Last visit was: 23 Jul 2024, 13:53 It is currently 23 Jul 2024, 13:53
Toolkit
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

# For similar cars and drivers, automobile insurance for collision damag

SORT BY:
Tags:
Show Tags
Hide Tags
Intern
Joined: 07 Nov 2003
Posts: 2
Own Kudos [?]: 54 [52]
Given Kudos: 0
Location: South Korea
Current Student
Joined: 31 Jul 2017
Status:He came. He saw. He conquered. -- Going to Business School -- Corruptus in Extremis
Posts: 1731
Own Kudos [?]: 5923 [6]
Given Kudos: 3124
Location: United States (MA)
Concentration: Finance, Economics
General Discussion
Intern
Joined: 22 Nov 2003
Posts: 27
Own Kudos [?]: 9 [2]
Given Kudos: 0
Location: Serbia
Manager
Joined: 12 Oct 2003
Posts: 175
Own Kudos [?]: 18 [3]
Given Kudos: 0
Location: USA
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]
2
Kudos
1
Bookmarks
I vote for A.

If it were true that in Greatport it costs more to get your car repaired then charging more in insurance would make sense. But because the author assumes that it does not cost more, hence he concludes that ....

I don't think I have explained properly. Official ans?
Manager
Joined: 12 Oct 2003
Posts: 175
Own Kudos [?]: 18 [0]
Given Kudos: 0
Location: USA
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]
Note the time difference between Zeka's and my posting
Intern
Joined: 07 Nov 2003
Posts: 2
Own Kudos [?]: 54 [2]
Given Kudos: 0
Location: South Korea
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]
2
Bookmarks

Thanks for the explanation
VP
Joined: 03 Feb 2003
Posts: 1012
Own Kudos [?]: 1675 [0]
Given Kudos: 0
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]
immediately got A; it perfectly coroborates the given conclusion.
Intern
Joined: 13 Apr 2014
Posts: 2
Own Kudos [?]: [0]
Given Kudos: 0
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]
I would go with option A as the correct option.
Manager
Joined: 06 Aug 2015
Posts: 57
Own Kudos [?]: 58 [1]
Given Kudos: 84
Concentration: General Management, Entrepreneurship
GMAT Date: 10-30-2016
GRE 1: Q160 V135
GPA: 3.34
WE:Programming (Computer Software)
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]
1
Kudos
I go with A.
Since, The argument states that:
Insurance costs = G > F and # Collisions = F > G.
Therefore author might have assumed that Collision cost are less in G. Since, there is a possibility that, the collisions cost can be higher even if the # of collisions are less. So definitely the answer should be in that terms for the authors conclusion to be true.
Intern
Joined: 05 Nov 2012
Posts: 35
Own Kudos [?]: 32 [1]
Given Kudos: 106
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]
1
Bookmarks
For similar cars and drivers, automobile insurance for collision damage has always cost more in Greatport than in Fairmont. Police studies, however, show that cars owned by Greatport residents are, on average, slightly less likely to be involved in a collision than cars in Fairmont. Clearly, therefore, insurance companies are making a greater profit on collision-damage insurance in Greatport than in Fairmont.

Which of the following is an assumption on which the argument depends?

A. Repairing typical collision damage does not cost more in Greatport than in Fairmont.
B. There are no more motorists in Greatport than in Fairmont.
C. Greatport residents who have been in a collision are more likely to report it to their insurance company than Fairmont residents are.
D. Fairmont and Greatport are the cities with the highest collision-damage insurance rates.
E. The insurance companies were already aware of the difference in the likelihood of collisions before the publication of the police reports.

Can someone eliminate B and C for me.
Intern
Joined: 10 Apr 2013
Posts: 12
Own Kudos [?]: 6 [1]
Given Kudos: 183
GMAT 1: 620 Q45 V31
GMAT 2: 710 Q47 V40
GPA: 3.5
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]
1
Kudos
For insurance company to make a profit they either must have least number of claims or they have to minimize each payout

Now choice B talks about the number of motorists. Doesn't talk about the number of motorist who will claim. Doesn't affect the conclusion about making greater profit even when it is negated.

Option C kind of weakens the
Conclusion. It says more claims are likely to be filed thereby affecting the profit. Negating C doesn't shatter the conclusion.

Option A on the other hand says the payout for damage is going to be less in Greenport. Negate A payout is going to be more hence the profit is going to be lesser.

Please let me know if I might have overlooked anything in my reasoning.

Sent from my ONE E1003 using GMAT Club Forum mobile app
Board of Directors
Joined: 11 Jun 2011
Status:QA & VA Forum Moderator
Posts: 6047
Own Kudos [?]: 4767 [1]
Given Kudos: 463
Location: India
GPA: 3.5
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]
1
Kudos
nishatfarhat87 wrote:
For similar cars and drivers,automobile insurance for collision damage has always cost more in Greatport than in Fairmont. Police studies, however, show that cars owned by Greatport residents are, on average, slightly less likely to be involved in a collision than cars in Fairmont. Clearly, therefore, insurance companies are making a greaterprofit on collision-damage insurancein Greatport than in Fairmont.

