@duongthang: Is the answer to the question you posted A?

Please provide OA. I dont find this question to be there in CR Bible.

Thanks.

@duongthang: Is the answer to the question you posted A?

Please provide OA. I dont find this question to be there in CR Bible.

Thanks.

Can you please explain what is the "language shift" you have mentioned in this post? (This argument exhibits a language shift.)

Thanks!

GMATGuruNY wrote:

perfectstranger wrote:The price the government pays for standard weapons purchased from military contractors is determined by a pricing method called "historical costing��. historical costing allows contractors to protect their profits by adding a percentage increase based on the current rate of inflation, to the previous year's contractual price.
Which of the following statements, if true, is the best basis for a criticism of historical costing as an economically sound pricing method for military
contracts?
(A) The government might continue to pay for
past inefficient use of funds.
(B) The rate of inflation has varied considerably
over the past twenty years.
(C) The contractual price will be greatly affected
by the cost of materials used for the products.
(D) Many taxpayers question the amount of
money the government spends on military
contracts.
E) The pricing method based on historical costing might not encourage the development of innovative weapons.

Learn to recognize the common flaws.
This argument exhibits a language shift.

The premise is about how the contractors protect their profits.
The conclusion is that the method used is economically sound.

The argument assumes that these two ideas are connected: that if contractors are able to protect their profits, then the method used is economically sound.

The correct answer will break the link between these two ideas: it will show that, even though the pricing method enables the contractors to protect their profits, it is NOT a method that is economically sound.

Answer choice A does just what we need: The government might continue to pay for past inefficient use of funds. Since historical costing guarantees that the contractors will make a profit, the contractors have no incentive to use government funds efficiently, resulting in a pricing method that enables the contractors to protect their profits but is NOT economically sound.

The correct answer is A.

prepp wrote:Can you please explain what is the "language shift" you have mentioned in this post? (This argument exhibits a language shift.)

Thanks!

In a LANGUAGE SHIFT, the premise is about X, but the conclusion is not about X.
The conclusion is about Y.
The assumption is that there is a LINK between X and Y.

A simple example:
We have no money, so we can't go to the movies.
Here, we have a shift in language.
The premise is about MONEY, but the conclusion is NOT about money.
The conclusion is about the MOVIES.
The ASSUMPTION is that there is a link between MONEY and the MOVIES: that if we don't have money, we can't go to the movies.

GMATGuruNY wrote:

perfectstranger wrote:The price the government pays for standard weapons purchased from military contractors is determined by a pricing method called "historical costing��. historical costing allows contractors to protect their profits by adding a percentage increase based on the current rate of inflation, to the previous year's contractual price.
Which of the following statements, if true, is the best basis for a criticism of historical costing as an economically sound pricing method for military
contracts?
(A) The government might continue to pay for
past inefficient use of funds.
(B) The rate of inflation has varied considerably
over the past twenty years.
(C) The contractual price will be greatly affected
by the cost of materials used for the products.
(D) Many taxpayers question the amount of
money the government spends on military
contracts.
E) The pricing method based on historical costing might not encourage the development of innovative weapons.

Learn to recognize the common flaws.
This argument exhibits a language shift.

The premise is about how the contractors protect their profits.
The conclusion is that the method used is economically sound.

The argument assumes that these two ideas are connected: that if contractors are able to protect their profits, then the method used is economically sound.

The correct answer will break the link between these two ideas: it will show that, even though the pricing method enables the contractors to protect their profits, it is NOT a method that is economically sound.

Answer choice A does just what we need: The government might continue to pay for past inefficient use of funds. Since historical costing guarantees that the contractors will make a profit, the contractors have no incentive to use government funds efficiently, resulting in a pricing method that enables the contractors to protect their profits but is NOT economically sound.

The correct answer is A.

Mitch
Could you please explain why do you say it NOT economically sound even if the contractors are able to protect their profits?

IMO A

great question..
though i got the answer right

the long discussion terrifies me ...
small question with such a huge inner content

this is what makes gmat horrifying...

katy_123 wrote:

GMATGuruNY wrote:

perfectstranger wrote:The price the government pays for standard weapons purchased from military contractors is determined by a pricing method called "historical costing��. historical costing allows contractors to protect their profits by adding a percentage increase based on the current rate of inflation, to the previous year's contractual price.
Which of the following statements, if true, is the best basis for a criticism of historical costing as an economically sound pricing method for military
contracts?
(A) The government might continue to pay for
past inefficient use of funds.
(B) The rate of inflation has varied considerably
over the past twenty years.
(C) The contractual price will be greatly affected
by the cost of materials used for the products.
(D) Many taxpayers question the amount of
money the government spends on military
contracts.
E) The pricing method based on historical costing might not encourage the development of innovative weapons.

