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# Garnet and RenCo each provide health care for their

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Garnet and RenCo each provide health care for their [#permalink]

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20 Jan 2005, 21:24
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Garnet and RenCo each provide health care for their employees. Garnet pays for both testing of its employees' cholesterol levels and treatment of high cholesterol. This policy saves Garnet money, since high cholesterol left untreated for many years leads to conditions that require very expensive treatment. However, RenCo dose not have the same financial incentive to adopt such a policy, because ______.

A. early treatment of high cholesterol dose not entirely eliminate the possibility of a stroke later in life
B. the mass media regularly feature stories encouraging people to maintain diets that are low in cholesterol
C. RenCo has significantly more employees than Garnet has
D. RenCo's employees are unlikely to have higher cholesterol levels than Garnet's employees
E. the average length of time an employee stays with RenCo is less than it is with Garnet
[Reveal] Spoiler: OA

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Last edited by dentobizz on 14 Nov 2013, 02:27, edited 1 time in total.

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21 Jan 2005, 06:57
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E. The only one which talks about the time frame. the average length of time an employee stays with RenCo is less than it is with Garnet
which is of importance because it is said that This policy saves Garnet money, since high cholesterol left untreated for many years leads to conditions that require very expensive treatment

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Re: CR - Garnet and RenCo [#permalink]

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24 Sep 2011, 12:12
As far as I know average is not a good indicator for any stats. In this case, it's been argued that average length of time an employee stays with RenCo is less than with Garnet. But in reality, this average might be less just because of few employees. Other employees may very well have length of time greater than that with Garnet. Considering this factor, is E still correct as many have suggested on this forum? Can someone please explain?

Also, I chose C because I thought if RenCo has more number of employees then upfront expenditure may be much more than the Garnet and my assumption is that not many employees will necessarily require expensive treatment. Hence, RenCo may not have the same advantage as Garnet. I was not fully convinced with this option either, but it sounded better than E.
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Re: CR - Garnet and RenCo [#permalink]

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24 Sep 2011, 14:43
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sgupta0827 wrote:
As far as I know average is not a good indicator for any stats. In this case, it's been argued that average length of time an employee stays with RenCo is less than with Garnet. But in reality, this average might be less just because of few employees. Other employees may very well have length of time greater than that with Garnet. Considering this factor, is E still correct as many have suggested on this forum? Can someone please explain?

Also, I chose C because I thought if RenCo has more number of employees then upfront expenditure may be much more than the Garnet and my assumption is that not many employees will necessarily require expensive treatment. Hence, RenCo may not have the same advantage as Garnet. I was not fully convinced with this option either, but it sounded better than E.

I agree with you to an extent. The average is not a good indicator when the data are too widely dispersed. However, if we consider the standard deviation is not too much, the answer perhaps lies in the word "incentive". If we replace the word "incentive" with "capacity", "C" becomes a stronger candidate. Incentive is something like an ROI. If RenCo's employees quit every two years, why does it have to worry about the long term demerits of the ailment as to oppose to the Garnet employees, who work at least 25-30 years for the company. Yes, I am assuming a wild case where the average of the two cases will vary significantly. Too many assumptions are making it a weak argument.

But, E is the strongest among the weak.
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Re: CR - Garnet and RenCo [#permalink]

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24 Sep 2011, 16:27
fluke wrote:
sgupta0827 wrote:
As far as I know average is not a good indicator for any stats. In this case, it's been argued that average length of time an employee stays with RenCo is less than with Garnet. But in reality, this average might be less just because of few employees. Other employees may very well have length of time greater than that with Garnet. Considering this factor, is E still correct as many have suggested on this forum? Can someone please explain?

Also, I chose C because I thought if RenCo has more number of employees then upfront expenditure may be much more than the Garnet and my assumption is that not many employees will necessarily require expensive treatment. Hence, RenCo may not have the same advantage as Garnet. I was not fully convinced with this option either, but it sounded better than E.

I agree with you to an extent. The average is not a good indicator when the data are too widely dispersed. However, if we consider the standard deviation is not too much, the answer perhaps lies in the word "incentive". If we replace the word "incentive" with "capacity", "C" becomes a stronger candidate. Incentive is something like an ROI. If RenCo's employees quit every two years, why does it have to worry about the long term demerits of the ailment as to oppose to the Garnet employees, who work at least 25-30 years for the company. Yes, I am assuming a wild case where the average of the two cases will vary significantly. Too many assumptions are making it a weak argument.

But, E is the strongest among the weak.

Thanks fluke for the explanation. Perhaps I am still lacking the depth to understand these questions. Even after reading your explanation I don't understand the difference between capacity and incentive, and why would capacity make "C" a stronger candidate? I am always wary about choosing an option with "average". Do you know any strategy when I am in dilemma about these options?
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Re: CR - Garnet and RenCo [#permalink]

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24 Sep 2011, 18:01
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sgupta0827 wrote:
Thanks fluke for the explanation. Perhaps I am still lacking the depth to understand these questions. Even after reading your explanation I don't understand the difference between capacity and incentive, and why would capacity make "C" a stronger candidate? I am always wary about choosing an option with "average". Do you know any strategy when I am in dilemma about these options?

"However, RenCo dose not have the same financial incentive to adopt such a policy, because RenCo has significantly more employees than Garnet has."
Now, how do we know that there are no financial incentives to adopt a policy just on the basis of company's employee strength? We actually don't unless we are given a good reason. "E" gives us that reason.

