PrepTest 108, Section 1, Question 19
Many people complain about corporations, but there are(441 more words not shown)
With which one of the(13 more words not shown)
- AEven CEOs of(7 more words not shown)
- BCEOs of owner-operated(10 more words not shown)
- COwner-operated noncharitable corporations(9 more words not shown)
- DIt is highly(12 more words not shown)
- ECEOs should attempt(12 more words not shown)
Reading the passage
What do these economists want CEOs to do? Maximize profit. They give two reasons: CEOs owe that to the owners, and even without that obligation, maximizing profit supposedly serves the public best.
What we’re looking for
Answer from their perspective. The author's environmental objection comes later; don't accidentally give it to the people being criticized.
Working the answers
- A
Charitable institutions are expressly set apart when paragraph 3 describes owners' interest in profits. The later recommendation concerns a noncharitable organization. We can't extend it to charities just because these economists sound enthusiastic about profit.
- BCorrect
Paragraph 3 considers an owner-operated noncharitable business whose CEO needn't maximize profits. Even then, the economists say the CEO should still pursue the greatest possible profit (paragraph 3), because they believe that will benefit the public. Removing the obligation to outside owners doesn't change their advice.
- C
We aren't comparing which ownership arrangement makes more money. We're discussing what CEOs should try to do.
- D
They think pursuing profit benefits the public. This says a CEO's actions are highly unlikely to help. It doesn't fit their view, and even the author only denies a guarantee of benefit.
- E
The economists don't give this environmental exception. Their claim that maximizing profit serves the public is exactly what the paper-mill example challenges. E imports the author's objection into their position.
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