Which of the following is an assumption on which the argument depends?

A. Repairing typical collision damage does not cost more in Greatport than in Fairmont.
B. There are no more motorists in Greatport than in Fairmont.
C. Greatport residents who have been in a collision are more likely to report it to their insurance company than Fairmont residents are.

Can someone eliminate B and C for me.

Check carefully , the argument talks about Cost-----------> Profit relationship
Quote:
We know, Profit = Revenue ( Cost to Drivers ) - Expenditure of Insurance Companies ( On Collision damage )

The missing premises / part is : Expenditure of Insurance Companies ( On Collision damage )

Options (B) and (C) can be rejected because they can not substantiate the reasoning/claim...

(B) No of motorists in Greatport is not a contributor to Profit

(C) Reporting/Non reporting is not a contributor to Profit....

Try negating options (B) and (C) the conclusion doesn't fall apart, ence answer must be (A)
Intern
Joined: 05 Nov 2012
Posts: 35
Own Kudos [?]: 32 [0]
Given Kudos: 106
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]
maha2804 wrote:
For insurance company to make a profit they either must have least number of claims or they have to minimize each payout

Now choice B talks about the number of motorists. Doesn't talk about the number of motorist who will claim. Doesn't affect the conclusion about making greater profit even when it is negated.

Option C kind of weakens the
Conclusion. It says more claims are likely to be filed thereby affecting the profit. Negating C doesn't shatter the conclusion.

Option A on the other hand says the payout for damage is going to be less in Greenport. Negate A payout is going to be more hence the profit is going to be lesser.

Please let me know if I might have overlooked anything in my reasoning.

Sent from my ONE E1003 using GMAT Club Forum mobile app

Hey Maha,

This is how I convinced myself. Leme know if you see any flaws in this logic:

The argument states that Clearly, therefore, insurance companies are making a greater profit on collision-damage insurance in Greatport than in Fairmont.
Profit = Revenue - Claims for each

PT: The claims are not going to be higher in GF.
A. Correct. It ignores the price of the claims. If A is negated it can break the argument. Correct
B. This doesn't talk about the greater profit part because if more motorists are there then there will be more revenue and yet not greater profits.
C. Also on similar lines because despite more claims in GP both can earn same amnt of profit due to more exp repairs in greatport.
X had 100 insured ppl, 60 claimed full insurance because of cost = profit on the 60 is zero. Remaining profits = 40

Y had 90 insured insured ppl, 60 claimed insurance but because the repairs are cheaper they claimed .5 . Remaining profits = 90 - .30 = 60

So, B has no effect on conclusion on being negated. Similarly C is also on similar lines. if u reduce the no. of claims in Y.
Current Student
Joined: 18 Jun 2016
Posts: 220
Own Kudos [?]: 620 [0]
Given Kudos: 111
Location: United States (NY)
GMAT 1: 720 Q50 V38
GMAT 2: 750 Q49 V42
GPA: 4
WE:General Management (Other)
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]
joinraveesh wrote:
For similar cars and drivers, automobile insurance for collision damage has always cost more in Greatport than in Fairmont. Police studies, however, show that cars owned by Greatport residents are, on average, slightly less likely to be involved in a collision than cars in Fairmont. Clearly, therefore, insurance companies are making a greater profit on collision-damage insurance in Greatport than in Fairmont.
Which of the following is an assumption on which the argument depends?

A. Repairing typical collision damage does not cost more in Greatport than in Fairmont.
B. There are no more motorists in Greatport than in Fairmont.
C. Greatport residents who have been in a collision are more likely to report it to their insurance company than Fairmont residents are.
D. Fairmont and Greatport are the cities with the highest collision-damage insurance rates.
E. The insurance companies were already aware of the difference in the likelihood of collisions before the publication of the police reports.

For all those picking C, Reporting to the Insurance Company is different from Claiming the Insurance.
Manager
Joined: 19 Feb 2018
Posts: 97
Own Kudos [?]: 163 [0]
Given Kudos: 229
GMAT 1: 530 Q48 V15
GMAT 2: 640 Q48 V30
GMAT 3: 590 Q46 V25
GMAT 4: 600 Q48 V25 (Online)
GMAT 5: 710 Q49 V37
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]
(A) Repairing typical collision damage does not cost more in Greatport than in Fairmont. Right answer

(B) There are no more motorists in Greatport than in Fairmont. Strengthen the conclusion. It's not an assumption.

