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# Country X imposes heavy tariffs on imported manufactured

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Re: Country X imposes heavy tariffs on imported manufactured  [#permalink]

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29 Aug 2013, 00:45
4
jaituteja wrote:
Hi,

Thanks,

Can you enlighten on A.
If the company X has restriction to product goods, then A should be an assumption.

Thanks,
Jai

Good question Jai.
A is a very classical "necessary condition". But it is NOT a sufficient condition.

Okay, I will rewrite a definition of an assumption: "An assumption is a hidden statement that MUST be true for a conclusion to be true". It means if the assumption happens, the conclusion MUST be correct. If the assumption happens, but the conclusion MAY/ MAY NOT be correct. That assumption is wrong.

Conclusion: Y could increase its profits in the long term by opening a factory in Country X.

Let assume, Country X has some restrictions that make Y more difficult to get permit But Y still get permit. Is it enough for Y to earn profits in the long term? Nope. Because there are many other factors affecting the selling of Y. So "getting a permit" is only a necessary condition. It does not guarantee the conclusion WILL be true. Thus, A cannot be the correct assumption.

Hope it's clear.
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Re: Country X imposes heavy tariffs on imported manufactured  [#permalink]

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18 Sep 2013, 08:37
C is definitely correct.. No doubt in that.
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Re: Country X imposes heavy tariffs on imported manufactured  [#permalink]

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20 Sep 2013, 00:01
I was stuck between answers (C) and (E). I ended up choosing (C) simply because a healthy market is important for a long term investment. Although I could see how (E) could be important for long term profits as well. Kind of tricky.
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Re: Country X imposes heavy tariffs on imported manufactured  [#permalink]

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21 Sep 2013, 23:10
ISBtarget wrote:
lagomez wrote:
ISBtarget wrote:
Country X imposes heavy tariffs on imported manufactured goods. Company Y has determined that it could increase its profits in the long term by opening a factory in Country X to manufacture the goods that it currently produces in its home country for sale in Country X.

For Company Y's determination to be true, which of the following assumptions must also be true?

Company Y will be able to obtain all the necessary permits to open a factory in Country X.
Company Y currently produces no goods outside its home country.
A sustainable market for Company Y's goods currently exists in Country X.

Company Y's home country does not impose tariffs on imported goods.
Labor costs in Country X are lower than those in Company Y's home country.

i chose the last option while the OA is 3rd option.

The question stem says that country Y is planning to shift the company to country y and the company is currently produces goods for sale in country X.Which means the company already have a market for its product in country X.

Also for the 5th options, the OA explanation is that the labour cost is less than the tariff , from where did they make this assumption?

the company has determined that it could increase profits by opening a factory in X. It can be assumed that the company has done it's due diligence, analyzing all costs before determining whether to open the factory in X. For the plan to work, there must be a market. One can assume labor costs have already been factored into the determination of the opening of the factory. A company would have already analyzed that the tariffs are more than the labor costs.

I am over-analyzing the question and assuming too much, which also leads me to believe I'm bringing extraneous information into the question thereby complicating the matter. However, with C, this is not the case.

The question stem says company is already producing the products for sale in country X which implies that there is already a market. if this is an implication from the question itself why would we assume that the labour cost is less than the tariff with no clue or information from the question

Awesome, I completely missed this one out...
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Re: Country X imposes heavy tariffs on imported manufactured  [#permalink]

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02 Apr 2015, 02:36
ISBtarget wrote:
Country X imposes heavy tariffs on imported manufactured goods. Company Y has determined that it could increase its profits in the long term by opening a factory in Country X to manufacture the goods that it currently produces in its home country for sale in Country X.

For Company Y's determination to be true, which of the following assumptions must also be true?

A) Company Y will be able to obtain all the necessary permits to open a factory in Country X.
B) Company Y currently produces no goods outside its home country.
C) A sustainable market for Company Y's goods currently exists in Country X.
D) Company Y's home country does not impose tariffs on imported goods.
E) Labor costs in Country X are lower than those in Company Y's home country.

i chose the last option while the OA is 3rd option.

