PrepTest 124, Section 1, Question 12
Melinda: Hazard insurance decreases an individual's risk by(38 more words not shown)
Jack's response most clearly trades(13 more words not shown)
- Ajudiciously(1 more words not shown)
- Bmany(1 more words not shown)
- Ehazard(1 more words not shown)
Reading the argument
Buying insurance doesn't make the house fireproof. It changes who bears the financial loss if the house burns down.
Imagine paying a premium into an insurance pool. Many other policyholders pay too. If your house burns down, the policy can cover costs you would otherwise face on your own. The shared pool spreads that financial burden, even though writing the premium check doesn't itself make a fire less likely.
What we’re looking for
Melinda is talking about the risk to your finances. Jack hears “risk” as the chance that the bad event will occur. That's why the two claims can coexist: insurance can reduce your exposure to a large financial loss without reducing the chance of a fire. The question asks which expression allows that shift in meaning. Look for the word whose meaning changes, not simply a word appearing in the disputed claim.
Working the answers
- A
“Judiciously spreading” describes the distribution of risk among policyholders. Jack doesn't interpret spreading to mean a different kind of distribution or challenge whether the distribution is sensible. His objection concerns what is supposed to become less risky: his finances or the occurrence of a fire.
- B
Jack doesn't misunderstand how many people hold policies. Whether the group is large or small wouldn't explain his response about the house's chance of burning down. The number of policyholders isn't where the meanings split.
- CCorrect
For Melinda, “risk” concerns the financial loss an individual faces. For Jack, it concerns the likelihood that the house will burn down. He objects that the second risk doesn't decrease, even though Melinda's point concerns the first. Once we separate those meanings, his response no longer answers her claim.
- D
Both speakers understand “decreases” to mean becomes lower. They disagree about whether a decrease occurs because they apply that word to different things. Melinda means a lower financial risk; Jack considers a lower chance of fire. The ambiguity is in what risk means, not what decreasing means.
- E
Both are discussing insurance against a hazard; Jack uses fire insurance as his example. He doesn't treat the policy as a different kind of product. His misunderstanding concerns what insurance reduces, so changing the meaning of “hazard insurance” isn't needed to explain the exchange.
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