PrepTest 127, Section 3, Question 2
Shareholder: The company's current operations are time-proven successes.(40 more words not shown)
If the shareholder's statements are(12 more words not shown)
- AThe company's present(4 more words not shown)
- BInvestment into pharmaceuticals(8 more words not shown)
- CThe company will(10 more words not shown)
- DOnly if the(10 more words not shown)
- EThe company has(12 more words not shown)
Reading the argument
The shareholder sounds worried about moving money away from a business that already works. I can understand that concern, although past success alone doesn't guarantee continued success. Imagine a company that made presentation slides for clients. If new software made those slides easy for clients to make themselves, the old business might need to change. That is a possibility to consider, not something we know about this company.
We are told that food services could take funds needed by the existing operations. We are also told that food services carry more inherent risk than pharmaceuticals. Whether that comparison fits our intuition about selling tacos versus developing drugs doesn't matter here. The question asks us to accept the shareholder's statements.
What we’re looking for
The shareholder's tone suggests that the expansion might be a bad idea, but the passage stops short of saying the company should abandon it. A most strongly supported answer should stay close to what we actually have. The clearest comparison is the greater risk of food services. We should not turn that risk into certain failure.
Working the answers
- A
The current operations need some funds, but that doesn't mean they need increased funding. They could have exactly the right budget now and suffer if money were taken away. We aren't told there is a shortfall or a need for, say, 10 percent more money.
- B
The passage warns that food services may draw money from other operations. It doesn't say that pharmaceuticals would avoid that problem. Either expansion could require resources the company currently uses elsewhere. We cannot give pharmaceuticals a funding advantage that the shareholder never supplies.
- C
A risky business can still succeed. Perhaps the company's taco business would be exceptionally popular and make a great deal of money. Calling the industry volatile gives us uncertainty about the outcome, not a guarantee that the company will lose money.
- D
Why would pharmaceuticals be the only route to increased profits? The passage never rules out improving the existing operations or, for example, raising prices successfully. Even a comparison showing that one expansion is less risky wouldn't make that expansion necessary for higher profits.
- ECorrect
The higher inherent risk of food services supports a greater chance of losing money there than in pharmaceuticals. This is the limited comparison the shareholder gives us. It doesn't promise that pharmaceuticals will succeed, and it doesn't say that food services will fail. Those stronger claims aren't needed.
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