(C) Greatport residents who have been in a collision are more likely to report it to their insurance company than Fairmont residents are. Weaken the conclusion; however, we are looking for assumption.

(D) Fairmont and Greatport are the cities with the highest collision-damage insurance rates.

(E) The insurance companies were already aware of the difference in the likelihood of collisions before the publication of the police reports.
Manager
Joined: 05 Mar 2017
Posts: 179
Own Kudos [?]: 176 [0]
Given Kudos: 687
Location: India
Concentration: General Management, Marketing
GPA: 3.6
WE:Marketing (Hospitality and Tourism)
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]
For similar cars and drivers, automobile insurance for collision damage has always cost more in Greatport than in Fairmont. Police studies, however, show that cars owned by Greatport residents are, on average, slightly less likely to be involved in a collision than cars in Fairmont. Clearly, therefore, insurance companies are making a greater profit on collision-damage insurance in Greatport than in Fairmont.

Which of the following is an assumption on which the argument depends?

A. Repairing typical collision damage does not cost more in Greatport than in Fairmont.
B. There are no more motorists in Greatport than in Fairmont.
C. Greatport residents who have been in a collision are more likely to report it to their insurance company than Fairmont residents are.
D. Fairmont and Greatport are the cities with the highest collision-damage insurance rates.
E. The insurance companies were already aware of the difference in the likelihood of collisions before the publication of the police reports.
Retired Moderator
Joined: 28 Feb 2020
Posts: 935
Own Kudos [?]: 494 [0]
Given Kudos: 839
Location: India
WE:Other (Other)
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]

Could anyone of you as and when possible, help me out with this question,
After reading all the comment, I am still unable to understand how A is the correct.

Thank you.
Manager
Joined: 20 Dec 2019
Posts: 58
Own Kudos [?]: 29 [0]
Given Kudos: 64
Location: India
Schools: ISB'22 (I)
GMAT 1: 730 Q50 V38
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]
Agree with option A by POE. However, should the option not contain the word "significant" ?
A slight higher cost still maintains the conclusion.
Intern
Joined: 06 Aug 2020
Posts: 18
Own Kudos [?]: 15 [0]
Given Kudos: 17
Location: India
GMAT 1: 660 Q48 V33
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]
A - Correct
B - a typical trap; Drivers in City G < or = Drivers in City F
Intern
Joined: 08 Nov 2019
Posts: 5
Own Kudos [?]: 1 [0]
Given Kudos: 64
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]
For similar cars and drivers, automobile insurance for collision damage has always cost more in Greatport than in Fairmont. Police studies, however, show that cars owned by Greatport residents are, on average, slightly less likely to be involved in a collision than cars in Fairmont. Clearly, therefore, insurance companies are making a greater profit on collision-damage insurance in Greatport than in Fairmont.

P: For similar cars and drivers, automobile insurance for collision damage has always cost more in Greatport than in Fairmont
P: Police studies, however, show that cars owned by Greatport residents are, on average, slightly less likely to be involved in a collision than cars in Fairmont
C: Therefore, insurance companies are making a greater profit on collision-damage insurance in Greatport than in Fairmont.

Greatport insurance more expensive than Fairmont. Less car accidents in G. Therefore, insurance makes more. Well, what if the cars are more expensive? This seems like the biggest assumption made so let's try and find it below.

Which of the following is an assumption on which the argument depends?

(A) Repairing typical collision damage does not cost more in Greatport than in Fairmont. -- I don't like it, but it is as close as we get. If the cars don't cost more to repair, then the insurance makes more money (huge assumption made). I wish this had said "insurance companies don't pay more", but we have to deal with it. For the negation, if they do cost more, the argument is ruined.

(B) There are no more motorists in Greatport than in Fairmont. -- But we are talking about averages, so we do not care about number of vehicles.

(C) Greatport residents who have been in a collision are NOT more likely to report it to their insurance company than Fairmont residents are. -- This is reversed to a certain extent. If this were the other way around, it would be an assumption (the argument would be destroyed because the comparison wouldn't be accurate). But if they are not more likely, then the numbers are correct and the accident rates are comparable.

(D) Fairmont and Greatport are NOT the cities with the highest collision-damage insurance rates. -- OK, but who cares about the rates of collision in the country or world? We just care about the comparison between the two cities listed.

(E) The insurance companies were NOT already aware of the difference in the likelihood of collisions before the publication of the police reports. -- Who cares if they were aware? The argument isn't about motivation, but the result. And the argument believes that the result is that G makes more money than F.

C talks about number of reporting that is relevant only when revenue not profit is being talked about . here its profit..
Re: For similar cars and drivers, automobile insurance for collision damag [#permalink]
1   2
Moderators:
GMAT Club Verbal Expert
6991 posts
GMAT Club Verbal Expert
236 posts
CR Forum Moderator
824 posts