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From time to time there is a public outcry against predatory pricing

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From time to time there is a public outcry against predatory pricing  [#permalink]

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New post 02 Jul 2018, 11:05
3
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A
B
C
D
E

Difficulty:

  95% (hard)

Question Stats:

22% (01:51) correct 78% (01:57) wrong based on 392 sessions

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From time to time there is a public outcry against predatory pricing- where a company deliberately sells its products at prices low enough to drive its competitors out of business. But this practice clearly should be acceptable, because even after its competitors go out of business, the mere threat of renewed competition will prevent the company from raising its prices to unreasonable levels.

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

(A) Any company that is successful will inevitably induce competitors to enter the market.
(B) It is unlikely that several competing companies will engage in predatory pricing simultaneously.
(C) Only the largest and wealthiest companies can engage in predatory pricing for a sustained period of time.
(D) It is only competition or the threat of competition that keeps companies from raising prices.
(E) Any pricing practice that does not result in unreasonable prices should be acceptable.

Source: LSAT

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Re: From time to time there is a public outcry against predatory pricing  [#permalink]

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New post 02 Jul 2018, 12:38
Akela wrote:
From time to time there is a public outcry against predatory pricing- where a company deliberately sells its products at prices low enough to drive its competitors out of business. But this practice clearly should be acceptable, because even after its competitors go out of business, the mere threat of renewed competition will prevent the company from raising its prices to unreasonable levels.

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

(A) Any company that is successful will inevitably induce competitors to enter the market.
(B) It is unlikely that several competing companies will engage in predatory pricing simultaneously.
(C) Only the largest and wealthiest companies can engage in predatory pricing for a sustained period of time.
(D) It is only competition or the threat of competition that keeps companies from raising prices.
(E) Any pricing practice that does not result in unreasonable prices should be acceptable.

Source: LSAT


I did not get how E is the OA. Experts please help.
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Re: From time to time there is a public outcry against predatory pricing  [#permalink]

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New post 02 Jul 2018, 15:53
Akela wrote:
From time to time there is a public outcry against predatory pricing- where a company deliberately sells its products at prices low enough to drive its competitors out of business. But this practice clearly should be acceptable, because even after its competitors go out of business, the mere threat of renewed competition will prevent the company from raising its prices to unreasonable levels.

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

(A) Any company that is successful will inevitably induce competitors to enter the market.
(B) It is unlikely that several competing companies will engage in predatory pricing simultaneously.
(C) Only the largest and wealthiest companies can engage in predatory pricing for a sustained period of time.
(D) It is only competition or the threat of competition that keeps companies from raising prices.
(E) Any pricing practice that does not result in unreasonable prices should be acceptable.

Source: LSAT


Can anyone provide OE for this qn ? OA seems generic.

Premise : Predatory pricing practice is followed by a company to drive competition out of market
Conclusion : Company might continue practicing this pricing due to fear of new competition

Assumption : Even if a company gains monopoly, if there is a price increase, then there will definitely be competition. Hence companies will not raise prices.

A gets its right.

D is a perfect trap. What if the government puts an upper limit on price. So even if there are no competition, the company can't still increase price.
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Re: From time to time there is a public outcry against predatory pricing  [#permalink]

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New post 02 Jul 2018, 21:31
Akela wrote:

(A) Any company that is successful will inevitably induce competitors to enter the market.
(B) It is unlikely that several competing companies will engage in predatory pricing simultaneously.
(C) Only the largest and wealthiest companies can engage in predatory pricing for a sustained period of time.
(D) It is only competition or the threat of competition that keeps companies from raising prices.
(E) Any pricing practice that does not result in unreasonable prices should be acceptable.

Source: LSAT


A - Being successful in implementing predatory pricing does not indicate that a company is successful generally.
B - Not relevant
C - Not relevant
D - I think this is wrong because the passage already states that predatory pricing causes lower price to force competitors out.
E - Only one left
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Re: From time to time there is a public outcry against predatory pricing  [#permalink]

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New post 26 Jul 2018, 06:17
Akela wrote:
From time to time there is a public outcry against predatory pricing- where a company deliberately sells its products at prices low enough to drive its competitors out of business. But this practice clearly should be acceptable, because even after its competitors go out of business, the mere threat of renewed competition will prevent the company from raising its prices to unreasonable levels.

