For similar homes and comparable residents, home insurance for theft

Use variance technique...

Conclusion :- insurance companies are making a greater profit on home theft insurance in Springfield than in Shelbyville.

Option B -->

YES..the cost of compensating theft losses in Springfield is greater than the cost of compensating theft losses in Shelbyville.

The conclusion gets HURT.

We cant conclude that "insurance companies are making a greater profit on home theft insurance in Springfield than in Shelbyville."

No...the cost of compensating theft losses in Springfield is not greater than the cost of compensating theft losses in Shelbyville.

But the home insurance for theft has always cost more in Springfield than in Shelbyville. So We can conclude that "insurance companies are making a greater profit on home theft insurance in Springfield than in Shelbyville."

The conclusion gets HELPED.

So option B is answer.

Please give me kudo s if you liked my explanation.

OFFICIAL EXPLANATION:

Reading the question: we can use opinion-charged words to identify the pieces of the argument here. "Clearly" introduces the conclusion. The word "however" also is a clue: it tells us that the first sentence is a data point, not just filler. The logical structure is: A is true, but B is true, therefore C is true. A is the difference in cost in home insurance between these two cities, B is the rate of theft. The argument is not too strong.

Creating a filter: as the page summarizing the Critical Reasoning Strategy mentions, a prediction of the correct answer, even a vague or unrealistic prediction, is most powerful filter to evaluate answer choices. Predicting isn't always easy, but on this question, there are many reasons why insurance companies might have to pay more for losses in Springfield than in Shelbyville. Maybe the thieves in Springfield are more skilled and they manage to steal more per theft than in Shelbyville. That possibility is unlikely to be an answer choice, but we can still use it: "thieves in Springfield are more skilled and steal more."

Applying the filter, we evaluate the answer choices. Choice (B) is actually pretty close to our prediction. Choice (C) involves auto rates, which wouldn't shed light on this question without further information. (D) and (E) also involve comparisons with other things that we know nothing about, so they cause problems rather than solve problems. Back to (A), we can see it doesn't directly concern whether companies profit more from fewer thefts. Notice that our prediction was quite different from choice (B), but it was similar enough to help us spot (B) quickly.

Logical proof: we can use analysis by extreme cases to establish that choice (B) is correct. If the losses per theft were identical in Shelbyville and in Springfield, the conclusion would be true and the argument would stand; if they were wildly different, the conclusion could be false.

The correct answer is (B).

I think the answer is A.

If homes are similar it means that the resident's income is almost the same. The reason might be the population density. If in Springfield there are more residents than in Shelbyville, the insurance company is more likely to make more profit on their residents. Especially if the insurance company pay less compensation

This is a GMAT Prep question and the OA given (which you can check under the spoiler in the first post) is B. The official explanation is also given above. Please check. Hope it helps.

1.The first thing that should click in our mind as soon as we read the conclusion is that the emphasis is over the money aspect(notice key words-cost,profit) so it is a major hint going forward in option analysis.

2.Less chances of robbery makes a strong case for gaining profit (esp. with high insurance cost)
But what if the compensated cost are not comparable?

Option B says the same thing.If compensation costs for theft losses are higher in Springfield than those in Shelbyville then accrued profit may not be higher despite less chances of robbery and vice versa if the opposite happens.Hence this evaluation is necessary.

Option B is correct.


Note: Best way to solve these evaluate the answer question is by asking Yes/No and see the effect on argument

Posted from my mobile device

Can someone explain why A is wrong?

I would like to see a screenshot of the source material if this is, in fact, an official question. GMAT Prep questions do not provide explanations, and the one offered above in this post uses language that I have not seen in OEs from the OG: references to "we," "us," and "our"; "creating a filter"; "logical proof." (This is not to take away from the explanation itself, which I find to be useful.) To my eye, the question appears to be nothing more than a spin-off of this OG Evaluate question on automobile insurance, probably written by a Simpsons fan: the Simpsons reside in Springfield, whose contentious relationship with neighboring town Shelbyville is present throughout the series. Of course, I could be wrong. But I have never seen two uncannily similar official questions with little more than town names swapped out. Although it is true that GMAC™ sometimes recycles material, most often in CR questions, by presenting a certain passage with different boldfaced lines or by asking a different question, this one seems spurious to me.

I would suggest dropping the tag "GMAT Prep" unless the source can be verified as such.

- Andrew