amirsaf1 wrote:
Why A is correct? Even if we try to use common knowledge or out of the scope info here, it still does not make sense. Ok, let's just assume that new medications that replace existing products were priced higher, but then how do we know the new meds were already being purchased by consumers? "concentrated" is written on A. There is no clear timeline here. If they concentrated on developing the new meds and the new meds were still in development, A does not make sense because the new meds HAVE NOT REPLACED the existing meds yet. Anybody can help to explain?
Note that we are looking back in time over a substantial period. The last sentence says "Even though use of prescription drugs did not expand after this price freeze, per capita expenditure for prescription drugs
continued to increase by a substantial percentage each year."
So if we are talking today, we could be looking at say, 2015. Till 2015, for several years expenditure increased by 15%. So Govt came up with price freeze for current drugs. But post that too, the expenditure kept increasing every year.
How would you explain this? If we got to know that post the price freeze, the companies got busy into replacing current drugs, that explains why the price kept increasing. Since they were not allowed to increase price of current drugs, they replaced those with higher priced drugs. Basically (A) gives us the way they could have circumvented the law.
Note that this is an official question. GMAC expects you to be able to arrive at this logic.
I get the logic. But then, how we interpret that drug companies already replaced the current drugs with higher priced drugs? Because answer choice A states that they concentrated on replacing the drugs. And I think here there is a need to see it from the drug companies POV. And maybe GMAC's common knowledge or logical thinking here is that any company always prioritize profit over anything. I am not sure how we can define it as "logic" or "common" here. I am not so sure how "common" is "common". For example, giving tips is common in USA, but not for other countries. However, I think that GMAT test takers need to learn what "common" is in the states. It is a blurry line between "common knowledge", "logical reasoning", and "convoluted story". I hope someone can really explain what we can consider belongs to any of these 3 categories.