PrepTest 145, Section 4, Question 3
Researchers have found that the percentage of people(77 more words not shown)
Which one of the following,(11 more words not shown)
- AIn both high-(21 more words not shown)
- BMany governments of(20 more words not shown)
- CThe percentage of(22 more words not shown)
- DIn high-income countries,(19 more words not shown)
- EIn low-income countries,(14 more words not shown)
Reading the argument
If richer countries offer more business opportunities, why are people in the poorest countries even more likely to start businesses?
The first comparison seems understandable: a higher percentage of people start businesses in high-income countries than in middle-income ones. Perhaps having more money helps, and the passage emphasizes the greater opportunity to build a business. That account makes sense as a possibility.
Then the low-income countries disrupt the expected pattern. Maybe there are opportunities there that we're overlooking. Or maybe starting a business isn't always an attractive choice among several good options. What if there aren't satisfactory jobs available, so people have to make their own work?
What we’re looking for
The question asks us to explain that higher rate of business starts in low-income countries. I'd look for something that gives people there a reason to start a business despite the country's lower income. It could involve opportunities, or it could involve the lack of alternatives.
Working the answers
- A
This tells us that businesses in both groups of countries are often small. It doesn't explain why a larger share of people in low-income countries start them. Similar expectations about employing one or two people leave that difference unanswered.
- B
Less government assistance would seem to make starting a business harder in low-income countries. Yet their rate of business starts is higher. We still need the reason people start businesses despite that disadvantage; B makes the finding more surprising.
- C
This compares what happens to businesses after they are founded. The puzzle concerns how often people start them. Knowing that the failure rate is no higher doesn't by itself tell us why a greater percentage of people take that initial step.
- D
Discovering later that an opportunity was illusory doesn't prevent the person from having started a business. The answer tells us about disappointing outcomes in high-income countries, without establishing why the rate of starting businesses is even higher in low-income ones.
- ECorrect
For most entrepreneurs in low-income countries, other employment is unavailable or unsatisfactory. Starting a business can therefore be a response to needing a way to work, rather than to spotting the kind of attractive opportunity emphasized for richer countries. That different pressure helps explain why a larger share of people start businesses there.
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