Inference Question

This topic has expert replies
Master | Next Rank: 500 Posts
Posts: 106
Joined: Sat Mar 02, 2013 4:29 pm
Thanked: 4 times

Inference Question

by buoyant » Wed Apr 03, 2013 7:20 pm
The view has prevailed for the better part of the twentieth century that small firms do not perform an important role in Western economies. Official policies in many countries have favored large units of production because there were strong reasons to believe that large firms were superior to small firms in
virtually every aspect of economic performance- productivity, technological progress, and job security and compensation. However, in the 1970s, evidence began to suggest that small firms in some countries were outperforming their larger counterparts. Perhaps the best example of this trend was in the steel industry, where new firms entered the market in the form of "mini-mills," and small-firm employment expanded, while many large companies shut down plants and reduced employment. Although no systematic evidence exists to determine unequivocally whether smaller units of production are as efficient as large firms or are, in fact, more efficient, some researchers have concluded that the accumulated evidence to date indicates that small firms are at least not burdened with an inherent size disadvantage.

Thus, an alternative view has emerged in the economics literature, arguing that small firms make several important contributions to industrial markets. First, small firms are often the source of the kind of innovative activity that leads to technological change. Small firms generate market turbulence that creates additional dimensions of competition, and they also promote international competition through newly created niches. Finally, small firms in recent years have generated the preponderant share of new jobs.

However, empirical knowledge about the relative roles of large and small firms is generally based upon anecdotal evidence and case studies, and such evidence has proved inadequate to answer major questions concerning the role of small firms across various industries and nations. An additional difficulty is that it is not obvious what criteria one should use to distinguish small firms from large ones. While a "small firm" is often defined as an enterprise with fewer than 500 employees, research studies of small firms use a wide variety of definitions.

The passage suggests which of the following about the empirical study of small firms' role?
(A) Anecdotal evidence does not support the theory that small firms' role is significant.
(B) Degrees of market turbulence are the primary indicator of small firms' role.
(C) An examination of new niches created by small firms has provided important data for the analysis of such firms' role.
(D) Case studies have provided reliable evidence to answer major questions concerning small firms' role.
(E) A more precise definition of the term "small firm" is crucial to making a conclusive analysis about small firms' role

I am stuck between choices A and E
Although, i am sure that choice A can't be correct (as,according to the passage, such evidence is insufficient to conclude about small firms' role and not that such evidence doesn't support at all), I am little confused why the correct ans is E

Plz explain.

Legendary Member
Posts: 774
Joined: Mon Jan 23, 2012 4:32 am
Thanked: 46 times
Followed by:14 members

by aditya8062 » Wed Apr 03, 2013 8:59 pm
it has to be E
A cannot be the answer as the last para talks that anecdotal studies have proved inadequate in answering major questions concerning small firms across various industries and nations . it never says that Anecdotal evidence does not support the theory that small firms' role is significant. in fact if u look last and second last para in whole u will find that second last para is indeed stressing the important role of small firms and the fact that last para tells us that all these studies are based on empirical facts is making it clear that empirical fact do support the fact that small firms play an important part
make sense ?

PS : when u post passage kindly post all the question as is just a waste of time of other people who read the passage to answer just one question !!

User avatar
Master | Next Rank: 500 Posts
Posts: 123
Joined: Fri Nov 09, 2012 2:34 am
Location: Bengaluru, India
Thanked: 46 times
Followed by:9 members

by Gowri@CrackVerbal » Wed Apr 03, 2013 9:49 pm
buoyant wrote:The view has prevailed for the better part of the twentieth century that small firms do not perform an important role in Western economies. Official policies in many countries have favored large units of production because there were strong reasons to believe that large firms were superior to small firms in
virtually every aspect of economic performance- productivity, technological progress, and job security and compensation. However, in the 1970s, evidence began to suggest that small firms in some countries were outperforming their larger counterparts. Perhaps the best example of this trend was in the steel industry, where new firms entered the market in the form of "mini-mills," and small-firm employment expanded, while many large companies shut down plants and reduced employment. Although no systematic evidence exists to determine unequivocally whether smaller units of production are as efficient as large firms or are, in fact, more efficient, some researchers have concluded that the accumulated evidence to date indicates that small firms are at least not burdened with an inherent size disadvantage.

