In the United States, landowners are effectively insured : GMAT Critical Reasoning (CR)
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# In the United States, landowners are effectively insured

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In the United States, landowners are effectively insured [#permalink]

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14 Aug 2012, 20:36
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In the United States, landowners are effectively insured against natural disasters because the government subsidizes all land repairs by providing emergency relief after natural disasters. This “subsidy” is a partial cause for the high percentage of houses built on disaster-prone lands because it gives owners no financial incentive to research whether the land on which they build their houses is secure against disaster, argues an actuary. If owners were more selective, then potential house sites would need to be safe before being developed.

The actuary's argument makes which of the following assumptions?

A) Natural disasters are most costly when they strike large houses built close together.

B) A large percentage of landowners own several different lands across states.

C) The most careful site selection tends to be by owners building the more expensive houses.

D) The difference in the relief amounts paid to owners by different states has no major effect on site selection.

E) Potential builders can know which lands are secure against disaster.

I does not understand argument of these sentence
[Reveal] Spoiler: OA

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Re: In the United States, landowners are effectively insured [#permalink]

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14 Aug 2012, 22:11
Aristocrat wrote:
In the United States, landowners are effectively insured against natural disasters because the government subsidizes all land repairs by providing emergency relief after natural disasters. This “subsidy” is a partial cause for the high percentage of houses built on disaster-prone lands because it gives owners no financial incentive to research whether the land on which they build their houses is secure against disaster, argues an actuary. If owners were more selective, then potential house sites would need to be safe before being developed.

The actuary's argument makes which of the following assumptions?

A) Natural disasters are most costly when they strike large houses built close together.

B) A large percentage of landowners own several different lands across states.

C) The most careful site selection tends to be by owners building the more expensive houses.

D) The difference in the relief amounts paid to owners by different states has no major effect on site selection.

E) Potential builders can know which lands are secure against disaster.

I does not understand argument of these sentence

Argument states that the government insures land against any natural disaster, so land owners don't take sufficient pains to build their homes on areas which are disaster free. and land owners do it because they know that if some disaster happens then government will pay for the insured land.

The author concludes that land owners thus do not take pains to research whether the land which they have bought is disaster prone or not?

This argument assumes that Landowners have sufficient understanding to know what kind of land is disaster prone and what is not.

Hence answer is E.
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Re: In the United States, landowners are effectively insured [#permalink]

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14 Aug 2012, 22:36
I think the answer should be D. If you negate it, the conclusion is weakend.

How can E be true? the potential builders are not same as landowners.
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Re: In the United States, landowners are effectively insured [#permalink]

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14 Aug 2012, 22:38
Primises 1 : The house owners are insured INDIRECTLY , How ? because after disaster govt give money.
Primises 2 : The govt help is responsible for lot of house in disaster area as it not give any incentive b4 , so that owner can determine which area is safe.

So the answer Clearly E, it assumes people can know which area are safe b4 they build .

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Re: In the United States, landowners are effectively insured [#permalink]

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14 Aug 2012, 22:41
tapsgmat wrote:
Primises 1 : The house owners are insured INDIRECTLY , How ? because after disaster govt give money.
Primises 2 : The govt help is responsible for lot of house in disaster area as it not give any incentive b4 , so that owner can determine which area is safe.

So the answer Clearly E, it assumes people can know which area are safe b4 they build .

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How can E be true? the potential builders are not same as landowners.
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Re: In the United States, landowners are effectively insured [#permalink]

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14 Aug 2012, 22:43
got it right at 2:36 mins

In the United States, landowners are effectively insured against natural disasters because the government subsidizes all land repairs by providing emergency relief after natural disasters. This “subsidy” is a partial cause for the high percentage of houses built on disaster-prone lands because it gives owners no financial incentive to research whether the land on which they build their houses is secure against disaster, argues an actuary. If owners were more selective, then potential house sites would need to be safe before being developed.

Meaning
If the Govt. give some benefit to the landowners then the landowners will do some study to find the best lands and construct safer houses.

The actuary's argument makes which of the following assumptions?

A) Natural disasters are most costly when they strike large houses built close together.

B) A large percentage of landowners own several different lands across states.

C) The most careful site selection tends to be by owners building the more expensive houses.

D) The difference in the relief amounts paid to owners by different states has no major effect on site selection.

E) Potential builders can know which lands are secure against disaster.
The landowners will select the best lands and develop , so probability of disaster will be lesser ( and even if any disaster comes , they will be paid subsidy over the repair.)
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Re: In the United States, landowners are effectively insured [#permalink]

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15 Aug 2012, 00:27
Even i have chosen answer as 'D'
Thanks guys for explanation
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Re: In the United States, landowners are effectively insured [#permalink]

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19 Jan 2015, 06:03
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Re: In the United States, landowners are effectively insured [#permalink]

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11 Feb 2015, 17:31
The argument concludes that the “subsidy” is a partial cause for the high percentage of houses built on disaster-prone lands, because:
- land owners are effectively insured against natural disasters because the government subsidizes all land repairs by providing emergency relief after natural disasters
- it gives owners no financial incentive to research whether the land on which they build their houses is secure against disaster
- If owners were more selective, then potential house sites would need to be safe before being developed
E - It must assume that potential buyers are able to know which sites are safe if they are more selective. If it is not, whether they do research, they cannot be more selective. If it is, the conclusion is true.
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Re: In the United States, landowners are effectively insured [#permalink]

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11 Feb 2015, 18:46
gurpreetsingh wrote:
I think the answer should be D. If you negate it, the conclusion is weakend.

How can E be true? the potential builders are not same as landowners.

Hi Guruprit,

Could you please explain how negating D weakens the conclusion???

Thanx.
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Re: In the United States, landowners are effectively insured   [#permalink] 11 Feb 2015, 18:46
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