A Company : GMAT Verbal Section
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# A Company

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VP
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03 Apr 2005, 21:10
Whenever a company loses a major product-liability lawsuit, the value of the companyâ€™s stocks falls significantly within hours after the announcement. Cotoy has long been involved in a major product-liability lawsuit, and its stocks fell significantly in value today. Therefore, we can be sure that an unfavorable judgment against Cotoy in that lawsuit was announced earlier
today.

Which one of the following contains flawed reasoning that most closely parallels that in the argument above?

(A) Whenever a business treats its customers discourteously, its customers begin to shop elsewhere. Shopwell wants to keep all of its customers; therefore, its employees will never treat customers discourteously.
(B) Whenever the large airlines decrease fares, the financial stability of smaller competing airlines is adversely affected. Therefore, the smaller competing airlinesâ€™ financial stability must be seriously threatened when the large airlines announce a large price decrease.
(C) Whenever a country shows a lack of leadership on international issues, respect for the countryâ€™s policies begins to decline. Therefore, to gain respect for its policies, a country should show leadership on international issues.
(D) Whenever an entering student at Cashman College wins the Performance Fellowship, he or she receives $10,000. Therefore, Eula, a student who has enrolled at Cashman, must have won the Performance Fellowship, because she just received$10,000 from the college.
(E) Whenever a company advertises its products effectively, the companyâ€™s sales increase. Orocoâ€™s sales have not increased; therefore, it is likely that the company did not advertise its products effectively.

Last edited by MA on 04 Apr 2005, 18:59, edited 1 time in total.
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GMAT Club Legend
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03 Apr 2005, 21:40
Loses lawsuit --> Stocks fall
Cotoy stocks fall --> unfavorable judgement (lose lawsuit)

If A --> B does not mean B --> A

(A) Whenever a business treats its customers discourteously, its customers begin to shop elsewhere. Shopwell wants to keep all of its customers; therefore, its employees will never treat customers discourteously.

treat customer discourteously --> lose customer
shopwell not lose customer ---> will never treat customer discouteously

A --> B , !B --> !A
Different from passage.

(B) Whenever the large airlines decrease fares, the financial stability of smaller competing airlines is adversely affected. Therefore, the smaller competing airlinesâ€™ financial stability must be seriously threatened when the large airlines announce a large price decrease.

large airline decrease fare --> financial stability of samll airline affected
smaller competing airlines financial stability affected --> large airline annnouce decrease (have only annouced, not implemented yet)
A --> B, B --> C. Different from passage.

(C) Whenever a country shows a lack of leadership on international issues, respect for the countryâ€™s policies begins to decline. Therefore, to gain respect for its policies, a country should show leadership on international issues.

lack of leadership --> respect decline
respect not decline --> show leadership

If A --> B, !B --> !A
Different from passage.

(D) Whenever an entering student at Cashman College wins the Performance Fellowship, he or she receives $10,000. Therefore, Eula, a student who has enrolled at Cashman, must have won the Performance Fellowship, because she just received$10,000 from the college.

student wins fellowship --> gets 10,000
receive 10,000 --> must have won scholarship

If A --> B, B --> A
Same as passage.

(E) Whenever a company advertises its products effectively, the companyâ€™s sales increase. Orocoâ€™s sales have not increased; therefore, it is likely that the company did not advertise its products effectively.

sales not increase --> did not advertise effectively

If A --> B, !B --> !A
Different from passage

D it is.
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03 Apr 2005, 21:58
totally agree with ywilfred - should be D
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03 Apr 2005, 22:39
D.
_________________

Anyone who has never made a mistake has never tried anything new. -Albert Einstein.

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04 Apr 2005, 00:18
Yes it should be D.
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04 Apr 2005, 07:24
Agree on (D)
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04 Apr 2005, 07:33
ywilfred wrote:
(E) Whenever a company advertises its products effectively, the companyâ€™s sales increase. Orocoâ€™s sales have not increased; therefore, it is likely that the company did not advertise its products effectively.

sales not increase --> did not advertise effectively

If A --> B, !B --> !A
Different from passage

Actually, in E there is a similar reasoning in my opinion, though it's not the answer only because the stem says "it is likely that the company did not advertise its products effectively" instead of "we can be sure that the company did not advertise its products effectively".
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04 Apr 2005, 14:40
yep. D
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04 Apr 2005, 17:52
thearch wrote:
ywilfred wrote:
(E) Whenever a company advertises its products effectively, the companyâ€™s sales increase. Orocoâ€™s sales have not increased; therefore, it is likely that the company did not advertise its products effectively.

sales not increase --> did not advertise effectively

If A --> B, !B --> !A
Different from passage

Actually, in E there is a similar reasoning in my opinion, though it's not the answer only because the stem says "it is likely that the company did not advertise its products effectively" instead of "we can be sure that the company did not advertise its products effectively".

hmm.. good point ! OA on this question ?
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04 Apr 2005, 20:49
OA is D.
04 Apr 2005, 20:49
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