Critical Reasoning

IMO answer is A.

B-> irrelevant;
C-> the company Y intends to increase its profit in the long rung, yet in the answer choice it says currently, cleary not what is said.
D-> irrelevant;
E-> Assumption Negation Technique: labor costs in country X are not lower than those in Company Y's home country: does this sentence weaken the argument?:( this means labor costs may be the same, or higher, if they are the same, other things being equal, then the statement does not weaken the argument)Clearly not! so this is not the answer!

SubratGmat2011 wrote: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?

When a CR passage describes a PLAN:
The PREMISE is the plan itself.
The CONCLUSION is the goal of the plan.
The ASSUMPTION is what must be true for the plan to work.

In the passage above:
The plan is to OPEN A FACTORY in Country X in order to avoid the tariff.
The goal is to INCREASE PROFITS.
Which answer choice MUST BE TRUE for the plan to work?

"¢ Company Y will be able to obtain all the necessary permits to open a factory in Country X. No. The argument is not about whether the factory CAN be opened but about whether -- IF THE FACTORY IS OPENED -- Company Y will increase its profits. Eliminate A.

"¢ Company Y currently produces no goods outside its home country. No. For the plan to work, it does not have to be true that company Y currently produces no goods outside its home country. Eliminate B.

"¢ A sustainable market for Company Y's goods currently exists in Country X. Correct. Note that the passage tells us only that the goods produced by Company Y are FOR SALE in Country X. For Company Y to increase its profits, it is not enough that the products be FOR SALE; it must be true that there is a MARKET for the products and that people BUY them.

"¢ Company Y's home country does not impose tariffs on imported goods. No. The argument is not about importing goods into Company Y's home country. Eliminate D.

"¢ Labor costs in Country X are lower than those in Company Y's home country. No. It does not have to true that labor costs in Country X are LOWER; it must only be true that labor costs in Country X are not significantly HIGHER. Eliminate E.

The correct answer is C.

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?
"¢ Company Y will be able to obtain all the necessary permits to open a factory in Country X. (( Keep this ))"¢ Company Y currently produces no goods outside its home country. (( not relevant at all))"¢ A sustainable market for Company Y's goods currently exists in Country X. (( Comp Y already manufactures goods for country X))"¢ Company Y's home country does not impose tariffs on imported goods. (( CompY will manufacture goods in Country X for Country X's market for for company Y's home country))"¢ Labor costs in Country X are lower than those in Company Y's home country. (( This brings in the profitibility point. Evn if the company Y can avoid the import tariff if th eproduction cost is higher (labour , matrial etc) the overall cost is not reduced - so this point is to be considered most))
Now option A: Option E is the first point company Y should think before they plan to open their branch in country X. if it is financially viable then they will se if there is a permit issue. So E stands.

When a CR passage describes a PLAN:
The PREMISE is the plan itself.
The CONCLUSION is the goal of the plan.
The ASSUMPTION is what must be true for the plan to work.

hello mitch, thanks for your explanation. but i 'd like to know that is it the thumb rule to consider premise the plan itself when a CR passage describes a plan..

best regards

Nafi

I got this one wrong. I chose E. Thanks Mitch for the explanation.

I think option E would have been correct if it were-- The Labour costs in Country X are not significantly higher than labour costs in Country Y.

I am still confused between C and E.
Lower labor cost will defintely increase the profit right ?
though a sustainable market is needed in long term...

some more explainiation please

When a CR passage describes a PLAN:
The PREMISE is the plan itself.
The CONCLUSION is the goal of the plan.
The ASSUMPTION is what must be true for the plan to work.

I have never heard this before. It's original. Very useful stuff!