As measured by the Commerce Department, corporate profits peaked in th

A is the best answer.

(A) and have slipped since then, as many companies have been unable to pass on higher costs - Perfect. The present perfect verbs "have slipped" and "have been unable" are used correctly with "Since". This is the best answer.
(B) and have slipped since then, the reason being because many companies have been unable to pass on higher costs - "Being" is extremely avoidable on the GMAT; "the reason" and "because" are redundant. Eliminate
(C) and slipped since then, many companies being unable to pass on higher costs - "since", when used to indicate a timeframe, requires the perfect form of the verb: "slipped" [past tense] is incorrect. "Being" is avoidable. Eliminate
(D) but, many companies unable to pass on higher costs, they have slipped since then - "they" is unnecessary and ambiguous: does it refer to profits or companies? The "reason" for the profits slipping is not brought out by this construction. Eliminate
(E) yet are slipping since then, because many companies were unable to pass on higher costs - "since", when used to indicate a timeframe, requires the perfect form of the verb: "are slipping"/"were unable" is incorrect. Eliminate

As measured by the Commerce Department, corporate profits peaked in the fourth quarter of 1988 and have slipped since then, as many companies have been unable to pass on higher costs.

(A) and have slipped since then, as many companies have been unable to pass on higher costs- the "as" provides the reason for why the profits have slipped so meaning wise makes sense!-- a note on parallelism "peaked" and "have slipped" are parallel.
"have peaked" would be wrong because we cannot use present perfect tense for an event that took place at a specific time in the past "1988".- CORRECT!

(B) and have slipped since then, the reason being because many companies have been unable to pass on higher costs- "the reason because" is redundant since "the reason" and "because" pretty much mean the same thing and also "the reason being because" is also an awkward construction- Wrong!

(C) and slipped since then, many companies being unable to pass on higher costs- the word "since" is a trigger word for the usage of present perfect tense as "since" means since some indefinite time in the past till the present- this sentence has a verb tense issue by using "slipped" instead of " have slipped"; also being is awkward.- Wrong!

(D) but, many companies unable to pass on higher costs, they have slipped since then-The usage of "But" is wrong...
we are not contrasting anything....the clause "many companies...costs" provides the reason as to why the profits slipped- therefore "as" is an apt connector to provide a better relationship between the cause and effect!- Wrong!

(E) yet are slipping since then, because many companies were unable to pass on higher costs- yet and because create a redundancy error and we cannot use "yet" as the clause following it is not an independent sentence!; "are slipping since" is a verb tense error... we cannot use present progressive tense with "since" it creates a meaning issue as explained in option C- Wrong!

I have doubts about D.

Is the "they" ambiguous? Is it too far away from the noun (corporate profits) it's trying to modify? I'm always hesitant to use pronoun ambiguity as the reason to remove an answer choice, since I've seen many posts where people state the GMAT is very tolerant of pronoun ambiguity.

Or is there a meaning error? Is there no causality for D as there is for A?

Hi Sam

You are absolutely correct to be cautious when ruling out answer options for antecedent ambiguity. It is a questionable rule, which is often ignored by GMAT. In general, you should follow the following:

An answer option can be ruled out for antecedent ambiguity provided there is another answer option where the said ambiguity is corrected / removed with no new errors introduced.

In the above scenario, since we clearly have a better answer option, we should go with that one and not the one with the ambiguous antecedent. However, if more than one answer option has an ambiguous antecedent problem with no answer option clearly eliminating the error (without any new errors, of course), then do not eliminate the options with the ambiguous antecedent, since one of them could be the correct answer.

In the above question, as you can see, clearly answer option (A) has no problem of ambiguous antecedent or any other error. Hence we can go ahead and eliminate option (D).

I must add that in most cases where ambiguous antecedents are tolerated, the antecedent can normally be identified using some logic.

Hope this clarifies.

Hi thank you for the response.

However, I still have some doubts about D. What does the sentence really mean? I'm failing to recognize the meaning error associated with it..

Please help! Thank you in advance

Hi Sam

The meaning error, if any, arises from the ambiguous antecedent issue that we have identified. Let us view the sentence after plugging in option (D):

As measured by the Commerce Department, corporate profits peaked in the fourth quarter of 1988 but, many companies unable to pass on higher costs, they have slipped since then.

