Consumers in California seeking personal loans have fewer

Anon

Consumers in California seeking personal loans have fewer banks to turn to than do consumers elsewhere in the United States. This shortage of competition among banks explains why interest rates on personal loans in California are higher than in any other region of the United States.
Which of the following, if true, most substantially weakens the conclusion above?
(A) Because of the comparatively high wages they must pay to attract qualified workers, California banks charge depositors more than banks elsewhere do for many of the services they offer.
(B) Personal loans are riskier than other types of loans, such as home mortgage loans, that banks make.
(C) Since bank deposits in California are covered by the same type of insurance that guarantees bank deposits in other parts of the United States, they are no less secure than deposits elsewhere.
(D) The proportion of consumers who default on their personal loans is lower in California than in any other region of the United States.
(E) Interest rates paid by California banks to depositors are lower than those paid by banks in other parts of the United States because in California there is less competition to attract depositors.

OA -A

My question is..isnt D correct too...

if people dont default...banks cant charge them higher and make more profits...

Please help

lunarpower

svaradhan · Posted: Fri Jul 04, 2008 5:14 am Post subject:

I have a doubt with answer choice A. It states - "Because of the comparatively high wages they must pay to attract qualified workers, California banks charge depositors more than banks elsewhere do for many of the services they offer". But the argument is based on high interest rates for personal loans right? Where did depositors come into picture? Is this not out of scope? Please clarify

Carol · Posted: Fri Jul 04, 2008 11:03 am Post subject:

my approach:

"Consumers in California seeking personal loans have fewer banks to turn to(...) This shortage of competition among banks explains why interest rates on personal loans in California are higher"

what explains here the fact the interest rates are higher? California has fewer banks.

but we are asked to weaken the conclusion.ie, find other explanation for the higher rates: A explains it - "Because of the comparatively high wages they must pay to attract qualified workers, California banks charge depositors more than banks elsewhere do..." - they have to pay their qualified workers, so they increase the rates.

chidcguy · Posted: Fri Jul 04, 2008 11:50 am Post subject:

To me this is a causation question.

Shortage of competition among banks -> high interest rates on personal loans

We are asked to weaken the conclusion

X is causing Y we need an answer that says Z is causing Y

A exactly does that. In D the Y part is missing. It just makes a statement leaving it to the test taker to make a decision.

NSNguyen · Posted: Sun Jul 06, 2008 12:13 am Post subject:

I would go with A,
it is the only question can eliminate the skeptical about the issue that in CA the competition of bank is poor.

lunarpower · Posted: Sun Jul 06, 2008 8:22 pm Post subject:

lunarpower · Posted: Sun Jul 06, 2008 8:28 pm Post subject:

lunarpower · Posted: Sun Jul 06, 2008 8:30 pm Post subject:

here's how to do the "spoiler" thing i just talked about:

type
[spoiler]
before the text you want to hide, and
[/spoiler]
after that text.
the text will then be displayed in black on a black background, rendering it unreadable unless it's highlighted.

svaradhan · Posted: Tue Jul 08, 2008 6:32 am Post subject:

Ron, thanks a lot for clarifying my doubt. I have a similar doubt with the 50000 Norwegian smokers. I have posted the same question in this site. Please help me with that question too.

bigfernhead · Posted: Tue Jul 08, 2008 10:25 am Post subject:

Yes, people need to do this.

I'd prefer to have the spoiler on, than have people post answers to questions at a later time.

There's a lot of time that people don't come back to the forum on a timely manner, and we're always left guessing what OA was.