Thus, an alternative view has emerged in the economics literature, arguing that small firms make several important contributions to industrial markets. First, small firms are often the source of the kind of innovative activity that leads to technological change. Small firms generate market turbulence that creates additional dimensions of competition, and they also promote international competition through newly created niches. Finally, small firms in recent years have generated the preponderant share of new jobs.

However, empirical knowledge about the relative roles of large and small firms is generally based upon anecdotal evidence and case studies, and such evidence has proved inadequate to answer major questions concerning the role of small firms across various industries and nations. An additional difficulty is that it is not obvious what criteria one should use to distinguish small firms from large ones. While a "small firm" is often defined as an enterprise with fewer than 500 employees, research studies of small firms use a wide variety of definitions.

The passage suggests which of the following about the empirical study of small firms' role?
(A) Anecdotal evidence does not support the theory that small firms' role is significant.
(B) Degrees of market turbulence are the primary indicator of small firms' role.
(C) An examination of new niches created by small firms has provided important data for the analysis of such firms' role.
(D) Case studies have provided reliable evidence to answer major questions concerning small firms' role.
(E) A more precise definition of the term "small firm" is crucial to making a conclusive analysis about small firms' role

I am stuck between choices A and E
Although, i am sure that choice A can't be correct (as,according to the passage, such evidence is insufficient to conclude about small firms' role and not that such evidence doesn't support at all), I am little confused why the correct ans is E

Plz explain.
The question is regarding the 'empirical study' of small firms - so go straight to the last paragraph. The answer is evident in these lines:
However, empirical knowledge about the relative roles of large and small firms is generally based upon anecdotal evidence and case studies, and such evidence has proved inadequate to answer major questions concerning the role of small firms across various industries and nations. An additional difficulty is that it is not obvious what criteria one should use to distinguish small firms from large ones.

Option E points exactly to this: that a more precise definition of a 'small firm' is required to make any conclusion about the role of small firms.

Option A is wrong because the passage only says that anecdotal evidence is 'inadequate' to answer 'major question' - it does not say that such evidence 'does not support' the theory about the role of small firms.
Gowri N Kishore
Verbal Specialist & Mentor
CrackVerbal

If you find my posts useful, please hit the 'Thank' button. :)

Get a FREE Profile Evaluation from CrackVerbal experts!
https://applications.crackverbal.com/fre ... valuation/

Attend Live, Instructor-led Online classes by 99th p'cile instructors!
https://gmat.crackverbal.com/gmat-course ... ve-course/

User avatar
Master | Next Rank: 500 Posts
Posts: 110
Joined: Sun Aug 19, 2012 4:39 am
Thanked: 9 times
GMAT Score:640

by Ankur87 » Wed Apr 10, 2013 7:16 pm
+1 for E
as A says Anecdotal evidence does not support the theory......
but the last para states : anecdotal evidence has proved inadequate to answer major questions....
so the anecdotal evidence is inadequate, there is no question of not supporting the theory.

GMAT/MBA Expert

User avatar
GMAT Instructor
Posts: 3380
Joined: Mon Mar 03, 2008 1:20 am
Thanked: 2256 times
Followed by:1535 members
GMAT Score:800

by lunarpower » Sat Apr 20, 2013 3:28 am
i am a little late to this party, as usual, but i received a private message about this thread.

the question asks about the empirical study of small firms' role. therefore, we need to find ... the empirical study of small firms' role.

that's the last paragraph.

in that paragraph, it says...
such evidence has proved inadequate to answer major questions concerning the role of small firms across various industries and nations.
... i.e., we can't draw definitive conclusions
An additional difficulty is that it is not obvious what criteria one should use to distinguish small firms from large ones.
i.e.,
another reason why the evidence is inadequate is that there's no set definition of "small".

so, (e).
Ron has been teaching various standardized tests for 20 years.

