The automobile industry in Country A argues that, because : GMAT Critical Reasoning (CR)
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# The automobile industry in Country A argues that, because

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The automobile industry in Country A argues that, because [#permalink]

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24 Dec 2010, 09:35
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The automobile industry in Country A argues that, because foreign automakers underpay workers and get nationally subsidized materials, they can offer artificially low prices. Thus, the industry argues, the current 8 percent tariff on imported products should be increased for automobiles. However, other industries in Country A remain healthy despite competition with imported products without exceptional tariffs. This fact indicates an increased automobile tariff is unnecessary.

Which of the following, if true, most strongly supports the argument of Country A's automobile industry against the challenge made above?

A) In some industries -- such as childcare, scientific equipment, and higher education -- consumers care far more about the quality of the product than the price.
B) Many governments support automobile exports so strongly that they would be willing to increase subsidies to offset any additional costs that are a result of exports.
C) There are several industries for which the ratio of workers' wages in Country A to the workers' wages in other countries is even higher than it is in the automobile industry.
D) Because of a scarcity of mineral and metal resources, Country A's automobile industry has to import, and pay tariffs on, most mineral or metal materials used to produce automobiles.
E) No industries in Country A other than the automobile industry, including those whose raw materials are highly taxed, have asked for an increase of the 8 tariff

I think this one is 700+ level. What do you guys think ? Will post OA soon
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Re: Knewton CR : complex logic [#permalink]

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24 Dec 2010, 10:30
Okay , I didn't understand point A . Also IMO , its B .
If the government of many countries would give subsidy to facilitate export , then this can be a very valid reason for the automobile industry to put up.
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Re: Knewton CR : complex logic [#permalink]

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24 Dec 2010, 13:48
The automobile industry in Country A argues that, because foreign automakers underpay workers and get nationally subsidized materials, they can offer artificially low prices. Thus, the industry argues, the current 8 percent tariff on imported products should be increased for automobiles. However, other industries in Country A remain healthy despite competition with imported products without exceptional tariffs. This fact indicates an increased automobile tariff is unnecessary.

Which of the following, if true, most strongly supports the argument of Country A's automobile industry against the challenge made above?

A) In some industries -- such as childcare, scientific equipment, and higher education -- consumers care far more about the quality of the product than the price. [color=#000080]Very nice of them . But this choice is out of scope.[/color]
B) Many governments support automobile exports so strongly that they would be willing to increase subsidies to offset any additional costs that are a result of exports.May not necessarily for country A's government.
C) There are several industries for which the ratio of workers' wages in Country A to the workers' wages in other countries is even higher than it is in the automobile industry. [color=#000080]Even then those industries are healthy. So in a way its giving automobile manufacturers one more point to not to ask for import tariffs.[/color]
D) Because of a scarcity of mineral and metal resources, Country A's automobile industry has to import, and pay tariffs on, most mineral or metal materials used to produce automobiles. In the stimulus it is mentioned that other foreign automakers: (i) pay less. (ii) get government subsidy, making their cars cheaper to sell in country A. On top of that, country A's automobile manufacturers' production cost is higher because import tariffs on metal and mineral. As a result, the selling price will increase and so will the price competitiveness against foreign automakers. Therefore, to be fair to country A's car manufacturers, the government should increase tariffs on imported car.This IMO is the answer.
E) No industries in Country A other than the automobile industry, including those whose raw materials are highly taxed, have asked for an increase of the 8 tariff. [color=#000080]Probably they don't have competition or may be just that efficient cost or other wise. But anyways, this answer choice does not speak about automobile manufacturers hence out of scope.[/color]

I think this one is 700+ level. What do you guys think ? Will post OA soon

D. Whats the OA?
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Re: Knewton CR : complex logic [#permalink]

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24 Dec 2010, 16:41
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[D]

Country A's automobile industry's argument:
Foreign companies underpay workers and get cheaper materials. This enables them to keep prices low. Therefore, increase import tariffs, so that we have a level playing field (against them).

Response:
Other industries in country A manage fine. You don't need a tariff increase.

Question:
Slam the response.

Without even looking at the options, the most obvious way to slam the response is to indicate that different industries function differently. Other industries may manage fine, but the automobile industry likely has peculiar problems of its own. We're probably looking for an option that highlights this.

A) Out of scope in every way. Not relevant to the automobile industry. Not relevant to country A. Quality v Price is not relevant to the issue at hand (should import tariff be increased?)