The question stem says that country Y is planning to shift the company to country y and the company is currently produces goods for sale in country X.Which means the company already have a market for its product in country X.

Also for the 5th options, the OA explanation is that the labour cost is less than the tariff , from where did they make this assumption?

don't understand how C is OA , company Y is already exporting the products to country X so this need not to be the assumption .
besides, option C talks about the current market , how it will affect the long term plan .
very confusing question .
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Re: Country X imposes heavy tariffs on imported manufactured  [#permalink]

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18 Apr 2016, 07:52
I think the answer should be A. We already know that the market exists in country X. The only barrier to higher profit remains tariffs
So if they want to move to country X, it is important to know whether country X will make it easy for them to settle.
As for answer E: we don't need labor cost in X to be lower than Y. We wouldn't even care if they were at the same level as avoiding tariffs would increase profitability anyway.
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Re: Country X imposes heavy tariffs on imported manufactured  [#permalink]

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07 May 2016, 12:09
Country X imposes heavy tariffs on imported manufactured goods. Company Y has determined
that it could increase its profits in the long term by opening a factory in Country X to
manufacture the goods that it currently produces in its home country for sale in Country X. For
Company Y's determination to be true, which of the following assumptions must also be true?

If we see the bolded portion above, doesn't it mean that country X has already a market for Company Y's product. There for company Y produces goods in it's home country to export to country X.
If my above explaination is true, Can some one please explain why C is still the Correct answer.
A looks more promising than the rest of the option though it got few loop holes too.
WHY C????
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Re: Country X imposes heavy tariffs on imported manufactured  [#permalink]

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24 May 2016, 00:59
Hi, to those people deriding the question, it is a classic gmat trap. You are more likely to learn by doing hard questions of this type than ignoring and moving on.

Since most are falling for E,

E says: Wages are lower in X than Y.

This is a classic gmat trap : Showing one condition while ignoring the rest conditions.

Lets assume wages are lower in X than Y.

Cool.

And most importantly: Are the wages lower enough to offset the import cost?

In assumption question whenever in doubt, do the negation test :

E) Wages are higher in X than Y.

Okay, but we are saving a lot on imports. And nowhere it is given how much of the wages vs import difference is. Cancel out.

But for C

There is no sustainable market in X

So if we open a factory in X and there is no sustainable market, does it make sense? I can open a barber shop in a city with only hairless men. The wages might be very low. But what's the use?

PS: It is very easy to fall for A in the negation test. But then again, we are attacking the premise and the conclusion. Where we are just concerned about profit. A doesn't say anything at all.

All in all, I think this is an excellent question. It is full of traps. Learn from it. Don't assume it is stupid just because it looks weird.
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Re: Country X imposes heavy tariffs on imported manufactured  [#permalink]

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11 Aug 2016, 13:54
I am still not convinced with 'C'.

What is the need of exporting to Country 'X' or for that matter establishing a firm in Country X, when Y doesn't have a market? To increase its profits implies that it has a market and what's more required is, the cost of manufacturing shouldn't exceed the savings they anticipate. So, 'Labor costs' can be one of the essential costs.

Can somebody help me with a better explanation?
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Country X imposes heavy tariffs on imported manufactured  [#permalink]

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11 Aug 2016, 22:42
Argo wrote:
I am still not convinced with 'C'.

What is the need of exporting to Country 'X' or for that matter establishing a firm in Country X, when Y doesn't have a market? To increase its profits implies that it has a market and what's more required is, the cost of manufacturing shouldn't exceed the savings they anticipate. So, 'Labor costs' can be one of the essential costs.

Can somebody help me with a better explanation?

Hi Argo

That's exactly why we need C

The people in Y are thinking they can make a profit

But if there is no sustainable market, then there is no profit.

Therefore this assumption is essential to connect the dots.

And also remember labor cost is one of the costs. There are a lot of costs. We can't paint a picture by looking at just one part of the puzzle.
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Re: Country X imposes heavy tariffs on imported manufactured  [#permalink]

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07 Jan 2017, 02:46
Hi all,
I do agree that sustainable market is crucial to the long term profit for the company,but is it necessary for such market to already exist in the first place? What if company Y see the potential,sustainable markets which none has invested in country x?

