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Tough CR:Heavy Tariffs

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Tough CR:Heavy Tariffs

by zaarathelab » Mon Aug 08, 2011 3:36 am
Country X imposes heavy tariffs on imported manufactured goods. Company Y has determined that it could increase its profits in the long term by opening a factory in Country X to manufacture the goods that it currently produces in its home country for sale in Country X.

For Company Y's determination to be true, which of the following assumptions must also be true?

a) Company Y will be able to obtain all the necessary permits to open a factory in Country X.
b) Company Y currently produces no goods outside its home country.
c) A sustainable market for Company Y's goods currently exists in Country X.
d) Company Y's home country does not impose tariffs on imported goods.
e) Labor costs in Country X are lower than those in Company Y's home country.
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by bblast » Mon Aug 08, 2011 3:57 am
the questions asks for assumption 4 company Y's determination = increase profits.

A> addresses feasibility of set up process- does not address profits
B> irrelavant
C> correct answer
D> this would be the answer if company Y were manufacturing something in X for use in country Y.

Looks like E to me as its the only option that pertains to $$.


In fact if I apply negation- C seems to win over E

phew !! Tough one.i'll leave this to someone else
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by Ozlemg » Mon Aug 08, 2011 4:05 am
IMO C

the company has determined that it could increase profits by opening a factory in X. It can be assumed that the company has already done , analyzing all costs before determining whether to open the factory in X. For the plan to work, there must be a market.
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by David@VeritasPrep » Mon Aug 08, 2011 7:21 am
This question has been discussed before on a few occasions. You can search Beat the GMAT for various discussions.

The OA given is C.

However, I do not believe that this is a correct assumption. Here is the response a gave to this same question a few months ago.

"This takes the assumption a little too far and would not appear this way on the GMAT - probably not even the LSAT.

In fact, I am not in love with choice C. Why does a sustainable market have to currently exist? What if a sustainable market will exist in 6 weeks from now? The determination is about long-term markets. C would be better if it said, "A sustainable market for company Y's goods will eventually exist" or "it is possible for a sustainable market to exist." That is the kind of thing that would make a good answer choice.

I agree with what you say about A -- What good is it to decide that you would make a profit if you will not be able to get the permits? What if I say "nuclear fusion could solve our energy problems." Then an assumption is "nuclear fusion is possible." I think that is a reasonable assumption.

I can see that this question is designed to be tricky and to set A up as the wrong answer. No doubt the writer of the question would say that the assumption is not that the company will make more profit, but that it could increase it profits. So it is not exactly necessary that they be able to obtain the permits just that if it were possible then they could increase profits.

Kind of like saying that my commute to work would be quicker if I could flap my arms and fly. It is not assumed that I can fly, I am only saying that hypothetically if I could fly it would be quicker. Perhaps the assumption is that I would not get stuck in an air traffic jam with all the other people flying to work!!

Anyway, not a great question, but with a little edit it could be and C would become a good assumption answer. Although I would also like to see A changed a little so that it is less correct.

Do you guys see how an increase in "long term profits" does not require that "a sustainable market currently exists" but only that it is possible for one to exist?
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by zaarathelab » Thu Aug 11, 2011 11:15 pm
Thanks David.

Was confused between A and C. I agree that the answer constructs need to be better worded.
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