Community activist: If Morganville wants to keep its central shopping

Question

Community activist: If Morganville wants to keep its central shopping district healthy, it should prevent the opening of a huge SaveAll discount department store on the outskirts of Morganville. Records from other small towns show that whenever SaveAll has opened a store outside the central shopping district of a small town, within five years the town has experienced the bankruptcies of more than a quarter of the stores in the shopping district.

The answer to which of the following would be most useful for evaluating the community activist’s reasoning?

(A) Have community activists in other towns successfully campaigned against the opening of a SaveAll store on the outskirts of their towns?

(B) Do a large percentage of the residents of Morganville currently do almost all of their shopping at stores in Morganville?

(C) In towns with healthy central shopping districts, what proportion of the stores in those districts suffer bankruptcy during a typical five-year period?

(D) What proportion of the employees at the SaveAll store on the outskirts of Morganville will be drawn from Morganville?

(E) Do newly opened SaveAll stores ever lose money during their first five years of operation?

ID: 100916
OG2017 CR632 P535

GMATNinja · Accepted Answer

The passage begins with the conclusion: "If Morganville wants to keep its central shopping district healthy, it should prevent the opening of a huge SaveAll discount department store on the outskirts of Morganville."

The activist bases this conclusion on the following evidence: "Records from other small towns show that whenever SaveAll has opened a store outside the central shopping district of a small town, within five years the town has experienced the bankruptcies of more than a quarter of the stores in the shopping district."

Sure, this doesn't PROVE that the same thing will happen in Morganville. However, the evidence seems to suggest that if Morganville opens a SaveAll on the outskirts of town, then we would expect more than a quarter of the stores in the central shopping district to experience bankruptcy within five years.

According to the author, these bankruptcies would indicate that the central shopping district is no longer healthy (here "healthy" means "flourishing" or "prospering"). The author believes that this effect can be avoided if the town prevents the SaveAll from opening.

The answer to which of the following would be most useful for evaluating the community activist’s reasoning?

Perhaps community activists have thwarted the opening of SaveAll stores in other towns. So what? Maybe if we knew that the bankruptcy rates were LOWER in those towns, then we would have information relevant to the argument.

But simply knowing the answer to (A) doesn't help us evaluate the author's logic. Regardless of the answer, the author would still be concerned about the evidence from the towns in which a SaveAll DID open. (A) is irrelevant and can be eliminated.

We don't care whether residents do all, most, some, or very little of their shopping at stores in Morganville. Whatever the percentage, we would simply want to know whether that percentage will CHANGE if a SaveAll is opened.

Knowing whether the percentage will increase or decrease in Morganville's shopping district would certainly be useful, but simply knowing the current percentage would not help us evaluate the argument. Eliminate (B).

Let's say we find out that roughly a quarter of stores in a HEALTHY central shopping district suffer bankruptcy during a typical five-year period. This would be evidence that losing a quarter of the stores to bankruptcy is NOT a sign that a shopping district is "unhealthy". In that case, the records from the other towns would simply show that, DESPITE having a SaveAll, the shopping districts maintained  healthy  bankruptcy rates.

So, the fact that a quarter of stores in Morganville's central shopping district will likely experience bankruptcy is no cause for alarm. This is what we would expect in ANY healthy central shopping district. So, based on the evidence, there is no reason to expect that opening a SaveAll will negatively affect the health of the central shopping district.

Answering this question would certainly be useful in evaluating the argument, so hang on to (C).

We don't care about the staff at the SaveAll. The argument is not related to employment/unemployment stats. Maybe most of the employees are from Morganville and maybe not. Either way, will opening a SaveAll cause an unhealthy level of bankruptcies? (D) does not help us evaluate the argument, so eliminate this one.

Maybe they do and maybe they don't. In either case, the SaveAll stores could negatively affect business in the central shopping districts and cause bankruptcies within five years. (E) is irrelevant and can be eliminated.

(C) is the best answer.

bipolarbear · Answer

I pick C. The author suggests that the opening of the saveall store causes bankruptcies to occur in 25% of the stores in the shopping district. if we were to know what the percentage of stores went bankrupt, independent of the effects of saveall, it would shed insight on whether or not saveall contributes to the effect, and thus help us evaluate the author's reasoning.

