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license patented technology

by himu » Tue Nov 20, 2012 9:29 pm
When a company refuses to allow other companies to produce patented technology, the consumer invariably loses. The company that holds the patent can charge exorbitant prices because there is no direct competition. When the patent expires, other companies are free to manufacture the technology and prices fall. Companies should therefore allow other manufacturers to license patented technology.

The argument above presupposes which of the following?

Companies cannot find legal ways to produce technology similar to patented technology.
Companies have an obligation to act in the best interest of the consumer.
Too many patents are granted to companies that are unwilling to share them.
The consumer can tell the difference between patented technology and inferior imitations.
Consumers care more about price than about quality.
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by GMATGuruNY » Tue Nov 20, 2012 9:40 pm
When a company refuses to allow other companies to produce patented technology, the consumer invariably loses. The company that holds the patent can charge exorbitant prices because there is no direct competition. When the patent expires, other companies are free to manufacture the technology and prices fall. Companies should therefore allow other manufacturers to license patented technology.

The argument above presupposes which of the following?

(A) Companies cannot find legal ways to produce technology similar to patented technology.
(B) Companies have an obligation to act in the best interest of the consumer.
(C) Too many patents are granted to companies that are unwilling to share them.
(D) The consumer can tell the difference between patented technology and inferior imitations.
(E) Consumers care more about price than about quality.
The premise is about X: The CONSUMER loses when a company refuses to allow other companies to produce patented technology.
The conclusion is about Y: COMPANIES should therefore allow other manufacturers to license patented technology.

The assumption is that X is linked to Y: that, because the CONSUMER loses, COMPANIES should change what they are doing -- even though these companies can charge EXORBITANT prices. Why should a company that can charge exorbitant prices change its business model? What's bad for the consumer clearly is GOOD for the company.

Answer choice B exposes the assumption:

For the conclusion here to be valid, it MUST BE TRUE THAT companies have an obligation to act in the best interest of the consumer.

If this answer choice is negated -- if companies DO NOT have an obligation to act in the best interest of the consumer -- then they have no reason to license patented technology, invalidating the conclusion of the passage.

The correct answer is B.
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