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

(A) Any company that is successful will inevitably induce competitors to enter the market.
(B) It is unlikely that several competing companies will engage in predatory pricing simultaneously.
(C) Only the largest and wealthiest companies can engage in predatory pricing for a sustained period of time.
(D) It is only competition or the threat of competition that keeps companies from raising prices.
(E) Any pricing practice that does not result in unreasonable prices should be acceptable.

Source: LSAT


Though, I got it right, but it was difficult to cross out D. I only crossed out D for its extreme language.

I chose E because it connects conclusion and premise.

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From time to time there is a public outcry against predatory pricing  [#permalink]

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New post 26 Jul 2018, 09:21
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From time to time there is a public outcry against predatory pricing- where a company deliberately sells its products at prices low enough to drive its competitors out of business. But this practice clearly should be acceptable, because even after its competitors go out of business, the mere threat of renewed competition will prevent the company from raising its prices to unreasonable levels.

Firstly, it is important to correctly identify the right conclusion.
It is NOT "Company will raise prices to unreasonable levels due to fear of competition"

The conclusion is "predatory pricing practice should be acceptable."
The argument to support the conclusion is that even if a company practices predatory pricing and drives out its competitors, it cannot increases prices to unreasonable levels due to the threat of new competition.

So in a nutshell "Predatory ricing should be acceptable because it will not lead to unreasonable prices."

Now lets analyze the options.

(A) Any company that is successful will inevitably induce competitors to enter the market. Not linked to the conclusion or supporting argument.
(B) It is unlikely that several competing companies will engage in predatory pricing simultaneously. Not linked to the conclusion or supporting argument.
(C) Only the largest and wealthiest companies can engage in predatory pricing for a sustained period of time. Not linked to the conclusion or supporting argument.
(D) It is only competition or the threat of competition that keeps companies from raising prices. This questions the validity of the argument supporting the conclusion, but not the conclusion. Even if we assume there might be other factors too that keeps companies from raising prices, competition may still be an option and it may well the more dominant reason that overrides the other factors. So there is no assumption that competition is the only factor. The assumption is that it is the major or one of the major factors.
(E) Any pricing practice that does not result in unreasonable prices should be acceptable. This options directly talks about our conclusion. Predatory ricing should be acceptable because it will not lead to unreasonable prices. And this option states the inherent assumption in the argument's line of reasoning that we do not need to consider any factor other than unreasonable pricing while deciding what should be acceptable.
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Re: From time to time there is a public outcry against predatory pricing  [#permalink]

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New post 26 Jul 2018, 09:32
A,B can be eliminated for various reasons.

C, D can be eliminated as they use the extreme word 'Only'

E - This is the best option left out and this needs to be true as it is stated in the argument "But this practice clearly should be acceptable"

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Re: From time to time there is a public outcry against predatory pricing  [#permalink]

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New post 26 Jul 2018, 20:57
Akela wrote:
From time to time there is a public outcry against predatory pricing- where a company deliberately sells its products at prices low enough to drive its competitors out of business. But this practice clearly should be acceptable, because even after its competitors go out of business, the mere threat of renewed competition will prevent the company from raising its prices to unreasonable levels.

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

(A) Any company that is successful will inevitably induce competitors to enter the market.
(B) It is unlikely that several competing companies will engage in predatory pricing simultaneously.
(C) Only the largest and wealthiest companies can engage in predatory pricing for a sustained period of time.
(D) It is only competition or the threat of competition that keeps companies from raising prices.
(E) Any pricing practice that does not result in unreasonable prices should be acceptable.

Source: LSAT


Premises:
Public is against predatory pricing
But even after competitors go out of business, threat of renewed competition will prevent unreasonable prices.

Conclusion: So this practice should be acceptable

We need an assumption here. An assumption is a missing necessary premise. Let's look for the missing link. The premises talk about how the policy prevents unreasonable prices. The conclusion drawn is that the policy should be acceptable. We are not given the link between unreasonable prices and acceptability.

Option (E) gives us that link: If a practice does not result in unreasonable prices, it should be acceptable.
So (E) is the answer.