What has "slipped" since then? The companies? Corporate profits? The "they" can logically apply to either and hence there is an ambiguity in what the sentence is trying to say. Apart from that, from a strictly meaning point of view, I do not think there is anything wrong.

Hope this helps.

As measured by the Commerce Department, corporate profits peaked in the fourth quarter of 1988 and have slipped since then, as many companies have been unable to pass on higher costs.

(A) and have slipped since then, as many companies have been unable to pass on higher costs CORRECT
(B) and have slipped since then, the reason being because many companies have been unable to pass on higher costs X
-this one is just terribly wordy...'the reason being because' is a colossal mess
(C) and slipped since then, many companies being unable to pass on higher costs X
-the problem with this sentence is that there is a disconnect between the last clause of the sentence and the second clause...we need to explain why profits have slipped since then...
(D) but, many companies unable to pass on higher costs, they have slipped since then X
-meaning change...and pronoun ambiguity...what is 'they' referring to? Is it companies? profits? What is slipping since 1988? It should be the profits...
(E) yet are slipping since then, because many companies were unable to pass on higher costs X
-'yet' is the wrong conjunction
-'present continuous tense is also wrong...we need the present perfect

Found some answer choice explanaiton, unsettling

PFB my take on this. Correct me if I am wrong

As measured by the Commerce Department, corporate profits peaked in the fourth quarter of 1988 and have slipped since then, as many companies have been unable to pass on higher costs.

(A) and have slipped since then, as many companies have been unable to pass on higher costs
corporate profits peaked.... and have slipped, plural = subject
have been, plural = verb
since then = since 1988 to now
"as many" connect with the previous phrase.
hold

(B) and have slipped since then, the reason being because many companies have been unable to pass on higher costs
the reason being because = redundant
S-V is okay.

(C) and slipped since then, many companies being unable to pass on higher costs
and slipped since then, <CONNECTOR MISSING> many
many companies being unable to pass on higher costs, <then what?>: Here, is an independent statement, that is pending to be completed.

(D) but, many companies unable to pass on higher costs, they have slipped since then
have, verb = plural
they are referring to companies? changes the meaning
they are referring to company profits? okay
Here, it is a vague pronoun.

corporate profits (that had peaked) is now slipping, subject = plural

(E) yet are slipping since then, because many companies were unable to pass on higher costs
yet are slipping since then (1988 to 2021): present perfect continuous tense is required
were= simple past. It happened before, not happening now,

Dear Experts,

I have 2 questions
1) As measured by the Commerce Department, corporate profits peaked in the fourth quarter of 1988 and have slipped since then, as many companies have been unable to pass on higher costs.

"corporate profits peaked in the fourth quarter of 1988 (+) and have slipped since then(-)"

Is it not required "A CONTRAST WORD" ? corporate profits peaked in the fourth quarter of 1988 (+) conveys positive meaning but have slipped since then(-)" conveys the negative. Why is (A) correct?

2) in (D), they can logically refer to corporate profits (because companies cannot slip !)

Good questions. There isn't really a contrast between having a peak and having a downward slope. In fact, having a peak in 1988 suggests a general upward trend before 1988 and a general downward trend after 1988, so you could argue that the "and" is perfectly reasonable, if not preferable.

The pronoun "they" in (D) isn't necessarily WRONG, since "they" could refer back to "corporate profits", as you suggested. But the pronoun is definitely somewhat confusing, and (A) avoids that confusion by not using a pronoun at all. So that's a minor reason to prefer (A) over (D).

I hope that helps!

GMATNinja EducationAisle IanStewart I eliminated option D because we need a comma before "but" to connect two Independent Clauses whereas in option A this issue has been eliminated. Also, we need some word such as "as" or "since" to show some kind of relationship between the modifier and the "but" clause. Correct me if I am wrong?

As measured by the Commerce Department, corporate profits peaked in the fourth quarter of 1988 but, many companies unable to pass on higher costs, they have slipped since then.

And I wanted to ask you whether "they" can refer to "costs"?

Yeah, I don't see a role for "many companies" in D. It could as well have been:

unable to pass on higher costs, many companies have slipped since then

It can be argued that "they" is technically ambiguous in D, but it should be noted that pronoun ambiguity should not be a reason to eliminate an answer choice.