TV satellites (derived by also using the subsidiary premises).

This assumption is reflected in option C- The greater the performance demands placed on satellites, the more frequently those satellites break down.

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The average normal infant born in the United
States weighs between twelve and fourteen
pounds at the age of three months. Therefore,
if a three-month-old child weighs only ten
pounds, its weight gain has been below the
United States average.
Which of the following indicates a flaw in the
reasoning above?
A) Weight is only one measure of normal
infant development.
B) Some three-month-old children weigh as
much as seventeen pounds.
C) It is possible for a normal child to weigh
ten pounds at birth.
D) The phrase "below average" does not
necessarily mean insufficient.
E) Average weight gain is not the same as
average weight.
Passage

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2. The average life expectancy for the United States population as a whole is 73.9 years, but
children born in Hawaii will live an average of 77 years, and those born in Louisiana, 71.7
years. If a newlywed couple from Louisiana were to begin their family in Hawaii, therefore, their
children would be expected to live longer than would be the case if the family remained in
Louisiana.
Which of the following, if true, would most seriously weaken the conclusion drawn in the
passage?
A. Insurance company statisticians do not believe that moving to Hawaii will significantly
    lengthen the average Louisianan's life.
B. The governor of Louisiana has falsely alleged that statistics for his state are inaccurate.
C. The longevity ascribed to Hawaii's current population is attributable mostly to genetically
     determined factors.
D. Thirty percent of all Louisianans can expect to live longer than 77 years.
E. Most of the Hawaiian Islands have levels of air pollution well below the national average
    for the United States

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Q3. Department of Energy Spokesman: Energy consumers who pay their own utility bills have a direct financial incentive to use less energy. But in most of our nation's residential rental properties, the owner of the property - not the tenant who directly consumes that property's energy - pays the utility bill. In order to reduce our nation's energy consumption, we should require that tenants be responsible for paying their utility bills in residential rental properties.

Which of the following is a reason to believe that the plan outlined above will not reach its goal?

Possible Answers:

  1. Most of the country's energy consumption comes from commercial real estate, not residential real estate.
  2. Energy bills are calculated not only by the amount of energy used, but also by the times of day during which energy is used.

  3. When owners of rental properties are responsible for utility bills, they are more likely to ensure that a property's appliances and furnaces are the most energy-efficient versions.

  4. Most rental properties are rented by younger people, and people tend to be more conscious about environmental issues like energy consumption when they are younger.

  5. Other nations have had success reducing energy consumption by offering rental subsidies for tenants whose energy usage falls below certain thresholds.

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Q4. In the two years since the state legalized the sale and use of marijuana, Kerry County has seen a dramatic increase in marijuana use. This has caused an issue both with Kerry County’s largely older and more-conservative population and with local businesses that complain of the smell. To significantly reduce the use of marijuana within the county, Kerry County plans to implement a 50% sales tax on the sale of marijuana, believing that the higher cost will serve as a deterrent to many local marijuana users.

Each of the following constitutes a reason to believe that Kerry County’s plan will not achieve its goal EXCEPT:

Possible Answers:

 
  • Marijuana use has been most popular among young professionals, a demographic that tends to have a large amount of disposable income.
  • Kerry County is among the smallest counties in the state, with no location that is more than a 20-minute drive from a neighboring county.
  • Despite the legalization of marijuana, there remains a non-trivial black market for the illegal sale of marijuana in Kerry County.
  • Kerry County already levies similar "sin tax" sales taxes on other recreational drugs such as alcohol and tobacco.
  • The state law that legalized marijuana also allows residents to grow a small amount of marijuana for personal use.​
This post was modified 3 months ago by Yashita
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In the two years since the state legalized the sale and use of marijuana, Kerry County has seen a dramatic increase in marijuana use. This has caused an issue both with Kerry County’s largely older and more-conservative population and with local businesses that complain of the smell. To significantly reduce the use of marijuana within the county, Kerry County plans to implement a 50% sales tax on the sale of marijuana, believing that the higher cost will serve as a deterrent to many local marijuana users.

Each of the following constitutes a reason to believe that Kerry County’s plan will not achieve its goal EXCEPT:

Possible Answers:

  1. Marijuana use has been most popular among young professionals, a demographic that tends to have a large amount of disposable income.
  2. Kerry County is among the smallest counties in the state, with no location that is more than a 20-minute drive from a neighboring county.

  3. Despite the legalization of marijuana, there remains a non-trivial black market for the illegal sale of marijuana in Kerry County.

  4. Kerry County already levies similar "sin tax" sales taxes on other recreational drugs such as alcohol and tobacco.

  5. The state law that legalized marijuana also allows residents to grow a small amount of marijuana for personal use.​

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Question:

In response to a high unemployment rate and to complaints from businesses that prospective employees are under-qualified for the available jobs, particularly in the sciences, the Labor Department has released its plan to remedy both problems. It will offer six-month training programs, free of charge to unemployed citizens, to prepare citizens for jobs as laboratory and medical technicians. Each citizen will have the opportunity to participate in one program free of charge, and the Labor Department will offer salary subsidies to firms that hire graduates of these programs.