(D) It is only competition or the threat of competition that keeps companies from raising prices.
The argument doesn't make this assumption. The argument tells us that threat of competition is sufficient to keep prices reasonable. Is it the only factor? May or may not be. It doesn't change anything in our argument. We are given that it is a factor that keeps prices reasonable. We are told to believe that hence this practice should be acceptable. We are assuming that reasonable prices should make the practice acceptable. What keeps prices reasonable is not the missing link.
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Re: From time to time there is a public outcry against predatory pricing  [#permalink]

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New post 17 Aug 2018, 06:20
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AkshdeepS wrote:
Though, I got it right, but it was difficult to cross out D. I only crossed out D for its extreme language.

I chose E because it connects conclusion and premise.

GMATNinja , KarishmaB

Please help with POE.


Quote:
From time to time there is a public outcry against predatory pricing- where a company deliberately sells its products at prices low enough to drive its competitors out of business. But this practice clearly should be acceptable, because even after its competitors go out of business, the mere threat of renewed competition will prevent the company from raising its prices to unreasonable levels.

The author concludes that predatory pricing should be acceptable. The logic here is not too complicated, but it is subtle:

  • When company engages in predatory pricing, it lowers prices to drive competitors out of the market.
  • The public does not like this practice.
  • But after driving its competitors out, the company will still want to avoid competitors coming back into the market.
  • Consequently, the company won't raise its prices to unreasonable levels.
  • Therefore, predatory pricing should be acceptable.

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

The author concludes that we should be OK with predatory pricing. This conclusion assumes that our acceptance of this practice depends on whether the prices of products rise to unreasonable levels. This is a very targeted conclusion with a very targeted assumption. It's tempting to focus on whether or not there are competitors around (as we're all trained to do in the business world), but the right answer choice will identify the connection between reasonable price levels and acceptance of predatory pricing. So how do we fill that gap?

Quote:
(A) Any company that is successful will inevitably induce competitors to enter the market.

The conclusion we're evaluating is whether predatory pricing is acceptable. Knowing that competition will enter the market when a company is "successful" doesn't identify the assumption about pricing that we're looking for. And we're definitely not evaluating the general success of companies. We are looking for a connection between seeing a reasonable price and accepting predatory pricing. (A) is too broad, and doesn't identify why we would accept or reject the use of predatory pricing, so let's eliminate it.

Quote:
(B) It is unlikely that several competing companies will engage in predatory pricing simultaneously.

The conclusion doesn't depend on how many companies engage in predatory pricing. And if multiple companies did practice predatory pricing at the same time, according the information given, one of them would eventually drive the others out anyway. Choice (B) doesn't give us any new information and doesn't address the specific logical argument being made, so eliminate it.

Quote:
(C) Only the largest and wealthiest companies can engage in predatory pricing for a sustained period of time.

The argument doesn't depend on how large or wealthy the predatory company is. Choice (C) doesn't connect in any way to the argument's conclusion about why we should accept or reject predatory pricing, so we'll eliminate it, too.

Quote:
(D) It is only competition or the threat of competition that keeps companies from raising prices.

Hopefully you noticed the word "only" in choice (D). Does the author's logic require that competition or the threat of competition is the only thing that keeps companies from raising prices?

No... Maybe in the absence of competition, or even in addition to competition, a company would avoid raising prices because doing so would hurt its reputation/image. Or maybe it sells luxury items and people simply aren't willing to pay above a certain amount for those items.

(D) does not have to be true for the argument to hold, so we can eliminate this one.

Quote:
(E) Any pricing practice that does not result in unreasonable prices should be acceptable.

Yes! This is the only answer choice that specifically targets why the public should accept predatory pricing. It's also unambiguous in telling us that ANY pricing practice that does not result in unreasonable prices should be acceptable. This completes the logic of the argument by reinforcing the importance of reasonable prices. Since this is such a good fit for the argument, any doubts we have about choices (A) and (D) should be even easier to let go of. (E) is the best choice by far, and that's why it's the correct answer choice.

This is a tough one! I hope this helps.
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Re: From time to time there is a public outcry against predatory pricing &nbs [#permalink] 17 Aug 2018, 06:20
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