KarishmaB · Answer

Premises:  
Records from other small towns show that whenever SaveAll has opened a store outside the central shopping district of a small town, within five years the town has experienced the bankruptcies of more than a quarter of the stores in the shopping district.

Conclusion:   
If Morganville wants to keep its central shopping district healthy, it should prevent the opening of a huge SaveAll discount department store on the outskirts of Morganville.

The author claims that if M wants to keep its central shopping district healthy, it should not allow opening of SaveAll. 
As support to the claim, the author says that in same situation other towns saw closing of 25% of their central shopping stores in 5 years.
What would be useful to evaluate whether this reasoning has merit - whether central shopping district health will be jeopardized by opening SaveAll in M?

(A) Have community activists in other towns successfully campaigned against the opening of a SaveAll store on the outskirts of their towns?

Whether activists were successful in campaign in other towns is irrelevant. We know that in many small towns they weren't but that's besides the point in any case. Our question is whether the reasoning of the activist is relevant - whether central shopping district health will be jeopardized by opening SaveAll in M.

(B) Do a large percentage of the residents of Morganville currently do almost all of their shopping at stores in Morganville?

It doesn't matter whether a large percentage or a small percentage of M people do their shopping at stores in M. Even if a small percentage do their shopping at the shopping district specifically, the eco-system is developed to support that percentage. The point is what will happen after SaveAll opens. Will fewer people come to shop here then?

(C) In towns with healthy central shopping districts, what proportion of the stores in those districts suffer bankruptcy during a typical five-year period?

Correct. To say that 25% of turnover is huge, we need to know the turnover in a typical 5 year period.
If normally only 5% stores close down in a typical period of 5 years, then 25% is alarming.
If normally about 25-30% stores close down in a typical period of 5 years, then it seems even after opening SaveAll, it was business as usual for central shopping district stores.

(D) What proportion of the employees at the SaveAll store on the outskirts of Morganville will be drawn from Morganville?

This is irrelevant. We are discussing the health of the central shopping district, not employment options of people of M.

(E) Do newly opened SaveAll stores ever lose money during their first five years of operation?

The health of SaveAll is not our concern. We are discussing the health of central shopping district. SaveAll may book profits from day 1 or may take a hit for 5 years by reducing prices, eliminate competition and then raise prices - who knows. 
The point is the health of the central shopping district.

Answer (C)

Jivana · Answer

B:  for me.

C has a very strong case, but I think B calls out a more fundamental issue than C does.

B: 
Currently, do people shop in the central shopping district? If yes, then yeah saveall will cause a major problem. But if people do not, then saveall's effects on past bankruptcies as a reason to not allow them to open shop does not hold much water.

And if people, do shop in the central shopping district then allowing saveall to open shop can definitely play a big part in future bankruptcies.

C: The key piece of info missing here is SaveAll's effect on these bankruptcies. Even if we were to know how many shops go bankrupt during a five-year period, it has no correlation to SaveAll's effects.

Between,  B  & C --> B sounds more reasonable to me.

bipolarbear · Answer

The problem with B is that even if you know whether most people in Morganville shop in the central district, Saveall might still cause bankruptcies because everyone will move to Saveall. If you knew whether most people in OTHER districts used to shop in the central district, before Saveall was opened, that may help.

I think you're missing what C states.
25% of shops go bankrupt after Saveall opens. If 5% go bankrupt during a five-year period, Saveall is "correlated" with a 20% increase in bankruptcies. If 25% of shops go bankrupt, then there's no real correlation between Saveall and an increase in bankruptcies. Thus knowing the "a priori" percentage of bankruptcies would help in evaluating whether or not Saveall contributes to such an effect.

nitya34 · Answer

As per OG 12
 Situation:  Morganville should stop SaveAll from opening a store on its outskirts if it wants to keep
its shopping district healthy. Other small towns have experienced bankruptcies in
25 percent of the stores in their central shopping district within five years after such
openings.

