Connsumers in California seeking personal loans have fewer : GMAT Critical Reasoning (CR)
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# Connsumers in California seeking personal loans have fewer

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Connsumers in California seeking personal loans have fewer [#permalink]

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07 May 2007, 20:13
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Connsumers in California seeking personal loans have fewer banks to turn than do consumers elsewhere in the US. This shortage of competion among banks explains why interest rates on personal loans in California are higher than in any other region of the US.
Which of the following, if true, most substantially weakens the conclusion above?

A. Because of the comparatively high wayes they must pay to attract qualified workers, California banks charge depositors more than banks elsewhere do for many of the services they offer.
B. Personal loans are risker than other types of loans, such as home mortgage loans, that banks make.
C. Since bank deposits in California are covered by the same type of insurnance that guarentees bank deposit in other parts of the United States, they are no less secure than deposits elsewhere
D. The proportion of consumers who default on their personal loans is lower in California than in any other region of the US
E. Interest rates paid by California banks to depositors are lower than those paid by banks in other parts of the US because in California there is less competition to attract depositors

In the passage, does the shortage of competition among banks mean that there is no competition? I am a bit confused
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19 Dec 2011, 08:51
I went to A
what's OA?
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Re: Connsumers in California seeking personal loans have fewer [#permalink]

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19 Dec 2011, 09:05
I will go with A. Furthermore, shortage of competition does not mean no competition, but mean lack of competition.
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Re: Connsumers in California seeking personal loans have fewer [#permalink]

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21 Dec 2011, 00:26
I go with A
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Re: Connsumers in California seeking personal loans have fewer [#permalink]

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21 Dec 2011, 03:19
A. Because of the comparatively high wayes they must pay to attract qualified workers, California banks charge depositors more than banks elsewhere do for many of the services they offer.
-- interest rates are high as expenditure is high, correct !
B. Personal loans are risker than other types of loans, such as home mortgage loans, that banks make.
-- this can imply to other states too, this is out.
C. Since bank deposits in California are covered by the same type of insurnance that guarentees bank deposit in other parts of the United States, they are no less secure than deposits elsewhere
-- this supports, hence out
D. The proportion of consumers who default on their personal loans is lower in California than in any other region of the US
-- out of scope.
E. Interest rates paid by California banks to depositors are lower than those paid by banks in other parts of the US because in California there is less competition to attract depositors
-- irrelevant.
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Re: Connsumers in California seeking personal loans have fewer [#permalink]

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21 Dec 2011, 03:39
With A
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Re: Connsumers in California seeking personal loans have fewer [#permalink]

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21 Dec 2011, 20:28
IMO A
A show off an alternative cause
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Re: Connsumers in California seeking personal loans have fewer [#permalink]

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21 Dec 2011, 23:34
acdbe2003 wrote:
IMO A
A show off an alternative cause

same reasoning... A
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Re: Connsumers in California seeking personal loans have fewer [#permalink]

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26 Dec 2011, 07:34
So we need to counter the argument and state that its not due to lack of completion but some other reason for high interest rate

Only A provides an alternative reason for high interest rate
Re: Connsumers in California seeking personal loans have fewer   [#permalink] 26 Dec 2011, 07:34
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