--

Pueden hacerle preguntas a Ron en castellano
Potete chiedere domande a Ron in italiano
On peut poser des questions à Ron en français
Voit esittää kysymyksiä Ron:lle myös suomeksi

--

Quand on se sent bien dans un vêtement, tout peut arriver. Un bon vêtement, c'est un passeport pour le bonheur.

Yves Saint-Laurent

--

Learn more about ron

User avatar
Senior | Next Rank: 100 Posts
Posts: 89
Joined: Fri Jun 01, 2012 12:22 am
Location: Bangalore, India
Thanked: 6 times
Followed by:2 members

by sidceg » Wed Oct 08, 2014 6:57 pm
Not sure whether to open a new thread for another question from the same passage. So here I go.

The passage is primarily concerned with

(A) dismissing a challenge to a traditional viewpoint
(B) suggesting a new solution to a long-standing problem
(C) resolving a conflict between two competing viewpoints
(D) discussing the emergence of an alternative viewpoint
(E) defending an alternative viewpoint against possible counter evidence

I was down to D and E. And I eliminated D because I didn't find the passage to be discussing any "emergence" of an alternative view point. I thought if the word "emergence" was not given then D would have been the answer. So I had to pick up E through POE, though I was not fully satisfied with E as I did not understand it fully.

Can you please help me understand answering this question?

Thanks

GMAT/MBA Expert

User avatar
GMAT Instructor
Posts: 3380
Joined: Mon Mar 03, 2008 1:20 am
Thanked: 2256 times
Followed by:1535 members
GMAT Score:800

by lunarpower » Sun Oct 12, 2014 1:49 am
If I were 10 years old, how would you explain to me what choices D and E say?
Ron has been teaching various standardized tests for 20 years.

--

Pueden hacerle preguntas a Ron en castellano
Potete chiedere domande a Ron in italiano
On peut poser des questions à Ron en français
Voit esittää kysymyksiä Ron:lle myös suomeksi

--

Quand on se sent bien dans un vêtement, tout peut arriver. Un bon vêtement, c'est un passeport pour le bonheur.

Yves Saint-Laurent

--

Learn more about ron

User avatar
Senior | Next Rank: 100 Posts
Posts: 89
Joined: Fri Jun 01, 2012 12:22 am
Location: Bangalore, India
Thanked: 6 times
Followed by:2 members

by sidceg » Sun Oct 12, 2014 4:31 am
I am not sure how do I do that to E though option D is simple enough to understand. I thought the passage is discussing alternative view point and not about its emergence. So the moment I saw emergence of alternative viewpoint I ruled it off. As I had said, I was left with E by POE and not by understanding what E actually means. In fact I just read what it actually said only now. I think this a terrible thing to do on the GMAT. But I am open to criticism so that I can correct myself.

I notice that there are two negatives - against counter evidence - which mean that the passage is doing something FOR the EVIDENCE.

Can you please take over from this point as I am stuck?

GMAT/MBA Expert

User avatar
GMAT Instructor
Posts: 3380
Joined: Mon Mar 03, 2008 1:20 am
Thanked: 2256 times
Followed by:1535 members
GMAT Score:800

by lunarpower » Wed Oct 22, 2014 5:10 am
...let's try that again.

i'm 10 years old. in those choices, what do the words mean?

e.g., choice (a) means...
...they'll describe something people have thought for a while
...then they'll describe a new way of thinking that goes against that one
...but will decide that the new way of thinking is wrong.

^^ do this for the two choices you're asking about.
there are no "tricks" in the wording of GMAC items, so it's important that you understand exactly what the words say.
Ron has been teaching various standardized tests for 20 years.

--

Pueden hacerle preguntas a Ron en castellano
Potete chiedere domande a Ron in italiano
On peut poser des questions à Ron en français
Voit esittää kysymyksiä Ron:lle myös suomeksi

--

Quand on se sent bien dans un vêtement, tout peut arriver. Un bon vêtement, c'est un passeport pour le bonheur.

Yves Saint-Laurent

--

Learn more about ron

Newbie | Next Rank: 10 Posts
Posts: 7
Joined: Tue Jun 24, 2014 4:04 pm

by Chicagosummer » Thu Oct 23, 2014 8:10 pm
IMO D