Learn to recognize the common flaws.
This argument exhibits a language shift.

The premise is about how the contractors protect their profits.
The conclusion is that the method used is economically sound.

The argument assumes that these two ideas are connected: that if contractors are able to protect their profits, then the method used is economically sound.

The correct answer will break the link between these two ideas: it will show that, even though the pricing method enables the contractors to protect their profits, it is NOT a method that is economically sound.

Answer choice A does just what we need: The government might continue to pay for past inefficient use of funds. Since historical costing guarantees that the contractors will make a profit, the contractors have no incentive to use government funds efficiently, resulting in a pricing method that enables the contractors to protect their profits but is NOT economically sound.

The correct answer is A.

Mitch
Could you please explain why do you say it NOT economically sound even if the contractors are able to protect their profits?

At issue is not what I say but what the PASSAGE says.
According to the PASSAGE, if contractors are able to protect their profits, then historical costing is an economically sound method.
To weaken this conclusion, the correct answer must must show that historical costing is NOT an economically sound method -- even if it enables contractors to protect their profits.

Hello Mitch,


your explanation is very clear. I just have on question. Can you give an example for the inefficient use of funds? What is exactly meant by that in this context?

Thanks

GMATGuruNY wrote:

perfectstranger wrote:The price the government pays for standard weapons purchased from military contractors is determined by a pricing method called "historical costing��. historical costing allows contractors to protect their profits by adding a percentage increase based on the current rate of inflation, to the previous year's contractual price.
Which of the following statements, if true, is the best basis for a criticism of historical costing as an economically sound pricing method for military
contracts?
(A) The government might continue to pay for
past inefficient use of funds.
(B) The rate of inflation has varied considerably
over the past twenty years.
(C) The contractual price will be greatly affected
by the cost of materials used for the products.
(D) Many taxpayers question the amount of
money the government spends on military
contracts.
E) The pricing method based on historical costing might not encourage the development of innovative weapons.

Learn to recognize the common flaws.
This argument exhibits a language shift.

The premise is about how the contractors protect their profits.
The conclusion is that the method used is economically sound.

The argument assumes that these two ideas are connected: that if contractors are able to protect their profits, then the method used is economically sound.

The correct answer will break the link between these two ideas: it will show that, even though the pricing method enables the contractors to protect their profits, it is NOT a method that is economically sound.

Answer choice A does just what we need: The government might continue to pay for past inefficient use of funds. Since historical costing guarantees that the contractors will make a profit, the contractors have no incentive to use government funds efficiently, resulting in a pricing method that enables the contractors to protect their profits but is NOT economically sound.

The correct answer is A.

ozlemmetje wrote:Hello Mitch, your explanation is very clear. I just have on question. Can you give an example for the inefficient use of funds? What is exactly meant by that in this context?

Thanks

In this context, inefficient means wasteful.
The OA implies the following:
If the government has been OVERPAYING for weapons, then allowing contractors to increase prices at the current rate of inflation will cause the government to CONTINUE TO OVERPAY for weapons.
Overpaying for weapons is an inefficient/wasteful use of funds -- strengthening the conclusion that historical costing is NOT an economically sound pricing method.

I know one confusing thing to me that tripped me up on this problem was that it was asking if it was economically sound for the military (I missed that portion). From the perspective of the contractors, it is still economically sound given answer choice A because they can still protect their profits.

GMATGuruNY wrote: Answer choice A does just what we need: The government might continue to pay for past inefficient use of funds. Since historical costing guarantees that the contractors will make a profit, the contractors have no incentive to use government funds efficiently, resulting in a pricing method that enables the contractors to protect their profits but is NOT economically sound.

The correct answer is A.

GMATGuruNY wrote: In this context, inefficient means wasteful.
The OA implies the following:
If the government has been OVERPAYING for weapons, then allowing contractors to increase prices at the current rate of inflation will cause the government to CONTINUE TO OVERPAY for weapons.
Overpaying for weapons is an inefficient/wasteful use of funds -- strengthening the conclusion that historical costing is NOT an economically sound pricing method.

Hi GMATGuruNY,
Few clarifications required on your explanations above -

1. It appears to me from your above TWO quotes that in first explanation it seems that it's conveyed that the contractors DON'T use government funds efficiently, WHEREAS in the second explanation it seems that it says that the government has been using funds inefficiently OR in a wasteful manner by OVERPAYING for weapons -- so I'm getting LITTLE BIT confused that which one is actually taking place! (Though,I guess, the latter EXPLANATION is more likely to be CONVINCING)

Could you please help me understand where I'm getting this wrong ?

