BREAKING: Target Test Prep releases Brand New 2026 On Demand GMAT prep course

Redeem

Corporation profits

Expert replies
by Sprite_TM » Wed Apr 01, 2009 6:19 pm
Corporate Officer: Last year was an unusually poor one for our chemical division, which has traditionally contributed about 60 percent 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 percent of the corporation’s profits, up from 20 percent the previous year.

On the basis of the facts stated, which of the following is the best critique of the evidence presented above?

(A) The increase in the pharmaceutical division’s contribution to corporation profits could have resulted largely from the introduction of single, important new product.
(B) In multidivisional corporations that have pharmaceutical divisions, over half of the corporation’s profits usually come from the pharmaceuticals.
(C) The percentage of the corporation’s profits attributable to the pharmaceutical division could have increased even if that division’s performance had not improved.
(D) The information cited does not make it possible to determine whether the 20 percent share of profits cited was itself an improvement over the year before.
(E) The information cited does not make it possible to compare the performance of the chemical and pharmaceutical divisions in of the percent of total profits attributable to each.

OA C
Join the discussion
Source: — Critical Reasoning |

by scoobydooby » Wed Apr 01, 2009 11:07 pm
we need to find out the flaw in the reasoning

the evidence: PD's share of profit grew from 25% to 45% so the PD grew stronger.
what if the PD's actual and the company's overall profit fell?

if say overall profit:100, PD's profit: 25
following year overall profit fell to 50, PD's profit: 22.5
=> PD's profit actually fell, so based on the % contribution only we cant conclude that the division grew.
hence C

(in questions with % an increasing % may not always mean increasing numbers and vice-versa)
Join the discussion

by thought » Thu Apr 02, 2009 9:45 pm
Here's another way to look at this.

My paraphrase of the argument:

Because, the PD's contribution to profits is up to 45% from 20%, we should be encouraged.

IMO, the best critique is one that says we should not be encouraged about this increase.


(A) I didn't find this to be relevant to the paraphrased argument
(B) I didn't find this to be relevant to the paraphrased argument
(C) Bingo! If the percentage of the corporation’s profits attributable to the pharmaceutical division could have increased even if that division’s performance had not improved then the conclusion does not follow. (We should NOT be encouraged because there is no real improvement.)
(D) I didn't find this to be relevant to my paraphrased argument
(E) Maybe. I could see this being argued as a fair critique but it doesn't directly critique the premise or the conclusion of the paraphrased argument.
Join the discussion

by Brad.C » Sun May 15, 2016 6:42 am
I would go with option C
Join the discussion

by graem83d » Sun May 15, 2016 7:12 am
My intuition whispers that it is C
Join the discussion