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SBA!GMATPREP! Post Sat Oct 23, 2010 10:33 am
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  • Lap #[LAPCOUNT] ([LAPTIME])
    The United States government has a long-standing policy of using federal funds to keep small business viable. The Small Business Act of 1953 authorized the Small Business Administration (SBA) to enter into contracts with government agencies having procurement powers and to arrange for fulfillment of these contracts by awarding subcontracts to small businesses. In the mid-1960's, during the war on poverty years, Congress hoped to encourage minority entrepreneurs by directing such funding to minority businesses. At first this funding was directed toward minority entrepreneurs with very low incomes. A 1967 amendment to the Economic Opportunity Act directed the SBA to pay special attention to minority-owned businesses located in urban or rural areas characterized by high proportions of unemployed or low-income individuals. Since then, the answer given to the fundamental question of who the recipients should be--the most economically disadvantaged or those with the best prospects for business success--has changed, and the social goals of the programs have shifted, resulting in policy changes.


    The first shift occurred during the early 1970's. While the goal of assisting the economically disadvantaged entrepreneur remained, a new goal emerged: to remedy the effects of past discrimination. In fact, in 1970 the SBA explicitly stated that their main goal was to increase the number of minority-owned businesses. At the time, minorities constituted seventeen percent of the nation's population, but only four percent of the nation's self-employed. This ownership gap was held to be the result of past discrimination. Increasing the number of minority-owned firms was seen as a way to remedy this problem. In that context, providing funding to minority entrepreneurs in middle- and high-income brackets seemed justified.

    In the late 1970's, the goals of minority-business funding programs shifted again. At the Minority Business Development Agency, for example, the goal of increasing numbers of minority-owned firms was supplanted by the goal of creating and assisting more minority-owned substantive firms with future growth potential. Assisting manufacturers or wholesalers became far more important than assisting small service businesses. Minority-business funding programs were now justified as instruments for economic development, particularly for creating jobs in minority communities of high unemployment.

    Question#01:

    It can be inferred that the "ownership gap" (see highlighted text) would be narrowed if which of the following were to occur?

    (A) Minority entrepreneurs received a percentage of government contracts equal to that received by nonminority entrepreneurs.
    (B) Middle- and high-income minority entrepreneurs gave more assistance to their low-income counterparts in the business community.
    (C) Minority entrepreneurs hired a percentage of minority employees equal to the percentage of minority residents in their own communities.
    (D) The percentage of self-employed minority persons rose to more than ten percent of all self-employed persons.
    (E) Seventeen percent of all persons employed in small businesses were self-employed.

    OA: D

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    Post Sun Oct 24, 2010 3:33 am
    This question is a good example to why having prior knowledge or an opinion about the passage subject matter can throw you off. The core logic here is very simple but if you don't stick to the phrasing in the question stem, the distracting answer choices can easily pull you into speculations and assumptions which will cost you the question.

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    Post Tue Jul 05, 2011 5:21 am
    This passage and in particular this question were the only major bugs that threw me off in GMAT prep-II.

    options A,B and C are pretty hopeless,

    I still cant reason for D. Can a math expert help on this ? {this is not a typo : we need a math expert to decode option D}

    I went for E. :/

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    Last edited by bblast on Tue Jul 05, 2011 10:22 am; edited 2 times in total

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    Post Tue Jul 05, 2011 8:39 am
    I was looking at below stuff in the passage and thought the question was easy.. what weird options and an OA. Please explain the options Amit.

    "Increasing the number of minority-owned firms was seen as a way to remedy this problem. In that context, providing funding to minority entrepreneurs in middle- and high-income brackets seemed justified."

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    Post Wed Jul 06, 2011 1:11 am
    As I've written in the past, the key is the question stem.