With this reason,I not quite convince with option C and wrongly mark option A.
Even if this option is not quite around the plausible profit of the company,the company couldn't go any further if the plant couldn't be set up.
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Re: Country X imposes heavy tariffs on imported manufactured  [#permalink]

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12 Apr 2017, 09:42
When a CR passage describes a PLAN:
The PREMISE is the plan itself.
The CONCLUSION is the goal of the plan.
The ASSUMPTION is what must be true for the plan to work.

In the passage, above:
The plan is to OPEN A FACTORY in Country X in order to avoid the tariff.
The goal is to INCREASE PROFITS.
Which answer choice MUST BE TRUE for the plan to work?

• Company Y will be able to obtain all the necessary permits to open a factory in Country X. No. The argument is not about whether the factory CAN be opened but about whether -- IF THE FACTORY IS OPENED -- Company Y will increase its profits. Eliminate A.

• Company Y currently produces no goods outside its home country. No. For the plan to work, it does not have to be true that company Y currently produces no goods outside its home country. Eliminate B.

• A sustainable market for Company Y’s goods currently exists in Country X. Correct. Note that the passage tells us only that the goods produced by Company Y are FOR SALE in Country X. For Company Y to increase its profits, it is not enough that the products be FOR SALE; it must be true that there is a MARKET for the products and that people BUY them.

• Company Y’s home country does not impose tariffs on imported goods. No. The argument is not about importing goods into Company Y's home country. Eliminate D.

• Labor costs in Country X are lower than those in Company Y’s home country. No. It does not have to true that labor costs in Country X are LOWER; it must only be true that labor costs in Country X are not significantly HIGHER. Eliminate E.

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Re: Country X imposes heavy tariffs on imported manufactured  [#permalink]

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27 Jun 2017, 18:32
anairamitch1804 wrote:
When a CR passage describes a PLAN:
The PREMISE is the plan itself.
The CONCLUSION is the goal of the plan.
The ASSUMPTION is what must be true for the plan to work.

In the passage, above:
The plan is to OPEN A FACTORY in Country X in order to avoid the tariff.
The goal is to INCREASE PROFITS.
Which answer choice MUST BE TRUE for the plan to work?

• Company Y will be able to obtain all the necessary permits to open a factory in Country X. No. The argument is not about whether the factory CAN be opened but about whether -- IF THE FACTORY IS OPENED -- Company Y will increase its profits. Eliminate A.

• Company Y currently produces no goods outside its home country. No. For the plan to work, it does not have to be true that company Y currently produces no goods outside its home country. Eliminate B.

• A sustainable market for Company Y’s goods currently exists in Country X. Correct. Note that the passage tells us only that the goods produced by Company Y are FOR SALE in Country X. For Company Y to increase its profits, it is not enough that the products be FOR SALE; it must be true that there is a MARKET for the products and that people BUY them.

• Company Y’s home country does not impose tariffs on imported goods. No. The argument is not about importing goods into Company Y's home country. Eliminate D.

• Labor costs in Country X are lower than those in Company Y’s home country. No. It does not have to true that labor costs in Country X are LOWER; it must only be true that labor costs in Country X are not significantly HIGHER. Eliminate E.

Even though the company lacks sustainable right now.. There could be that it will have the market once it establishes the factory and earn profits then ?
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Re: Country X imposes heavy tariffs on imported manufactured  [#permalink]

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28 Jun 2017, 03:33
Merged topics. Please, search before posting questions!
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Re: Country X imposes heavy tariffs on imported manufactured  [#permalink]

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14 Nov 2017, 22:34
Country X imposes heavy tariffs on imported manufactured goods. Company Y has determined that it could increase its profits in the long term by opening a factory in Country X to manufacture the goods that it currently produces in its home country for sale in Country X.

For Company Y's determination to be true, which of the following assumptions must also be true?

A. Company Y will be able to obtain all the necessary permits to open a factory in Country X.

I would argue that A is a valid assumption here. If you negate this, the red part in the consideration cannot be true.
Re: Country X imposes heavy tariffs on imported manufactured &nbs [#permalink] 14 Nov 2017, 22:34

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