REASONING :Which option provides the information that it would be most useful to know in evaluating the argument? Th e argument contends that if SaveAll opens a store in Morganville, then that
will somehow undermine the health of the shopping district. Two basic questions arise
when evaluating the bankruptcy data from other small towns: (1) Did the opening of
SaveAlls cause any of these bankruptcies? No information is given about bankruptcy
rates in small towns without SaveAlls. (2) Is a 25 percent bankruptcy rate over five years
unhealthy?

OE for B&C

B The conclusion would be supported just as well—or as poorly—if this question were answered with a yes as with a no.
C Correct. This option provides the information that it would be most useful to know in evaluating
the argument.

crick20002002 · Answer

C it is.

Apply variance test

To apply the variance test , you should choose polar opposite answers:

In towns with healthy central shopping districts, what proportion of the stores in those districts suffer bankruptcy during a typical five-year period?

Ans 1 : More than a quarter (25%) : Well that means SaveAll does not cause bankruptcies. Since it is happening in towns with Healthy shopping districts, it must be normal for a quarter to go bankrupt in 5 year period.

Ans 2 : Less than a quarter(25 %) : That means SaveAll does cause some stores to go bankrupt.

Crick

AryamaDuttaSaikia · Answer

I feel your reasoning is a little too complicated. Let us try a simpler approach. The argument suggests it is because of Save all that the stores in the town suffer bankruptcies and this has been a trend in these five year period. In order to analyse the credibility behind this statement we have to analyse weather the bankruptcies are a coincidence, a natural phenomenon, or is it because of the opening of Save all. As suggested in "C" if we can find out what proportion of stores in a healthy shopping district suffer bankruptcy in a typical five year period it will help us to asses weather Save all is responsible for the same.

achandak · Answer

GMATNinja  :

My interpretation for option B: 
Currently means 'at Present'
If higher percentage of people are shopping at Mv, then there would be more impact. 
If lower percentage of people are shopping at Mv, then less impact.

This option B gives good variance test.

Understanding of Option C :

It only talks about healthy central shopping. So, out of scope.

Please throw some more light on option B and C.

I am not clear with the explaination.

Could you please help understand how do one avoid marking incorrect answers to such questions in Exam.

Sent from my Redmi 4 using  GMAT Club Forum mobile app

GMATNinja · Answer

Generally speaking, critical reasoning demands logical thinking, not statistical analyses. With very rare exceptions, if you're doing math on CR, odds are good that you're barking up the wrong tree.

In this case, let's stay focused on the conclusion we're asked to evaluate: whether  preventing the opening of SaveAll  will  keep  the central shopping district  healthy .

Here's (B) again:

If we are given this percentage at present, we still lack any information about whether that percentage will go up or down:

If we the present percentage is high, we still have no idea whether the percentage will stay high after SaveAll opens. 
  If we the present percentage is low, we still have no idea if the percentage will stay low after SaveAll opens.

Knowing the current percentage doesn't help us determine whether preventing SaveAll from opening will  keep  the central district "healthy". That's why we eliminate (B).

Again, the conclusion of this argument is: "If Morganville wants to  keep its central shopping district healthy , it should prevent the opening of a huge SaveAll discount department store on the outskirts of Morganville."

Morganville is a town with a healthy central shopping district, and the health of this central shopping district is  exactly  what we care about, so the information presented in (C) is very much  in  scope. Choice (C) is the only one that would lead us to more information about bankruptcy in central shopping districts (including Morganville's).

Once we have this information, we'll better understand what frequency of bankruptcy to expect in any  healthy  shopping district. We'll also better understand whether the opening of SaveAlls had anything to do with deeming a central shopping district to be  unhealthy . For these reasons, (C) is the best answer choice available.

I hope this helps!

kornn · Answer

Dear AjiteshArun , Thank you for your strong support. I am very thankful for your help

I have 2 questions here: Q1. If the answer to choice C. is that 25% of stores in a HEALTHY central shopping district suffer bankruptcy during a typical five-year period, how does this answer weaken the conclusion that losing MORE THAN 25% of the stores in the shopping district is a sign that a shopping district is "unhealthy". The author claims that MORE THAN 25% is considered "unhealthy". In other words, he is NOT specific . Maybe, in his opinion, 30% or 50% or 90% even ... is considered "unhealthy" . We don't know the specific number! So, if the answer to choice C. is 25%, the author's conclusion still holds because "unhealthy" is MORE THAN 25%. Again, if the answer to choice C. is 30%, the author's conclusion still holds because maybe when he says "MORE THAN 25%" he could mean that 35% is "unhealthy". Since the answer to choice C. has no clear impact, I am not sure why C. is right. Q2. The reason why choice D. is wrong is that the conclusion's scope is just c entral shopping district's economy, not Morganville's economy right? Thank you very very very much for your help Sir !

