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PT question

This topic has 1 member reply
jc114 Senior | Next Rank: 100 Posts Default Avatar
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12 Apr 2007
Posted:
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PT question

Post Sat Apr 28, 2007 4:14 pm
Corporate officer: Last year was an unusually poor one for our chemical division, which has traditionally contributed about 60% of the corporation's profits. It is therefore encouraging that there is the following evidence that the pharmaceutical division is growing stronger; it contributed 45% of the corporation's profits, up from 20% the previous year.
On the basis of the facts stated, which of the following is the best critique of the evidence stated above?

A. The increase in the pharmaceutical division's contribution to corporation profits could have resulted largely from the introduction of a single, new product.
B. In multidivisional corporations that have pharmaceutical divisions, over half of the corporation's profits comes from pharmaceuticals.
C. The % of the corporation's profits attributable to the pharmaceutical division could have increased even if that division's performance has not improved.
D. The information cited does not make it possible to determine whether the 20% share of profits cited was itself an improvement over the years before.
E. The information cited does not make it possible to cimpare the performance of the chemical and pharmaceutical divisions in terms of the percent of total profits attributable to each.


(I thought the answer was E...can someone explain why its C?)

Some companies in fields where skilled employees are hard to find make signing an "agreement not to compete" a condition of employment. In such an agreement, the employee promises not to go to work for a competing firm for a set period after leaving his or her current employer. Courts are increasingly ruling that these agreements are not binding. Yet paradoxically, for people who signed such agreements when working for competing firms, many firms are unwilling to consider hiring them during the period covered by the agreement.

Which of the following, if true, most helps to resolve the paradox?

A. Many companies will not risk having to become involved in lawsuits, even suits that they expect to have a favorable outcome, because of the associated costs and publicity.
B. In some industries, for example the broadcast media companies' main source of new employees tends to be people who are already employed by competing firms.
C. Most companies that require their employees to sign agreements not to compete are aware that these documents are not legally binding.
D. Many people who have signed agreements not to comepte are unwilling to renege on a promise by going to work for a competing firm.
E. Many companies consider their employees' established relationship with clients and other people outside the company to be valuable company assets.

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Top Reply
Post Sun Apr 29, 2007 3:59 am
For the first argument, you're looking at a favorite reasoning flaw on the GMAT: Sampling and Statistics. The error they love to throw in is the false assumption that %'s = #'s. In other words, just because the pharma div.'s % of the profits went up doesn't mean that they made more money.

That's pretty much what C says. E is a tempting trap answer, but the conclusion of the argument is that there is reason to be encouraged that the pharma's profits are up, not that specifically that there needs to be a comparison between the two divisions.

You don't mention your answer for the second one, but the paradox is that even though non-compete agreements are often not legally binding, companies still won't hire people who have them. So there must be some reason they don't want to have to fight the lawsuit. A gives you that reason.

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Matt McIver

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