PrepTest 131, Section 2, Question 2
Price: A corporation's primary responsibility is to its(56 more words not shown)
On the basis of their(10 more words not shown)
- Acorporations have a(4 more words not shown)
- Bcorporations are responsible(6 more words not shown)
- Cmeans should be(14 more words not shown)
- Da corporation's shareholders(14 more words not shown)
- Ethe livelihood of(9 more words not shown)
Reading the argument
Price's position is clear: shareholders take the greatest risks, so the corporation's primary responsibility belongs to them. We might question whether risk should determine who comes first, but we can still identify the reason Price gives for putting shareholders first. They stand to lose their investment if the company fails.
Albrecht challenges that comparison. A shareholder typically has investments in several places. If one company fails, the shareholder loses that investment but still has the others. An employee, however, could lose the job that supplies their livelihood. Albrecht thinks that gives employees the stronger claim on the corporation.
What we’re looking for
I'd predict a disagreement about who deserves the corporation's primary responsibility: shareholders or employees. Keep “primary” in that prediction. A corporation could have responsibilities to both groups while giving one group priority. The speakers don't have to deny every responsibility to the group they put second.
Working the answers
- A
Price clearly thinks corporations have a responsibility to shareholders. Albrecht could agree while thinking the responsibility to employees should come first. Removing 'primary' changes the issue: any responsibility is different from the greatest responsibility.
- B
Albrecht thinks corporations are responsible for employees, but Price doesn't deny that. Price gives shareholders priority. That leaves room for a responsibility to employees as well, so B doesn't establish opposite answers from the speakers.
- C
Neither speaker proposes a way for investors to recover losses after bankruptcy. They discuss who bears the greatest risk and who deserves priority, not whether someone should reimburse shareholders.
- DCorrect
This reaches the disagreement through the reason behind their different priorities. Price says shareholders take the greatest risks, so Price would agree that they have more at stake than anyone else. Albrecht's response is that diversified shareholders have other investments, while employees have their livelihood at stake. Albrecht rejects putting shareholders above employees on that measure. It isn't the precise primary-responsibility prediction, but it captures the disputed comparison supporting it.
- E
Albrecht says shareholders typically have diversified portfolios. That doesn't rule out some shareholders depending on this particular corporation for their livelihood. Nor does Price's claim that shareholders take the greatest risks establish that their livelihood specifically depends on the company. The speakers don't commit themselves to opposite positions on this narrower claim about some shareholders.
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