Find all School-related info fast with the new School-Specific MBA Forum

 It is currently 31 Aug 2016, 01:55

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

# Car Insurance

Author Message
VP
Joined: 25 Nov 2004
Posts: 1493
Followers: 6

Kudos [?]: 85 [0], given: 0

### Show Tags

03 Apr 2005, 22:02
In Argonia the average rate drivers pay for car accident insurance is regulated to allow insurance companies to make a reasonable profit. Under the regulations, the rate any individual driver pays never depends on the actual distance driven by that driver each year. Therefore, Argonians who drive less than average partially subsidize the insurance of those who drive more than average.

The conclusion above would be properly drawn if it were also true that in Argonia

(A) the average accident insurance rate for all drivers rises whenever a substantial number of new drivers buy insurance
(B) the average cost to insurance companies of insuring drivers who drive less than the annual average is less than the average cost of insuring drivers who drive more than the annual average
(C) the lower the age of a driver, the higher the insurance rate paid by that driver
(D) insurance company profits would rise substantially if drivers were classified in terms of the actual number of miles they drive each year
(E) drivers who have caused insurance companies to pay costly claims generally pay insurance rates that are equal to or lower than those paid by other drivers
Director
Joined: 01 Feb 2003
Posts: 851
Followers: 4

Kudos [?]: 83 [0], given: 0

### Show Tags

03 Apr 2005, 22:16
B should be it..
VP
Joined: 25 Nov 2004
Posts: 1493
Followers: 6

Kudos [?]: 85 [0], given: 0

### Show Tags

03 Apr 2005, 22:27
Vithal wrote:
B should be it..
GMAT Club Legend
Joined: 07 Jul 2004
Posts: 5062
Location: Singapore
Followers: 30

Kudos [?]: 315 [0], given: 0

### Show Tags

03 Apr 2005, 22:49
1) In Argonia the average rate drivers pay for car accident insurance is regulated to allow insurance companies to make a reasonable profit.

2) Under the regulations, the rate any individual driver pays never depends on the actual distance driven by that driver each year.

3) Therefore, Argonians who drive less than average partially subsidize the insurance of those who drive more than average.

The conclusion above would be properly drawn if it were also true that in Argonia

(A) the average accident insurance rate for all drivers rises whenever a substantial number of new drivers buy insurance
- Out of scope

(B) the average cost to insurance companies of insuring drivers who drive less than the annual average is less than the average cost of insuring drivers who drive more than the annual average
- If this is true, then the offset has to come ofrm the those who drive less than average

(C) the lower the age of a driver, the higher the insurance rate paid by that driver
- Out of scope

(D) insurance company profits would rise substantially if drivers were classified in terms of the actual number of miles they drive each year
- Not important. Does not attack the conclusion.

(E) drivers who have caused insurance companies to pay costly claims generally pay insurance rates that are equal to or lower than those paid by other drivers
- Contradicts conclsion that drivers who drive less than an average driver needs to pay more.

B it is.
Director
Joined: 01 Feb 2003
Posts: 851
Followers: 4

Kudos [?]: 83 [0], given: 0

### Show Tags

03 Apr 2005, 22:52
MA wrote:
Vithal wrote:
B should be it..

Say, driver A pays $100 for insurance and travels 500 miles and driver B pays$100, but travels 1000 miles. let us say the average distance travelled is 750 miles

Conclusion of the argument: Argonians who drive less than average partially subsidize the insurance of those who drive more than average

If A claims more in a year than B, then A will in no way subsidize the insurance of B - so, the assumption should be that A claims(cost to the insurance company) less than B..and this exactly what choice B states...

hence B
Manager
Joined: 05 Feb 2005
Posts: 116
Location: San Jose
Followers: 1

Kudos [?]: 1 [0], given: 0

### Show Tags

03 Apr 2005, 23:42
B.
_________________

Anyone who has never made a mistake has never tried anything new. -Albert Einstein.

Senior Manager
Joined: 10 Nov 2004
Posts: 294
Followers: 1

Kudos [?]: 14 [0], given: 0

### Show Tags

04 Apr 2005, 01:08
One more for B.
VP
Joined: 25 Nov 2004
Posts: 1493
Followers: 6

Kudos [?]: 85 [0], given: 0

### Show Tags

04 Apr 2005, 07:38
Vithal wrote:
MA wrote:
Vithal wrote:
B should be it..

Say, driver A pays $100 for insurance and travels 500 miles and driver B pays$100, but travels 1000 miles. let us say the average distance travelled is 750 miles

Conclusion of the argument: Argonians who drive less than average partially subsidize the insurance of those who drive more than average

If A claims more in a year than B, then A will in no way subsidize the insurance of B - so, the assumption should be that A claims(cost to the insurance company) less than B..and this exactly what choice B states...
hence B

perfect.
Director
Joined: 05 Jan 2005
Posts: 560
Followers: 2

Kudos [?]: 21 [0], given: 0

### Show Tags

04 Apr 2005, 09:11
(B) as well.
Manager
Joined: 12 Mar 2005
Posts: 65
Location: Milton Keynes UK
Followers: 2

Kudos [?]: 7 [0], given: 0

### Show Tags

04 Apr 2005, 09:17
B is my choice too.
_________________

The ability to focus attention on important things is a defining characteristic of intelligence.
--by Robert J. Shiller

Director
Joined: 27 Dec 2004
Posts: 905
Followers: 1

Kudos [?]: 38 [0], given: 0

### Show Tags

04 Apr 2005, 09:27
B....
Director
Joined: 27 Dec 2004
Posts: 905
Followers: 1

Kudos [?]: 38 [0], given: 0

### Show Tags

04 Apr 2005, 09:28
B....
Senior Manager
Joined: 07 Nov 2004
Posts: 458
Followers: 2

Kudos [?]: 64 [0], given: 0

### Show Tags

04 Apr 2005, 10:58
B is my choice
GMAT Club Legend
Joined: 07 Jul 2004
Posts: 5062
Location: Singapore
Followers: 30

Kudos [?]: 315 [0], given: 0

### Show Tags

04 Apr 2005, 20:46
OA ?
VP
Joined: 25 Nov 2004
Posts: 1493
Followers: 6

Kudos [?]: 85 [0], given: 0

### Show Tags

04 Apr 2005, 21:00
ywilfred wrote:
OA ?

you all r perfect. do you still need OA?
GMAT Club Legend
Joined: 07 Jul 2004
Posts: 5062
Location: Singapore
Followers: 30

Kudos [?]: 315 [0], given: 0

### Show Tags

04 Apr 2005, 21:50
Just in case the OA comes up differently
Similar topics Replies Last post
Similar
Topics:
14 Today s technology allows manufacturers to make small cars 7 04 Aug 2011, 09:12
automobile insurance 3 05 Sep 2008, 04:42
Car 2 21 Aug 2008, 16:30
In Argonia the average rate drivers pay for car 7 06 Jul 2008, 09:43
cars 15 06 Oct 2007, 14:32
Display posts from previous: Sort by