Charlie's Chainsaw Company has reason to believe that one of

A is wrong coz conclusion cites that it should be right ECONOMIC decision. A definitely supports but its beyond the scope, its not about economic.

D and E are suit. I mistakenly choose D, as its mentioned about share market in the argument.
The OA is E.

+1E

Premise - Charlie’s Chainsaw Company has reason to believe that one of its models of saw is defective. A recall of all of the saws would cost more than $5 million, and would probably result in a loss in market share over the next quarter because of bad publicity

Conclusion - a recall is the right economic decision

Any option which supports the conclusion is our answer

D and E are lucrative enough.

D. The stocks of publicly traded companies that announce product recalls often drop upon the announcement, but they generally return to the pre-announcement level within 12 months. (12 months of loss is loss. We do not have anything to compare this 12 month with. Not the best you want to select)
E. Three years ago a rival company went out of business because of large punitive damages awarded to a plaintiff who had been injured by a defective chainsaw (this is our answer, a loss of 5 million $ is better than going out of business)

real life scenario made me go immediately with A without considering other options

but its CRUEL GMAT WORLD , where author can be concerned about the profit
and hence the answer E

good stuff getgyan, very nicely explained was torn between D and E...

IMO E

D is not even a contender here because it is OFS. Reason being, it talks about the share prices of a publicly traded company whereas the argument talks about the market share of the company. Share prices are irrelevant.

Thanks,
S

Share market and Market share..nice trap is not closely considered!
My answer is E.

Only Option E is strong enough since Option D mentions the cases of publicly traded companies and there is nothing mentioned in the question stem regarding Charlie's Chainsaw Company being a publicly traded company.

even though recall has some disadvantages, it now seems as to a better idea. Why? Because if they don't recall, then something worse will happen.

E points out that clearly - there is a probability that the company may go out of business. That could be the worst-case scenario.

Among all the options, E gives a strong reason to support the conclusion.

D is using a subset - publicly traded companies. We don't know if CS falls in that category.

This one had some annoyingly tricky answer choices.


A. The stimulus stated specifically that it had to be the best economic reason, not reasoning based in ethics or otherwise. While that may pull in some serious repercussions in real life, it doesn't matter because it's out of the scope of the question.
B. One would be inclined to think the damage of 2 recalled products must be worse than the damage caused by the recall of 1 product but there is nothing that indicates whether or not this is true.
C. This would weaken the conclusion. If the recall of a product makes customers think that the problems are irreparable, that would be a bad economic decision.
D. It is possible that the company doesn't at all make an announcement and continues to make money in that one year. The potential gains from keeping quiet could potentially outweigh the gains from announcing, so there's nothing that really indicates whether this is a good or bad economic decision.
E. This one seems most demanding of action. Where stocks can go up or down, having a company driven into the ground and going out of business is a different matter entirely. Of the provided reasons this is the one that most strongly supports the given conclusions.

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