There has been given a discussion about a corporation. The corporation carries LIMITED fund.
What is limited fund? IS IT SPECIF? -Nope. It may be $ 50,000, $100,000, $200,000 or, $10,000,000. It actually depends on the company size or some other factors, isn’t it?
Suppose, Limited fund=$200,000
Let (according to correct answer option “E”),
(Dollar) needs to begin Cattle ranching=$100,000
(Dollar) needs to begin rubber-tapping=$200,000 (since rubber-tapping is twice as high as cattle ranching)
From the argument we’ve:Cattle Ranching:
1. Lower profits
2. Destroy forest
Rubber Tapping:
1. Higher Profits
2. Do not destroy forest
Question Stem says: But, they still cattle ranch though rubber-tapping is BETTER….WHY?
Here is my question/reasoning on something:
GMAC says (since ‘E’ is correct choice):
Since (Dollar) required to begin a rubber-tapping operation is twice as high as the(Dollar) required to begin a cattle ranching, they DO cattle ranch AS THEY DO NOT HAVE ENOUGH MONEY.[i] So what? I can still DO rubber-tapping because the argument and answer option didn’t specifically say that IF THE AMOUNT IS $100,000, THEN IT IS LIMITED FUND, BUT IF IT IS MORE THAN or LESS THAN $100,000, THEN IT WON’T BE THE LIMITED FUND! So, I can choose $200,000 as LIMITED fund.
How can I be sure that the cattle ranching groups pursue LESS profit? They still earn MORE profit, because the limited fund doesn’t mean that it is JUST $50,000, it may be $200,000, too.--right? If I can earn MORE profit by limited fund ($200,000), which is needed to open a rubber-tapping operation, how/why I make LESS profit? I am still earning MORE profit by this LIMITED fund!
GMAC didn’t specifically say that
Dollar needs to begin Cattle ranching=$100,000 and $$ needs to begin rubber-tapping=$200,000 (since rubber-tapping is twice as high as cattle ranching) or any SPECIFIC AMOUNT, which indicates that the fund is limited). If the argument DIRECTLY says that LIMITED fund IS $100,000, this CR will still not be okay because we are not informed the cost of cattle ranching or rubber-tapping!
The nitty-gritty: I want to say that I’ve to know the cost of cattle ranching, rubber-tapping, and the limited fund amount
simultaneously. The reasoning of the argument
along with correct answer option is fallacious, and thus it does not make any sense! I am not saying that GMAC is wrong; I just want to inform that
something is missing in this CR. If
something is missing in this CR, then GMAC’s thinking is wrong!
Analogy:This question is totally related with decision-making.
Suppose:
I have an apartment, which consists of two rooms (Room# 1 and Room# 2). Here, this is not my job to invest in the room, which is BETTER; my job is to invest in that room, which is
BETTER FOR ME as I am a decision-maker right on the moment.
Both rooms have special features. They are:
Room# 2 (equivalent to rubber-tapping):1. It costs double than Room# 1,
if I want to make it for the tenant to stay.2. RISK factor: Tenants do not destroy anything in my room (tenants do not destroy anything because they are very good guys
!)
3. It makes higher profit,
Room# 1
(equivalent to cattle ranching):1. It costs half of the Room# 2,
if I want to make it for tenant to stay.2. RISK factor: Sometimes, tenants destroy my television, freeze, AC and some other like this (this tenants are wicked guys
!)
3. It makes lower profit.
Everyone wants to get high profit by investing on something; I am not regarding of that. The question is trying to give signal that I should choose one in which I can invest whole the money, which is in my pocket, in my bank account, and/or somewhere else (the total amount from these source is limited). To invest in something, at first I have to know the cost/price of that product and the volume of my fund-Is the fund enough or not? Here, I have a LIMITED fund. The fund
may be worth $100,000 or $200,000, $600,000. I can’t invest in those ROOMS because I still do not know how much those rooms cost. Let, Room#2 costs $200,000 and Room#1 cost $100,000. Now, I’ll choose one, which is BETTER FOR ME not just better. I have a LIMITED fund. I do not know how much money in this fund. If the fund carries $200,000, then I must invest in Room# 2 to gain MORE profit. If the fund carries $100,000 then I must invest in Room#1 (here, I have to sacrifice higher profit as I do not have more money to invest in Room#2).---isn’t it?
But, I still do not know the volume of the fund and cost of Room# 1 & Room# 2. So, should I take decision to invest in Room# 1 or in Room# 2?----definitely not.
So, how does GMAC take decision to invest in Cattle ranching without having enough information?!?If my understanding is wrong, please correct me.Thanks.