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 ,
KarishmaBPlease 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.
close
02 Jul 2018, 12:05
69%
(02:02)
wrong 
