For similar cars and drivers, automobile insurance for collision damag

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?

Note the time difference between Zeka's and my posting

Answer is "A"

Thanks for the explanation

immediately got A; it perfectly coroborates the given conclusion.

I would go with option A as the correct option.

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.

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 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

Check carefully , the argument talks about Cost-----------> Profit relationship

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)

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.

For all those picking C, Reporting to the Insurance Company is different from Claiming the Insurance.

(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.

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.

nightblade354 yashikaagarwal

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.

Agree with option A by POE. However, should the option not contain the word "significant" ?
A slight higher cost still maintains the conclusion.

A - Correct
B - a typical trap; Drivers in City G < or = Drivers in City F

C talks about number of reporting that is relevant only when revenue not profit is being talked about . here its profit..