2. (Although it's a WEAKEN type CR) I guess, it's NOT EXACTLY that TYPICAL WEAKEN question in which CONCLUSION itself lies in the STIMULUS/ARGUMENT, rather the CONCLUSION here is in the QUESTION STEM... isn't it BIT weird ?

In GMAT,how often we can see such CR construction (in which CONCLUSION lies in the QUESTION STEM) ? Any other similar instances of Official Questions ?

3. I think, the main ISSUE here is adding increment to the previous year's contractual price. Because, if the government has been OVERPAYING for weapons, then MOST LIKELY there is some FLAW in the FIRST/BASE contractual price after which the HISTORICAL COSTING has made this FLAW to be continued in the subsequent years, without having a provision to get this FLAW rectified...and hence HISTORICAL COSTING thus becomes NOT economically sound. Am I correct ?

RBBmba@2014 wrote:
Hi GMATGuruNY,
Few clarifications required on your explanations above -

1. It appears to me from your above TWO quotes that in first explanation it seems that it's conveyed that the contractors DON'T use government funds efficiently, WHEREAS in the second explanation it seems that it says that the government has been using funds inefficiently OR in a wasteful manner by OVERPAYING for weapons -- so I'm getting LITTLE BIT confused that which one is actually taking place! (Though,I guess, the latter EXPLANATION is more likely to be CONVINCING)

The two posts are different ways of expressing the same situation:
If CONTRACTORS DO NOT USE FUNDS EFFICIENTLY (first post) -- if they require $200 for a weapon that should require only $100 -- then the government is OVERPAYING for weapons (second post).

2. (Although it's a WEAKEN type CR) I guess, it's NOT EXACTLY that TYPICAL WEAKEN question in which CONCLUSION itself lies in the STIMULUS/ARGUMENT, rather the CONCLUSION here is in the QUESTION STEM... isn't it BIT weird ?

In GMAT,how often we can see such CR construction (in which CONCLUSION lies in the QUESTION STEM) ? Any other similar instances of Official Questions ?

It is not uncommon for the conclusion to appear solely in the question stem.
Two examples in the OG12:
CR5: The adoption of this policy would be most likely to decrease employees' productivity if the employees' job functions required them to.
CR55: Which of the following strategies would be most likely to minimize Company X's losses on the policies?
In each case, the portion in red represents the conclusion of the argument.

3. I think, the main ISSUE here is adding increment to the previous year's contractual price. Because, if the government has been OVERPAYING for weapons, then MOST LIKELY there is some FLAW in the FIRST/BASE contractual price after which the HISTORICAL COSTING has made this FLAW to be continued in the subsequent years, without having a provision to get this FLAW rectified...and hence HISTORICAL COSTING thus becomes NOT economically sound. Am I correct ?

Your understanding seems correct.

GMATGuruNY wrote: It is not uncommon for the conclusion to appear solely in the question stem.
Two examples in the OG12:
CR5: The adoption of this policy would be most likely to decrease employees' productivity if the employees' job functions required them to.
CR55: Which of the following strategies would be most likely to minimize Company X's losses on the policies?
In each case, the portion in red represents the conclusion of the argument.

Hi GMATGuruNY,
Got a quick question on CR55:

How CONCLUSION here appears solely in the QUESTION STEM ? Because in the STIMULUS, there is a part that starts with Therefore, Company X is concerned... -- isn't it the CONCLUSION itself ? (If not, could you please shed light why so ?)

RBBmba@2014 wrote:

GMATGuruNY wrote: It is not uncommon for the conclusion to appear solely in the question stem.
Two examples in the OG12:
CR5: The adoption of this policy would be most likely to decrease employees' productivity if the employees' job functions required them to.
CR55: Which of the following strategies would be most likely to minimize Company X's losses on the policies?
In each case, the portion in red represents the conclusion of the argument.

Hi GMATGuruNY,
Got a quick question on CR55:

How CONCLUSION here appears solely in the QUESTION STEM ? Because in the STIMULUS, there is a part that starts with Therefore, Company X is concerned... -- isn't it the CONCLUSION itself ? (If not, could you please shed light why so ?)

The correct answer to CR55 must support the goal TO MINIMIZE LOSSES.
The question stem can be rephrased as follows:
Which of the following strategies, if implemented, would support the conclusion that losses will be minimized?