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(This passage was written in 1978.) Recent years have

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(This passage was written in 1978.) Recent years have [#permalink] New post 15 Sep 2007, 13:19
(This passage was written in 1978.)
Recent years have brought minority-owned businesses in the United States unprecedented opportunities—as well as new and significant risks. Civil rights activists have long argued that one of the principal reasons why Blacks, Hispanics, and other minority groups have difficulty establishing themselves in business is that they lack access to the sizable orders and subcontracts that are generated by large companies. Now Congress, in apparent agreement, has required by law that businesses awarded federal contracts of more than $500,000 do their best to find minority subcontractors and record their efforts to do so on forms filed with the government. Indeed, some federal and local agencies have gone so far as to set specific percentage goals for apportioning parts of public works contracts to minority enterprises.
Corporate response appears to have been substantial. According to figures collected in 1977, the total of corporate contracts with minority businesses rose from $77 million in 1972 to $1.1 billion in 1977. The projected total of corporate contracts with minority businesses for the early 1980’s is estimated to be over 53 billion per year with no letup anticipated in the next decade. Promising as it is for minority businesses, this increased patronage poses dangers for them, too. First, minority firms risk expanding too fast and overextending themselves financially, since most are small concerns and, unlike large businesses, they often need to make substantial investments in new plants, staff, equipment, and the like in order to perform work subcontracted to them. If, thereafter, their subcontracts are for some reason reduced, such firms can face potentially crippling fixed expenses. The world of corporate purchasing can be frustrating for small entrepreneurs who get requests for elaborate formal estimates and bids. Both consume valuable time and resources, and a small company’s efforts must soon result in orders, or both the morale and the financial health of the business will suffer.
A second risk is that White-owned companies may seek to cash in on the increasing apportionments through formation of joint ventures with minority-owned concerns. Of course, in many instances there are legitimate reasons for joint ventures; clearly, White and minority enterprises can team up to acquire business that neither could acquire alone. But civil rights groups and minority business owners have complained to Congress about minorities being set up as “fronts” with White backing, rather than being accepted as full partners in legitimate joint ventures.
Third, a minority enterprise that secures the business of one large corporate customer often runs the danger of becoming—and remaining—dependent. Even in the best of circumstances, fierce competition from larger, more established companies makes it difficult for small concerns to broaden their customer bases: when such firms have nearly guaranteed orders from a single corporate benefactor, they may truly have to struggle against complacency arising from their current success.


Which of the following, if true, would most weaken the authors assertion that, in the 1970s, corporate response to federal requirements (lines 18-19) was substantial

A. Corporate contracts with minority-owned businesses totaled $2 billion in 1979.

B. Between 1970 and 1972, corporate contracts with minority-owned businesses declined by 25 percent.

C. The figures collected in 1977 underrepresented the extent of corporate contracts with minority-owned businesses.

D. The estimate of corporate spending with minority-owned businesses in 1980 is approximately $10 million too high.

E. The $1.1 billion represented the same percentage of total corporate spending in 1977 as did $77 million in 1972.
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Re: RC clerify one question [#permalink] New post 15 Sep 2007, 17:01
ajisha wrote:
(This passage was written in 1978.)

Recent years have brought minority-owned businesses in the United States unprecedented opportunities—as well as new and significant risks. Civil rights activists have long argued that one of the principal reasons why Blacks, Hispanics, and other minority groups have difficulty establishing themselves in business is that they lack access to the sizable orders and subcontracts that are generated by large companies. Now Congress, in apparent agreement, has required by law that businesses awarded federal contracts of more than $500,000 do their best to find minority subcontractors and record their efforts to do so on forms filed with the government. Indeed, some federal and local agencies have gone so far as to set specific percentage goals for apportioning parts of public works contracts to minority enterprises.

Corporate response appears to have been substantial. According to figures collected in 1977, the total of corporate contracts with minority businesses rose from $77 million in 1972 to $1.1 billion in 1977. The projected total of corporate contracts with minority businesses for the early 1980’s is estimated to be over 53 billion per year with no letup anticipated in the next decade. Promising as it is for minority businesses, this increased patronage poses dangers for them, too. First, minority firms risk expanding too fast and overextending themselves financially, since most are small concerns and, unlike large businesses, they often need to make substantial investments in new plants, staff, equipment, and the like in order to perform work subcontracted to them. If, thereafter, their subcontracts are for some reason reduced, such firms can face potentially crippling fixed expenses. The world of corporate purchasing can be frustrating for small entrepreneurs who get requests for elaborate formal estimates and bids. Both consume valuable time and resources, and a small company’s efforts must soon result in orders, or both the morale and the financial health of the business will suffer.
A second risk is that White-owned companies may seek to cash in on the increasing apportionments through formation of joint ventures with minority-owned concerns. Of course, in many instances there are legitimate reasons for joint ventures; clearly, White and minority enterprises can team up to acquire business that neither could acquire alone. But civil rights groups and minority business owners have complained to Congress about minorities being set up as “fronts” with White backing, rather than being accepted as full partners in legitimate joint ventures.

Third, a minority enterprise that secures the business of one large corporate customer often runs the danger of becoming—and remaining—dependent. Even in the best of circumstances, fierce competition from larger, more established companies makes it difficult for small concerns to broaden their customer bases: when such firms have nearly guaranteed orders from a single corporate benefactor, they may truly have to struggle against complacency arising from their current success.

Which of the following, if true, would most weaken the authors assertion that, in the 1970s, corporate response to federal requirements (lines 18-19) was substantial

A. Corporate contracts with minority-owned businesses totaled $2 billion in 1979.

B. Between 1970 and 1972, corporate contracts with minority-owned businesses declined by 25 percent.

C. The figures collected in 1977 underrepresented the extent of corporate contracts with minority-owned businesses.

D. The estimate of corporate spending with minority-owned businesses in 1980 is approximately $10 million too high.

E. The $1.1 billion represented the same percentage of total corporate spending in 1977 as did $77 million in 1972.


This is E.

The passage supports with the fact that Corporate response appears to have been substantial. The fact is "the total of corporate contracts with minority businesses rose from $77 million in 1972 to $1.1 billion in 1977".

if E is true, then in % terms the corporate responses has not increased. It remained the same. So E weakens the claim.
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 [#permalink] New post 16 Sep 2007, 14:43
Thanks Fistail.

But why it can't be B?

B says exact year 1970 to 1972. I mean this does weaken it.

Please explain.
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 [#permalink] New post 16 Sep 2007, 16:51
ajisha wrote:
Thanks Fistail.

But why it can't be B?

B says exact year 1970 to 1972. I mean this does weaken it.

Please explain.


B is about 70-72 where as the question is about 1970 (70-79). so 70-72 doesnot reprsent 70's.
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 [#permalink] New post 16 Sep 2007, 17:06
Got it.

Thanks for precise explanation.
  [#permalink] 16 Sep 2007, 17:06
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