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Consumers in California seeking personal loans have fewer

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Re: Consumers in California seeking personal loans have fewer [#permalink]

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New post 25 Jul 2016, 00:51
This topic have been merged with: http://gmatclub.com/forum/topic-97871.html
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Consumers in California [#permalink]

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New post Updated on: 28 Sep 2017, 00:53
Consumers in California seeking personal loans have fewer banks to turn than do consumers elsewhere in the US. This shortage of competition among banks explains why interest rates on personal loans in California are higher than in any other region of the US.
Which of the following, if true, most substantially weakens the conclusion above?

(A) Because of the comparatively high wages they must pay to attract qualified workers, California banks charge depositors more than banks elsewhere do for many of the services they offer.
(B) Personal loans are riskier than other types of loans, such as home mortgage loans, that banks make.
(C) Since bank deposits in California are covered by the same type of insurance that guarantees bank deposits in other parts of the United States, they are no less secure than deposits elsewhere.
(D) The proportion of consumers who default on their personal loans is lower in California than in any other region of the United States.
(E) Interest rates paid by California banks to depositors are lower than those paid by banks in other parts of the United States because in California there is less competition to attract depositors.

Can some one explain option b's accuracy?

Originally posted by Ravindra.here on 28 Sep 2017, 00:46.
Last edited by broall on 28 Sep 2017, 00:53, edited 1 time in total.
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Re: Consumers in California seeking personal loans have fewer [#permalink]

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New post 10 Oct 2017, 05:30
Ravindra.here wrote:
Consumers in California seeking personal loans have fewer banks to turn than do consumers elsewhere in the US. This shortage of competition among banks explains why interest rates on personal loans in California are higher than in any other region of the US.
Which of the following, if true, most substantially weakens the conclusion above?

(A) Because of the comparatively high wages they must pay to attract qualified workers, California banks charge depositors more than banks elsewhere do for many of the services they offer.
(B) Personal loans are riskier than other types of loans, such as home mortgage loans, that banks make.
(C) Since bank deposits in California are covered by the same type of insurance that guarantees bank deposits in other parts of the United States, they are no less secure than deposits elsewhere.
(D) The proportion of consumers who default on their personal loans is lower in California than in any other region of the United States.
(E) Interest rates paid by California banks to depositors are lower than those paid by banks in other parts of the United States because in California there is less competition to attract depositors.

Can some one explain option b's accuracy?


Hi Ravindra.here,

For this question, you do not need to worry about (B)'s accuracy because it just says that everyone getting a personal loan is riskier than those getting home mortgages. But the question never compares the two, so it is out of scope and cannot be the answer. To answer any GMAT question, you shouldn't bring in any outside information. For example, if the paragraph says the sky is pink, we now know for that question the sky is pink. It is not blue in that case.

Does this help?
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Re: Consumers in California seeking personal loans have fewer [#permalink]

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New post 10 Oct 2017, 06:27
A is the answer.
Between A and D , A gives clear alternative solution.
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Re: Consumers in California seeking personal loans have fewer [#permalink]

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New post 21 Feb 2018, 11:51
the more the banks pay to depositors (people who put money in banks so that banks can issue loans), the more banks charge the borrowers (in this question, borrowers are consumers who seek loans)
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Re: Consumers in California seeking personal loans have fewer [#permalink]

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New post 19 Apr 2018, 19:01
Straight A. Classic causality, find alternative cause for hight rates.
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Re: Consumers in California seeking personal loans have fewer   [#permalink] 19 Apr 2018, 19:01

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