B) If anything, this weakens the case for an increase in tax. Some countries are willing to give any amount of subsidy to offset any extra cost imposed on their country's automobile exporters. If country A raises import tax, this would be an extra cost imposed on the automobile manufacturers in other countries. So, that country might decide to increase the subsidy provided to its manufacturers. As a result, there may just be no difference due to the increase. Either way, this doesn't challenge the response ("there's no need for a tariff increase 'cause other industries manage fine.")

C) There are many industries in country A where their workers are paid more than workers in other countries are. The automobile industry is one of these, but others have an even greater disparity. This means other industries, faced with problems similar to the automobile industry, are managing just fine. This doesn't challenge the response ("there's no need for a tariff increase 'cause other industries manage fine.").

D) This indicates that the automobile industry in country A has a special problem. The parts used to make the automobiles have to be imported, and taxes have to be paid to other countries for these imports. Clearly, this shows that the automobile industry in country A is different from the others. So while the response says ["there's no need for a tariff increase 'cause other industries manage fine."], the automobile industry can turn around and indicate that they have problems unlike those of any other industry. - CORRECT

E) No other industry seems to need this tariff increase. The automobile industry in country A cannot possibly use this to challenge the response ("there's no need for a tariff increase 'cause other industries manage fine.")
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Re: Knewton CR : complex logic [#permalink]

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26 Dec 2010, 15:01
+1 D

Yes, it is a 700-level question!
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Re: Knewton CR : complex logic [#permalink]

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26 Dec 2010, 23:06
Hi I chose D but i feel A is a contender as well.Because if the consumers in some industries care more for quality rather than price , the Automobile industry will get an excuse to to strengthen their demaind for Higher tariffs for Automobile exports.

A tells us that in some industries such as the ones mentioned above , the consumers go for the local products because the local products are better in quality than the imported ones . This point is , then , in support of the Automobile industry
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Re: Knewton CR : complex logic [#permalink]

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28 Dec 2010, 05:45
mundasingh123 wrote:
Hi I chose D but i feel A is a contender as well.Because if the consumers in some industries care more for quality rather than price , the Automobile industry will get an excuse to to strengthen their demaind for Higher tariffs for Automobile exports.

A tells us that in some industries such as the ones mentioned above , the consumers go for the local products because the local products are better in quality than the imported ones . This point is , then , in support of the Automobile industry

But in choice A , automobile industry is not mentioned as one of the impacted industries and scope is also too broad ( We are talking about Country A in the question where as in the choice it takes the entire auto industry into scope).

A) In some industries -- such as childcare, scientific equipment, and higher education -- consumers care far more about the quality of the product than the price.

OA is D . I am not posting official explanation as the replies capably handle it.

Hope this helps.
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Re: Knewton CR : complex logic [#permalink]

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04 Apr 2011, 00:18
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Re: Knewton CR : complex logic [#permalink]

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04 Apr 2011, 15:08
I go with D
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Re: Knewton CR : complex logic [#permalink]

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25 Apr 2011, 08:00
the answer is D of course. D strengthens the position taken by the automobile industry of country A
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Re: Knewton CR : complex logic [#permalink]

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20 May 2011, 06:45
there is a gap in the reasoning,hence a supporter answer choice is needed here.

D does the same.
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Re: Knewton CR : complex logic [#permalink]

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20 May 2011, 08:37
+1 for d and its really 700+ question

but not so complex logic....
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Re: The automobile industry in Country A argues that, because [#permalink]

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02 Jun 2012, 02:51
Hi, I still have trouble to understand why the answer should be D, not B.

As for answer D, if the production of cars in country A relies on imported products very much, that is to say increased tariff will have a reverse effect on the cost of making card in A, and will make the industry less competitive comparing from imported cars because 'foreign automakers underpay....', I thought this option weakens country A's claim most seriously, instead of supporting it.

For B, because foreign government gives subsidies to support their automobile industry, and that is the reason why AUTOMOBIL industry differentiates other industries, and the only way to compensate the disadvantage is to increase the tariff.

I realize it does say the government would offset 'ANY EXTRA COST', but thought it is the option supporting the claim most strongly.

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Re: The automobile industry in Country A argues that, because [#permalink]

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02 Jun 2012, 05:37
Mcmebk wrote:
Hi, I still have trouble to understand why the answer should be D, not B.

