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gmatnovice
- Newbie | Next Rank: 10 Posts
- Posts: 5
- Joined: Mon Jan 26, 2009 9:21 am
Critical reasoning
Recently credit card companies have come under attack by consumer groups who argue that the interest rates charged by these companies are unconscionably high. In fact, the rates are generally several percentage points above those charged by banks for ordinary personal loans. But consumer groups overlook the fact that credit cards afford the user great flexibility. A user can purchase an item while it is on sale. So the lower costs of the item offsets the extra cost of credit.
The argument above makes which of the following assumptions?
* The cost savings of buying an item at a reduced price are at least equal to the excess interest that a consumer pays on purchases made with a credit card.
* A credit card application is not rejected unless the applicant has a long history of late payments and other credit problems.
* The prices of items on sale purchased by consumers are still sufficiently high to enable sellers to recoup their costs and make a modest profit.
* The consumers who make purchases of sale items with credit cards are persons who might not qualify for bank loans with a lower interest rate.
* The average outstanding balance of the ordinary credit card user is no greater than the total non-credit-card debt of the credit card user.
WHAT DO YOU THINK THE ANSWER IS???
Recently credit card companies have come under attack by consumer groups who argue that the interest rates charged by these companies are unconscionably high. In fact, the rates are generally several percentage points above those charged by banks for ordinary personal loans. But consumer groups overlook the fact that credit cards afford the user great flexibility. A user can purchase an item while it is on sale. So the lower costs of the item offsets the extra cost of credit.
The argument above makes which of the following assumptions?
* The cost savings of buying an item at a reduced price are at least equal to the excess interest that a consumer pays on purchases made with a credit card.
* A credit card application is not rejected unless the applicant has a long history of late payments and other credit problems.
* The prices of items on sale purchased by consumers are still sufficiently high to enable sellers to recoup their costs and make a modest profit.
* The consumers who make purchases of sale items with credit cards are persons who might not qualify for bank loans with a lower interest rate.
* The average outstanding balance of the ordinary credit card user is no greater than the total non-credit-card debt of the credit card user.
WHAT DO YOU THINK THE ANSWER IS???