AjiteshArun · Answer

Hi  varotkorn ,

Think of that figure as the  "normal" rate of bankruptcy in a healthy central shopping district . We know that   with  a SaveAll, the rate of bankruptcy is around 25% . We now have to check  what the rate of bankruptcy is  without  a SaveAll , and compare that with 25%.

1. If the normal rate of bankruptcy is  less than 25% , then SaveAll is  bad  as far as the health of the central shopping district is concerned, as the presence of a SaveAll is associated with a higher rate of bankruptcy, around 25%. (STRENGTHEN)
2. If the normal rate of bankruptcy is  around 25% , then SaveAll  doesn't really have any effect  as far as the health of the central shopping district is concerned. (WEAKEN)
3. If the normal rate of bankruptcy is  more than 25% , then SaveAll is actually  good  for the central shopping district, as the presence of a SaveAll is associated with a lower rate of bankruptcy, around 25%. (WEAKEN)

kornn · Answer

Dear AjiteshArun , The part that I struggle with is "more than" in the last sentence : ... within five years the town has experienced the bankruptcies of more than a quarter of the stores in the shopping district. OE also mentions like what you did that we should regard the rate as around 25%, not literally more than 25% . So, here we have to ignore the "more than" part in the last sentence? That seems very counter-intuitive for me, honestly. How could I possibly know that "more than" 25% here is the same as around 25%! Please shed some light on me

Thank you as always Sir!

AjiteshArun · Answer

Hi varotkorn , You have a good eye for detail.

If we take the activist's "more than a quarter" to mean anything more than 25 and up to 100: 1. If the normal rate of bankruptcy is ≤ 25, that tends to confirm the activist's position (because SaveAll → increase in bankruptcy rate, STRENGTHEN). 2. If the normal rate of bankruptcy is > 25, then we can't be absolutely sure about what the impact of SaveAll is. This is still better than the other options, which don't help us evaluate the activist's reasoning at all . Mark C. Remember that verbal is not about looking for the "perfect" option. The correct option just has to be better than the other 4.

M838TE · Answer

GMATNinja 
choice E seems irrelevant at first, but the more I think about the profitability of the saveAll business venture, the more conclusion could be implied as a result.
E) Do newly opened SaveAll stores ever lose money during their first five years of operation?

If the SA stores do well, could we not at least assume that there is a shift in the economics in Morganville, causing a move in funds that could adversely affect the existing businesses?

if SA stores do badly, then perhaps the central shopping district may not be affected after all?

GMATNinja · Answer

The question asks which answer choice would be MOST useful for evaluating the reasoning in the argument. So, it's possible that multiple answer choices are somewhat useful -- you just have to pick the one that is  more  useful than the others.

With that in mind, here's (E):
 
For the answer to this question to impact the reasoning in the argument, you have to make several leaps of logic.

First, you have to assume that if a SaveAll store loses money within the first five years, it might close before it has a chance to bankrupt local businesses. We just don't have enough information to determine whether this is true -- maybe SaveAll has enough funds to lose money for a certain amount of time.

Second, the word "ever" makes (E) a pretty broad statement. Maybe ONE SaveAll lost money in particularly dire circumstances -- would that ONE instance really impact the reasoning in the argument? Not really. The activist's argument is still strong, even if a small number of SaveAlls lose money in the first five years AND closed down before they had a chance to bankrupt other businesses.

So, (E)  might  impact the reasoning in the argument if you make several tenuous assumptions -- but it's really a stretch.