    First, the term "ownership gap" points at the second paragraph:

    Quote:
    At the time, minorities constituted seventeen percent of the nation's population, but only four percent of the nation's self-employed <-- This ownership gap
    So the definition of the ownership gap is that 17% of population are minorities, but only 4% of self-employed are minorities. Statistically, you'd expect there to be 17% minorities in any group that reflects the whole of the population: in schools, as house-buyers, with certain health issues, etc. So there is a gap of 13% (=17-4) between the minorities in population in general and the minorities in the self-employed group specifically.

    The question asks - what can narrow down (reduce, shrink) this gap?

    (A) - not good. Even if we promise minorities equal amount of work it could all go to the 4% of minorities. No guarantee that more minority persons will become self-employed.
    (B) - "giving assistance" is irrelevant. We are looking for something that talks about people from the minorities group starting small businesses.
    (C) - big mess. Hiring minority employees is the opposite of helping them start a business, and the percentage of minority residents is irrelevant.
    (D) - simply put - instead of 4% minority persons in self-employment, there will be 10%. The gap will hence be narrowed down to a 7% gap (17-10=7 vs 17-4=13).
    (E) - irrelevant. This talks about how many people in small businesses are actually the owners, and hence self-employed (the rest are employees). The 17% here is a trap.

    Notice that if you were looking to eliminate the gap, instead of narrowing it down, you would rule out D and get it wrong. Always start with the question stem!

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    killer1387 GMAT Destroyer! Default Avatar
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    Post Sat Mar 10, 2012 8:28 am
    Guys it a try. Reference: same RC posted above.

    Q. Which of the following best describes the function
    of the second paragraph in the passage as a whole?

    (A) It narrows the scope of the topic introduced in the
    first paragraph.
    (B) It presents an example of the type of change
    discussed in the first paragraph.
    (C) It cites the most striking instance of historical
    change in a particular government policy.
    (D) It explains the rationale for the creation of the
    government agency whose operations are
    discussed in the first paragraph.
    (E) It presents the results of policies adopted by the
    federal government.

    OA-B i fell for A. please explain in detail.

    thnx

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    Post Sat Mar 10, 2012 2:40 pm
    killer1387 wrote:
    Guys it a try. Reference: same RC posted above.

    Q. Which of the following best describes the function
    of the second paragraph in the passage as a whole?

    (A) It narrows the scope of the topic introduced in the
    first paragraph.
    (B) It presents an example of the type of change
    discussed in the first paragraph.
    (C) It cites the most striking instance of historical
    change in a particular government policy.
    (D) It explains the rationale for the creation of the
    government agency whose operations are
    discussed in the first paragraph.
    (E) It presents the results of policies adopted by the
    federal government.

    OA-B i fell for A. please explain in detail.

    thnx
    This is a MATCH GAME.
    Scan the five answer choices.
    In the correct answer choice, EVERY WORD can be matched BACK TO THE PASSAGE.

    Answer choice B:
    It presents an example of the type of change discussed in the first paragraph.

    A type of change discussed in the first paragraph:
    The fundamental question of who the recipients should be...has CHANGED, and the social goals of the programs have SHIFTED, resulting in POLICY CHANGES.
    An example of this type of change, presented in the second paragraph:
    The FIRST SHIFT occurred during the early 1970's. While the goal of assisting the economically disadvantaged entrepreneur remained, a NEW GOAL emerged: to remedy the effects of past discrimination.

    Every word in B can be matched back to the passage.

    The correct answer is B.

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    killer1387 GMAT Destroyer! Default Avatar
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    Post Sat Mar 10, 2012 7:42 pm
    GMATGuruNY wrote:
    This is a MATCH GAME.
    hey Mitch,

    Can we say "whenever we get this type of question, the same strategy - MATCH GAME- can be always used" ?

    By this strategy option A is straight out.

    thnx

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    Post Sun May 06, 2012 7:17 pm
    I went with c) for the question below. Could anyone kindly advise why c is wrong? In 1970 both b) and c) are mentioned respectively in paragraph 2 and 3. I am very puzzled as to which one to go with...
    many thanks in advance!

