For similar cars and drivers, automobile insurance for collision damage has always cost more in Greatport than in Fairmont. Police studies, however, show that cars owned by Greatport residents are, on average, slightly less likely to be involved in a collision than cars in Fairmont. Clearly, therefore, insurance companies are making a greater profit on collision-damage insurance in Greatport than in Fairmont.

Which of the following is an assumption on which the argument depends?
A. Repairing typical collision damage does not cost more in Greatport than in Fairmont.
B. There are no more motorists in Greatport than in Fairmont.
C. Greatport residents who have been in a collision are more likely to report it to their insurance company than Fairmont residents are.
D. Fairmont and Greatport are the cities with the highest collision-damage insurance rates.
E. The insurance companies were already aware of the difference in the likelihood of collisions before the publication of the police reports.

This question was taken from http://www.testmagic.com/forum/topic.asp?TOPIC_ID=9440. There is no answer for this question but I'd like a debate on this question. I chose A for this question but I'm not sure as to how to explain how it is better or worse than the answer C given by the others. Can someone explain their reasoning?
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Best Regards,

Paul

I will go with A

My Answer is C

I see you've changed your answer.
What was your previous answer?

My bad! The answer is A. Overanalysing questions, sometimes, leads to
incorrect conclusions

IтАЩm still confused.

Here is my explanation.

Premise 1: Premium(AI-CD/Gt) > Preminum(AI-CD/Ft)
Premise 2: AccRate(Gt) < AccRate(Ft)
Conclusion : Profit(Gt) > Profit(Ft)

Profit = ( Number Of Policies * Premium per policy) тАУ (Cost Of Repair per Accident * Number Of Policies * Accident Rate )

Profit = Number Of Policies * [Premium per policy тАУ cost Of Repair per Accident * accident rate]

My confusion lies in interpreting the conclusion.
Does the conclusion, тАЬinsurance companies are making a greater profit on collision-damage insurance in Greatport than in Fairmont.тАЭ Means total profit on collision-damage insurance or profit per policy.

I assumed that the profit mentioned in the conclusion is total profit.

If so, we have four variables, out of which two are stated in the premise.
Other two variables have to be the assumptions and they are

1. Cost of Repair per accident in each city.
2. total number of polices in each city.
Based on the above information, we can't pick any single correct answer.


If we assume that the profit mentioned in the conclusion is profit per policy then
Only тАЬcost of repair per accidentтАЭ has to be assumed.
In which case the answer is clearly A.

IтАЩm not a native speaker and my SC score is not even half of many people in the forum.
Could some one validate my interpretation of the conclusion.

I see your point. But, why can't one presuppose that the cost of repair
doesn't vary among cities. I don't think it is a unwarrented presupposition.


Anyway, GMAT questions always have one clear answer.
This question, as it stands, is not clear. Does anyone know the source
of the question?

I hope, We don't get these kind of questions in GMAT

This is the best explanation to date that I've seen by Carsen on the link I first gave you. Very clear cut answer
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Best Regards,

Paul

All we need to know is that car+driver+cost or repair is same in order to ascertain that because cost of insurance is greater in Greatport, then it means that they are reaping more profits. Car+driver variables being similar is given in stimuli.
In (A) cost of repair being same is given and that is how we can acknowledge the conclusion. (B) is off topic. We don't need to know anything about motorists since this question concerns automobiles
_________________

Best Regards,

Paul