Compare that to (C):
 
I'll steal from our previous explanation:

Let's say we find out that roughly a quarter of stores in a HEALTHY central shopping district suffer bankruptcy during a typical five-year period. This would be evidence that losing a quarter of the stores to bankruptcy is NOT a sign that a shopping district is "unhealthy". In that case, the records from the other towns would simply show that, DESPITE having a SaveAll, the shopping districts maintained healthy bankruptcy rates.

So, the fact that a quarter of stores in Morganville's central shopping district will likely experience bankruptcy is no cause for alarm. This is what we would expect in ANY healthy central shopping district. So, based on the evidence, there is no reason to expect that opening a SaveAll will negatively affect the health of the central shopping district.

The answer to (C) would be much more useful in evaluating the argument than (E). (C) is the correct answer, and (E) is out.

I hope that helps!

ManyataM · Answer

I did not understand your explanation for option C , can you please put more insight ?

GMATNinja · Answer

The activist's reasoning for hating SaveAll depends on one fact: when a SaveAll opened up outside of other towns, over a quarter of downtown stores in those towns went bankrupt in a five year period.

Sounds pretty bad! If you want your downtown to be healthy and vibrant, you don't want a bunch of downtown stores to go bankrupt. The activist seems to believe that opening a SaveAll  causes  other downtown stores to go bankrupt. This the reason that the activist advises against having a SaveAll outside of his/her town.

There is a problem with the activist's argument, though: we have no idea how many downtown stores would have gone bankrupt even WITHOUT a SaveAll opening up. It could be  totally normal  for 25% of stores downtown stores to go bankrupt in 5 years. In this case, the author's reasoning would be greatly weakened, because perhaps the SaveAll didn't  cause  this problem in the other small towns at all. Perhaps those 25% of stores would have gone bankrupt anyway, and the SaveAll had nothing to do with it.

If that were true, then building a SaveAll just outside of the activist's town might not have a negative impact on the downtown stores. This would  weaken  the activist's argument.

On the other hand, what if it's  not normal at all  to have so many stores go bankrupt? Maybe under normal circumstances only 5% of downtown businesses go bankrupt in a 5 year period. Then, when a SaveAll moves in, it really DOES cause a lot of the downtown businesses to go bankrupt.

This would  strengthen  the author's argument, because it would support the claim that building a SaveAll would hurt the other downtown stores.

Knowing the typical proportion of stores that go bankrupt would either strengthen or weaken the activist's reasoning. So, knowing the answer to the question posed in (C) would greatly help in evaluating the argument.

I hope that helps!

AnishPassi · Answer

I'm replying to an old post, and GMATNinja has already shared a detailed reply to it too. I'd still like to highlight a specific nuance that I find many test-takers miss in answer choice (B).

The question can be answered with a Yes or a No.

Let's understand the two sides:

Yes: Yes, a large percentage of the residents of Morganville DO currently do almost all of their shopping at stores in Morganville.
No: No, a large percentage of the residents of Morganville DO NOT currently do almost all of their shopping at stores in Morganville.

The question would only help us figure out whether a high proportion of the population does almost all of their shopping at Morgalville stores or not.

The answer choice would NOT help us understand whether a large percentage of the population shops at Morganville - only whether a large percentage does almost all of their shopping at Morganville or not.

Even those people who do not do almost all their shopping at Morganville stores, could very well still be shopping at those stores; just that their shopping would be spread over other stores as well. Maybe they do some shopping in neighbouring towns, maybe they do some shopping online, etc.

So, in answer to the question, we'd learn that either a large chunk of the population does almost all of their shopping at Morganville or it does not. Either way, the point we need to understand is: would the current level of sales of Morganville stores (no matter what that level may be) get negatively impacted by a SaveAll opening? It doesn't matter what the current level is. All that matters is what would happen to that level once a SaveAll opens.

The question in answer choice (B) is irrelevant.

Aside: The reasoning in the argument makes that classic mistake of confusing correlation with causation. Just because over a quarter of the stores went bankrupt within five years of SaveAll stores opening, does not mean that the stores went bankrupt  because  of SaveAll stores opening. It is a classic ploy in GMAT arguments (and in real life). Just because an event happened  after  another, does not mean the latter was  caused by  the former.

Community activist: If Morganville wants to keep its central shopping

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Community activist: If Morganville wants to keep its central shopping

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