    According to the passage, in 1970 funding to minority entrepreneurs focused primarily on which of the following?



    (A) Alleviating chronic unemployment in urban areas

    (B) Narrowing the ownership gap

    (C) Assisting minority-owned businesses with growth potential

    (D) Awarding subcontracts to businesses that encouraged community development

    (E) Targeting the most economically disadvantaged minority-owned businesses

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    Post Sun May 27, 2012 5:16 am
    hi Lamania,

    read the below excerpt from the passage

    "In fact, in 1970 the SBA explicitly stated that their main goal was to increase the number of minority-owned businesses. At the time, minorities constituted seventeen percent of the nation's population, but only four percent of the nation's self-employed. This ownership gap was held to be the result of past discrimination. Increasing the number of minority-owned firms was seen as a way to remedy this problem"

    what you picked happened in late 70's and continued in 80's and the first shift occurred in early 1970's.So Narrowing ownership gap happened in 70's

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    Post Mon May 13, 2013 12:36 pm
    GMATGuruNY wrote:
    killer1387 wrote:
    Guys it a try. Reference: same RC posted above.

    Q. Which of the following best describes the function
    of the second paragraph in the passage as a whole?

    (A) It narrows the scope of the topic introduced in the
    first paragraph.
    (B) It presents an example of the type of change
    discussed in the first paragraph.
    (C) It cites the most striking instance of historical
    change in a particular government policy.
    (D) It explains the rationale for the creation of the
    government agency whose operations are
    discussed in the first paragraph.
    (E) It presents the results of policies adopted by the
    federal government.

    OA-B i fell for A. please explain in detail.

    thnx
    This is a MATCH GAME.
    Scan the five answer choices.
    In the correct answer choice, EVERY WORD can be matched BACK TO THE PASSAGE.

    Answer choice B:
    It presents an example of the type of change discussed in the first paragraph.

    A type of change discussed in the first paragraph:
    The fundamental question of who the recipients should be...has CHANGED, and the social goals of the programs have SHIFTED, resulting in POLICY CHANGES.
    An example of this type of change, presented in the second paragraph:
    The FIRST SHIFT occurred during the early 1970's. While the goal of assisting the economically disadvantaged entrepreneur remained, a NEW GOAL emerged: to remedy the effects of past discrimination.

    Every word in B can be matched back to the passage.

    The correct answer is B.
    Good approach..
    why not 'C'?

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    Post Mon May 13, 2013 4:23 pm
    nasheen wrote:
    GMATGuruNY wrote:
    killer1387 wrote:
    Guys it a try. Reference: same RC posted above.

    Q. Which of the following best describes the function
    of the second paragraph in the passage as a whole?

    (A) It narrows the scope of the topic introduced in the
    first paragraph.
    (B) It presents an example of the type of change
    discussed in the first paragraph.
    (C) It cites the most striking instance of historical
    change in a particular government policy.
    (D) It explains the rationale for the creation of the
    government agency whose operations are
    discussed in the first paragraph.
    (E) It presents the results of policies adopted by the
    federal government.

    OA-B i fell for A. please explain in detail.

    thnx
    This is a MATCH GAME.
    Scan the five answer choices.
    In the correct answer choice, EVERY WORD can be matched BACK TO THE PASSAGE.

    Answer choice B:
    It presents an example of the type of change discussed in the first paragraph.

    A type of change discussed in the first paragraph:
    The fundamental question of who the recipients should be...has CHANGED, and the social goals of the programs have SHIFTED, resulting in POLICY CHANGES.
    An example of this type of change, presented in the second paragraph:
    The FIRST SHIFT occurred during the early 1970's. While the goal of assisting the economically disadvantaged entrepreneur remained, a NEW GOAL emerged: to remedy the effects of past discrimination.

