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The general density dependence model can be applied to

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The general density dependence model can be applied to [#permalink] New post 30 May 2012, 17:53
The general density dependence model can be applied to explain the founding of specialist firms (those attempting to serve a narrow target market). According to this model, specialist foundings hinge on the interplay between legitimation and competitive forces, both of which are functions of the density (total number) of firms in a particular specialist population. Legitimation occurs as a new type of firm moves from being viewed as unfamiliar to being viewed as a natural way to organize. At low density levels, each founding increases legitimation, reducing barriers to entry and easing subsequent foundings. Competition occurs because the resources that firms seek--customers, suppliers, and employees--are limited, but as long as density is low relative to plentiful resources, the addition of another firm has a negligible impact on the intensity of competition. At high density levels, however, competitive effects outweigh legitimation effects, discouraging foundings. The more numerous the competitors, the fiercer the competition will be and the smaller will be the incentive for new firms to enter the field.

While several studies have found a significant correspondence between the density dependence model and actual patterns of foundings, other studies have found patterns not consistent with the model. A possible explanation for this inconsistency is that legitimation and competitive forces transcend national boundaries, while studies typically restrict their analysis to the national level. Thus a national-level analysis can understate the true legitimation and competitive forces as well as the number of foundings in an industry that is internationally integrated. Many industries are or are becoming international, and since media and information easily cross national borders, so should legitimation and its effects on overseas foundings. For example, if a type of firm becomes established in the United States, that information transcends borders, reduces uncertainties, and helps foundings of that type of firm in other countries. Even within national contexts, studies have found more support for the density dependence model when they employ broader geographic units of analysis--for example, finding that the model's operation is seen more clearly at the state and national levels than at city levels.
Question #4. According to the passage, which of the following may account for the inconsistency between the general density dependence model and the evidence provided by certain studies of foundings?
(A) Such studies have overemphasized the impact of preexisting firms on the establishment of new firms.
(B) Such studies have not focused strongly enough on the role of competition among newly established firms operating at the city and state levels.
(C) Such studies fail to differentiate among specialist firms with regard to the degree to which they deviate from familiar forms of organization.
(D) Such studies have not taken into account the fact that many industries are internationally integrated.
(E) Such studies have neglected to investigate firms that attempt to serve only a narrow target market.
[Reveal] Spoiler:
D


Question #5.In the second paragraph, the author is primarily concerned with
(A) noting various exceptions to a certain general finding
(B) examining the impact of one type of industry on another
(C) proposing a possible explanation for an inconsistency
(D) providing specific examples of a particular phenomenon
(E) defending the validity of a particular study's conclusions
[Reveal] Spoiler:
C


Question #6.The passage suggests that when a population of specialist firms reaches a high density level, which of the following is likely to occur?
(A) Foundings will decline despite legitimation that has occurred in these industries.
(B) Increasing competition will encourage many firms to broaden their target market.
(C) Competition for resources will become stabilized and thus foundings will be encouraged.
(D) Many customers will abandon their loyalty to older firms as more innovative firms enter the market.
(E) Firms will begin to cross national borders in an attempt to gain a competitive advantage.
[Reveal] Spoiler:
A


Question #7.The primary purpose of the passage is to
(A) question the validity of an economic model
(B) point out some inconsistencies within an economic model
(C) outline an economic model and suggest revisions to it
(D) describe an economic model and provide specific examples to illustrate its use
(E) explain why an economic model remains valid despite inconsistent research results
[Reveal] Spoiler:
E

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Re: 5/30 RC [#permalink] New post 30 May 2012, 18:08
OA is DCAE

I have a question regarding Q7.
How can E be an answer?

I googled this Q and found some people said that you should look at the beginning and the ending when you solve "primary purpose" questions.

I can see why E is an answer if I look at the last sentence of the passage, but what I don't understand is that where is the transition point.

The first paragraph just explains what the GDD model is, so the second paragraph has the main point of the passage.

The second paragraph starts with "While several studies have found a significant correspondence between the density dependence model and actual patterns of foundings, other studies have found patterns not consistent with the model."
And then, the passage explains a possible reason for the inconsistency.

I can understand up to this point.
However, I don't understand the following part. How can the following part be connected with the preceding part, which is the explanation for the possible reason for the inconsistency.
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Re: 5/30 RC [#permalink] New post 30 May 2012, 18:34
Good RC. I got the DEAE. I was dead confused between C and E in second question.
Can some one please let me know the reason why E has been ruled out.
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Re: 5/30 RC [#permalink] New post 30 May 2012, 18:49
Hi eybrj2, Let me try to explain how I selected the E for the last question.

A) question the validity of an economic model - This has been mainly raised in the second paragraph also author belives that model is correct. so ruled out.

(B) point out some inconsistencies within an economic model - Inconsistencies are not with model but with the results of research which has been done to prove this model. Also author not only point out these inconsistencies but also expalined them.
So ruled out.


(C) outline an economic model and suggest revisions to it - Author never wants to revise the model. so ruled out.

(D) describe an economic model and provide specific examples to illustrate its use - Clearly ruled out.


(E) explain why an economic model remains valid despite inconsistent research results
- This is the answer. Author clearly defended his model and wants to say that there are some inconsistencies but there are flaw in the research not in model.

Hope it will help !!
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Re: 5/30 RC [#permalink] New post 31 May 2012, 12:00
eybrj2 wrote:

I have a question regarding Q7.
How can E be an answer?

.

Between B and E.
Finding the tone of the passage can help. The tone is definitly positive. Just re-read the last few sentences. and that pull towards E.
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Re: 5/30 RC [#permalink] New post 05 Jun 2012, 01:24
i got DCAE . but i feel the answer to last question (primary purpose ) is kind of best out of worst choices .i dont think that what e says is the central motive of this passage .but yes it was one of the motives .other choices are too wrong to be answer .n yes the answer to 2nd question is definately C
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Re: 5/30 RC [#permalink] New post 12 Jun 2012, 15:42
DCAE

E is right for the last question. If you read the last sentence of the second paragraph...the author goes back to support the economic model despite the inconsistencies.
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Re: 5/30 RC [#permalink] New post 13 Jun 2012, 14:59
Expert's post
DCAE.

Q5: (E) is incorrect because the author does not defend the validity of a particular study's conclusions, he defends the validity of the whole theory. In fact, the only study he cites is one that runs counter to his viewpoint.

Q7: (B) is tempting here, but look at this sentence:

Quote:
Thus a national-level analysis can understate the true legitimation and competitive forces as well as the number of foundings in an industry that is internationally integrated.


The subtext of this sentence is that the author believes that the theory itself is consistent, but the application of the theory (limited to national analysis) is faulty, making (E) a better answer.
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Re: 5/30 RC   [#permalink] 13 Jun 2012, 14:59
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