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This topic has 0 member replies
toby001 Junior | Next Rank: 30 Posts
Joined
11 Jul 2016
Posted:
28 messages
Followed by:
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Test Date:
12/03/2016
Target GMAT Score:
720
GMAT Score:
680

Fri Nov 25, 2016 9:14 am
Elapsed Time: 00:00
• Lap #[LAPCOUNT] ([LAPTIME])
The following appeared as part of the business plan of an investment and financial consulting firm:
“Studies suggest that an average coffee drinker’s consumption of coffee increases with age, from age 10 through age
60. Even after age 60, coffee consumption remains high. The average cola drinker’s consumption of cola, however,
declines with increasing age. Both of these trends have remained stable for the past 40 years. Given that the number
of older adults will significantly increase as the population ages over the next 20 years, it follows that the demand for
coffee will increase and the demand for cola will decrease during this period. We should, therefore, consider
transferring our investments from Cola Loca to Early Bird Coffee.”
Discuss how well reasoned . . . etc.

The argument above is flawed for several reasons. Primarily, the argument fails to provide in concrete terms, how much cola consumption is expected to decline, or how much coffee consumption is expected to increase, but instead, only mentions vaguely that coffee consumption is expected to increase, whereas cola consumption is expected to decrease.

As mentioned briefly above, the argument does not specify exactly how much coffee consumption is expected to increase, or how much cola consumption is expected to decrease. In the same vein, the argument also fails to mention the current consumption levels of each product relative to the other. It could very well be that cola consumption levels are currently a lot higher than coffee consumption, in which case, it would be critical that we know the respective amounts of increase and decrease expected, before the argument can be substantiated. Had the argument mentioned in no uncertain terms, the current consumption levels of each product, as well as the estimated levels of increase and decrease respectively in the consumption of coffee and cola, then the argument could have been supported by this claim.

The argument also makes the unjustified assumption that because the reported trends have held steady for the past 40 years, that they will definitely hold steady over the next 20 years as the population ages. This is not necessarily true. The economy could be undergoing changes which will ensure that these trends do not hold true in the coming years. Without knowing for a fact, whether or not the trend will remain the same, the suggestion to transfer the investments bothers on irresponsible. the argument could be strengthened by providing evidence that suggests that the trends will not change in the next 20 years.

Finally, the argument makes another careless assumption that the success of an investment in each of these companies depends at least, in part, on the general consumption levels of the products they make. If each of the companies is one of the biggest players in its industry, then it could be that neither of them will be affected by an increase or decrease in the general consumption levels of their products. Both companies might already have as much share of the market as they can absorb, in which case, even a tremendous increase or decrease in the consumption levels won't have any impact on either company. The argument could be improved by providing evidence that suggests that any amount of increase or decrease will affect the bottom line of each company.

The argument is flawed because of the careless and unjustified assumptions. The argument could be strengthened by making the improvements suggested above.

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