    Every word in B can be matched back to the passage.

    The correct answer is B.
    Good approach..
    why not 'C'?
    Answer choice C cannot be matched back to the passage.
    Answer choice C: The MOST STRIKING instance of historical change.
    Passage: The FIRST shift occurred during the 1970's.
    MOST STRIKING ≠ FIRST.

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    Post Mon May 13, 2013 11:23 pm
    Try to anticipate an answer before examining the answer choices. It will help you eliminate incorrect choices.

    "It can be inferred that the "ownership gap" (see highlighted text) would be narrowed if which of the following were to occur?" Me thinking: "This is hard to anticipate because the answer choices can be anything. The correct answer has to involve something that gets more minorities owning businesses."

    It can be inferred that the "ownership gap" (see highlighted text) would be narrowed if which of the following were to occur?

    (A) Minority entrepreneurs received a percentage of government contracts equal to that received by nonminority entrepreneurs. - Awarding contracts to minority businesses doesn't help more minorities own businesses. These people already own businesses, or they wouldn't bid on government contracts. Eliminate.
    (B) Middle- and high-income minority entrepreneurs gave more assistance to their low-income counterparts in the business community. - So what? Giving them food would be assistance. Did the middle and high income folks help low income people start businesses? This doesn't seem to help. Eliminate.
    (C) Minority entrepreneurs hired a percentage of minority employees equal to the percentage of minority residents in their own communities. - This has nothing to do with minority people starting/owning businesses. Eliminate.
    (D) The percentage of self-employed minority persons rose to more than ten percent of all self-employed persons. - This certainly addresses the gap. If E isn't better (given I've eliminated A-C) then this is the answer.
    (E) Seventeen percent of all persons employed in small businesses were self-employed. - Giving me a fact about small business employees doesn't address the issue of minority people owning businesses. Eliminate.

    D is the answer.

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    Post Sun May 19, 2013 5:05 am
    I had an issue with this question ...
    There were a bunch of things that 1970 fundings focussed on .. as explained in paras 2 and 3 .
    the goal of helping the economically challenged , reducing the gap , helping businesses with larger growth prospects ,
    OA is B
    How can you narrow it down to B , some one please explain


    Question #23. 146-06 (22303-!-item-!-188;#058&000146-06)

    According to the passage, in 1970 funding to minority entrepreneurs focused primarily on which of the following?

    (A) Alleviating chronic unemployment in urban areas
    (B) Narrowing the ownership gap
    (C) Assisting minority-owned businesses with growth potential
    (D) Awarding subcontracts to businesses that encouraged community development
    (E) Targeting the most economically disadvantaged minority-owned businesses

    GMAT/MBA Expert

    Post Sun May 19, 2013 5:37 am
    kapilhede17 wrote:
    I had an issue with this question ...
    There were a bunch of things that 1970 fundings focussed on .. as explained in paras 2 and 3 .
    the goal of helping the economically challenged , reducing the gap , helping businesses with larger growth prospects ,
    How can you narrow it down to B , some one please explain


    Question #23. 146-06 (22303-!-item-!-188;#058&000146-06)

    According to the passage, in 1970 funding to minority entrepreneurs focused primarily on which of the following?

    (A) Alleviating chronic unemployment in urban areas
    (B) Narrowing the ownership gap
    (C) Assisting minority-owned businesses with growth potential
    (D) Awarding subcontracts to businesses that encouraged community development
    (E) Targeting the most economically disadvantaged minority-owned businesses
    The question stem asks not about the ENTIRE DECADE but only about ONE SPECIFIC YEAR: 1970.
    From the passage: IN 1970 the SBA explicitly stated that their main goal was TO INCREASE THE NUMBER OF MINORITY-OWNED BUSINESSES. THIS OWNERSHIP GAP...
    The lines above support answer choice B:
    In 1970 funding focused primarily on narrowing the ownership gap.

    The correct answer is B.

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