As for answer D, if the production of cars in country A relies on imported products very much, that is to say increased tariff will have a reverse effect on the cost of making card in A, and will make the industry less competitive comparing from imported cars because 'foreign automakers underpay....', I thought this option weakens country A's claim most seriously, instead of supporting it.

For B, because foreign government gives subsidies to support their automobile industry, and that is the reason why AUTOMOBIL industry differentiates other industries, and the only way to compensate the disadvantage is to increase the tariff.

I realize it does say the government would offset 'ANY EXTRA COST', but thought it is the option supporting the claim most strongly.

Read Manitshah's response above. It's really nice.
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Re: The automobile industry in Country A argues that, because [#permalink]

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07 Jun 2012, 00:42
A) In some industries -- such as childcare, scientific equipment, and higher education -- consumers care far more about the quality of the product than the price. - The passage speaks about the price rather than quality - Irrelevant - Incorrect
B) Many governments support automobile exports so strongly that they would be willing to increase subsidies to offset any additional costs that are a result of exports. - Governments support their respective automobile industry and that reduces the cost for them, which is actually mentioned in the passage - Incorrect
C) There are several industries for which the ratio of workers' wages in Country A to the workers' wages in other countries is even higher than it is in the automobile industry. - Irrelevant - No direct connection to the arguement - Incorrect
D) Because of a scarcity of mineral and metal resources, Country A's automobile industry has to import, and pay tariffs on, most mineral or metal materials used to produce automobiles. - Since raw materials are imported and tariffs has to be paid, this additional cost cuts into the profits. To gain advantage, the foreign import duty have to be increased. Fills in the gap - Correct
E) No industries in Country A other than the automobile industry, including those whose raw materials are highly taxed, have asked for an increase of the 8 tariff - Out of scope - Incorrect
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Re: The automobile industry in Country A argues that, because [#permalink]

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24 Jun 2012, 02:28
Initially went for A but wised up an went for D eventually.

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01 Aug 2014, 23:32
The automobile industry in Country A argues that, because foreign automakers underpay workers and get nationally subsidized materials, they can offer artificially low prices. Thus, the industry argues, the current 8 percent tariff on imported products should be increased for automobiles. However, other industries in Country A remain healthy despite competition with imported products without exceptional tariffs. This fact indicates an increased automobile tariff is unnecessary.

Which of the following, if true, most strongly supports the argument of Country A's automobile industry against the challenge made above?

(A) In some industries-such as childcare, scientific equipment, and higher education-consumers care far more about the quality of the product than the price.

(B) Many governments support automobile exports so strongly that they would be willing to increase subsidies to offset any additional costs that are a result of exports.

(C) There are several industries for which the ratio of workers' wages in Country A to the workers' wages in other countries is even higher than it is in the automobile industry.

(D) Because of a scarcity of mineral and metal resources, Country A's automobile industry has to import, and pay tariffs on, most mineral or metal materials used to produce automobiles.

(E) No industries in Country A other than the automobile industry, including those whose raw materials are highly taxed, have asked for an increase of the 8% tariff.

Can someone please explain me why D is correct?

Thanks
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02 Aug 2014, 00:57
Hello qwerty12321,

Here the Stem is pointing to the fact that: Auto Mfgrers are complaining about the cost-competitiveness to other foreign mfgrers. So, the domestic Auto industry is asking for higher tariff on these imported cars in order to boost the domestic business.

Now, the author is comparing the auto industry with other domestic industries by saying that, these other industries also face competition. But, are not asking for higher tariffs. So, it is assuming that these other industries have similar mfg processes/supplies/etc. In short, everything is comparable.

We need to negate that. So, option (D), states that the auto industry has to import Mineral/Metal which also attracts import tariff. Hence, making the raw material costly. Thus, they lose the competitive advantage. So, it weakens the author's claim.

Does that make sense?
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02 Aug 2014, 01:41
The automobile industry in Country A argues that, because foreign automakers underpay workers and get nationally subsidized materials, they can offer artificially low prices. Thus, the industry argues, the current 8 percent tariff on imported products should be increased for automobiles. However, other industries in Country A remain healthy despite competition with imported products without exceptional tariffs. This fact indicates an increased automobile tariff is unnecessary.

in this argument the automobile industry in country A is compared with other industries in the country A.
if we indicate that the condition of automobile industry is different from that of the other industries in country A, then the conclusion will break apart.

D does exactly the same thing. because of the scarcity of mineral and metal resources the automobile industry incur additional costs of importing these resources.
Re: Automobile Industry   [#permalink] 02 Aug 2014, 01:41
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