Which of the following, if true, would constitute reason to believe that the labor department’s plan will not achieve its aims?

Possible Answers:

  1. Laboratory and medical technician jobs are not the only jobs for which companies are struggling to find qualified employees.
  2. Successful graduates of technical training programs nearly always have scientific job experience prior to enrolling in such programs.

  3. Similar programs in neighboring countries have had mixed results.

  4. Many universities and technical colleges offer nine- and twelve-month programs to train students in the same fields.

  5. The proposed program is significantly more expensive than several alternatives proposed by members of the legislative body.

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In an attempt to protect the environment and stop oil companies from sinking a decommissioned North Sea oil platform to the bottom of the ocean, environmental groups ringed the platform with protest boats and demanded that it be towed to land, where it could be dismantled above water. Environmentalists argued that sinking the oil platform would cause irreparable damage to the deep sea ecosystem and release into the ocean over 53 tons of oil residue and heavy metals.

Which of the following, if true, indicates the plan to tow the oil platform to land is ill-suited to the environmentalist group’s goals?

Possible Answers:

  1. The release of 53 tons of toxic material into the ocean is very little compared to the volume of very highly toxic materials released by deep sea volcanoes.
  2. The National Environmental Research Council approved the sinking of the oil platform, calling it the “best practicable environmental option.”

  3. The sinking of the platform is fully in line with internationally approved guidelines for the disposal of off shore installations at sea.

  4. Towing the oil platform into shallow waters poses a massive risk that it may break up on its way to land, releasing the contained pollutants into fragile coastal waters.

  5. Dismantling the oil platform on land would cost over 70 million dollars, compared to the $7.5 million needed to secure and sink it in a deep ocean location.

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Question:

Members of the staff at the local daycare suggest that parents would have more incentive to pick up their children on time if the parents were assessed a fine after arriving more than 10 minutes late to pick up their children.

Which of the following, assuming that it is a realistic possibility, argues the most strongly against the effectiveness of the suggestion above?

Possible Answers:

  1. Late fines might cause some parents to enroll their children in other daycares.
  2. There might be irreconcilable disagreements among the daycare staff about whether the late fines should be imposed.

  3. By replacing social norms with market norms, fines might induce parents to weigh the “costs” of picking their children up late and, as a result, to frequently choose to be late.

  4. Some parents might pick up their children late no matter what level of fine is imposed against them.

  5. Removing the late fine policy might actually increase the number of tardy pick-ups.

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Restaurateur: If San Francisco wants to retain its thriving restaurant industry, then we must defeat the newly proposed increase in the city dining tax. In cities across the country that have enacted a similarly high tax, within three years nearly 35% of all restaurants have gone out of business.

To better evaluate the argument above, it would be most useful to answer which of the following questions?

Possible Answers:

  1. What percentage of restaurants typically go out of business over a three-year period in cities without a similarly high dining tax?
  2. How would San Francisco’s new dining tax compare to other cities across the country?

  3. Is price the most important factor for potential customers in determining where they will choose to dine?

  4. Does the new city tax apply to restaurants that have been in business for more than 25 years?

  5. How many restaurants are in San Francisco compared to other cities across the country?

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Question:

Because of extreme congestion in the city of Nobi, it typically takes close to one hour to commute at rush hour to the downtown business area by car from the neighboring suburbs that are only ten to fifteen miles away. Recently, the city installed separate bus lanes that connect these suburbs to the downtown area and that allow buses to move unimpeded during rush hour. With these new lanes, commuters from the suburbs will now be able to use the bus to reach the downtown area during rush hour in considerably less time than they could previously by driving their cars.

Which of the following would be most important to know in evaluating the argument above?

Possible Answers:

  1. Whether a large percentage of commuters drive to the downtown area at times other than rush hour.
  2. Whether the buses used in the new separate lanes are similar to other buses used.

  3. Whether the buses make frequent stops when traveling between the suburbs and the downtown area during rush hour.

  4. Whether the buses have frequent departure times during rush hour.

  5. Whether a large percentage of commuters use means other than driving to commute to the downtown area during rush hour.

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Because of extreme congestion in the city of Nobi, it typically takes close to one hour to commute at rush hour to the downtown business area by car from the neighboring suburbs that are only ten to fifteen miles away. Recently, the city installed separate bus lanes that connect these suburbs to the downtown area and that allow buses to move unimpeded during rush hour. With these new lanes, commuters from the suburbs will now be able to use the bus to reach the downtown area during rush hour in considerably less time than they could previously by driving their cars.

Which of the following would be most important to know in evaluating the argument above?

Possible Answers:

  1. Whether a large percentage of commuters drive to the downtown area at times other than rush hour.
  2. Whether the buses used in the new separate lanes are similar to other buses used.

  3. Whether the buses make frequent stops when traveling between the suburbs and the downtown area during rush hour.

  4. Whether the buses have frequent departure times during rush hour.

  5. Whether a large percentage of commuters use means other than driving to commute to the downtown area during rush hour.