Let's think it like this:
I) I'm not going to get much return even if I medically insure my employees because they are just too many in numbers. (Financial incentive-the return of investment)

II) I just can't afford to medically insure my employees because they are too many in numbers. (Financial incapacity)

III) I'm not going to get much return even if I medically insure my employees because they will leave my company after a short time anyway.
E is trying to say just that in a convoluted manner.

IMO, "III" is a better reason than "I" for not getting the employees insured.
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Re: CR - Garnet and RenCo [#permalink]

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24 Sep 2011, 20:00
fluke wrote:
sgupta0827 wrote:
Thanks fluke for the explanation. Perhaps I am still lacking the depth to understand these questions. Even after reading your explanation I don't understand the difference between capacity and incentive, and why would capacity make "C" a stronger candidate? I am always wary about choosing an option with "average". Do you know any strategy when I am in dilemma about these options?

"However, RenCo dose not have the same financial incentive to adopt such a policy, because RenCo has significantly more employees than Garnet has."
Now, how do we know that there are no financial incentives to adopt a policy just on the basis of company's employee strength? We actually don't unless we are given a good reason. "E" gives us that reason.

Let's think it like this:
I) I'm not going to get much return even if I medically insure my employees because they are just too many in numbers. (Financial incentive-the return of investment)

II) I just can't afford to medically insure my employees because they are too many in numbers. (Financial incapacity)

III) I'm not going to get much return even if I medically insure my employees because they will leave my company after a short time anyway.
E is trying to say just that in a convoluted manner.

IMO, "III" is a better reason than "I" for not getting the employees insured.

hmm now I understand the difference between ROI and Financial capacity in this context.
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Re: CR - Garnet and RenCo [#permalink]

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26 Sep 2011, 09:44
pb_india wrote:
Garnet and RenCo each provide health care for their employees. Garnet pays for both testing of its employees' cholesterol levels and treatment of high cholesterol. This policy saves Garnet money, since high cholesterol left untreated for many years leads to conditions that require very expensive treatment. However, RenCo dose not have the same financial incentive to adopt such a policy, because ______.

A. early treatment of high cholesterol dose not entirely eliminate the possibility of a stroke later in life
B. the mass media regularly feature stories encouraging people to maintain diets that are low in cholesterol
C. RenCo has significantly more employees than Garnet has
D. RenCo's employees are unlikely to have higher cholesterol levels than Garnet's employees
E. the average length of time an employee stays with RenCo is less than it is with Garnet

C and E are strong choices
I would go with E
What's the OA?
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Re: CR - Garnet and RenCo [#permalink]

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26 Sep 2011, 14:29
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Re: Garnet and RenCo each provide health care for their [#permalink]

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02 Jan 2012, 09:42
E should be the answer. It specifies why RenCo does not have the "incentive" for such a move. If its employees are going to quit the company within a short span, then paying for the testing and treatment of high cholesterol does not make sense. The company would not incur any long term loss anyway because its employees would already have quit by the time they develop high cholesterol levels.
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Re: Garnet and RenCo each provide health care for their [#permalink]

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02 Jan 2012, 11:20
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whts wrong with C???
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Re: Garnet and RenCo each provide health care for their [#permalink]

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02 Jan 2012, 12:12
rajeevrks27 wrote:
whts wrong with C???

I think the explanations discussed above might help. Just having more employees is not sufficient to act as a deterrent to the financial incentive. That is why E is better.
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Re: Garnet and RenCo each provide health care for their [#permalink]

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26 Dec 2012, 05:51
Still the question, whats wrong with C? Explanations will be appreciated.
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Re: Garnet and RenCo each provide health care for their [#permalink]

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07 Jan 2013, 07:07
pb_india wrote:
Garnet and RenCo each provide health care for their employees. Garnet pays for both testing of its employees' cholesterol levels and treatment of high cholesterol. This policy saves Garnet money, since high cholesterol left untreated for many years leads to conditions that require very expensive treatment. However, RenCo dose not have the same financial incentive to adopt such a policy, because ______.

A. early treatment of high cholesterol dose not entirely eliminate the possibility of a stroke later in life
B. the mass media regularly feature stories encouraging people to maintain diets that are low in cholesterol
C. RenCo has significantly more employees than Garnet has
D. RenCo's employees are unlikely to have higher cholesterol levels than Garnet's employees
E. the average length of time an employee stays with RenCo is less than it is with Garnet

We are looking for a good reason why it's RenCo has no reason to spend like Garnet on treating high-cholesterol of its employees.
It's given if left untreated for many years, it becomes more costly.

While I was reading this, I thought to myself aren't they planning to resign earlier than that.

It is not C because the reason for the incentive is more about avoiding future extra costs. Time is more of the issue. We need to assume a little more about the significance of number of employees if we are to take this as correct response.

D and E are contenders to me. But, E is best because it shows that RenCo doesn't have to worry because employees aren't going to be employed with them that long.

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Re: Garnet and RenCo each provide health care for their [#permalink]

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21 Jan 2013, 20:13
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Marcab wrote:
Still the question, whats wrong with C? Explanations will be appreciated.

Hi,

I think I should offer my two cents to the reason why C cannot be the answer. This is a doubt expressed by a number of people.

Let's start with a basic question - what incentive does Garnet has to allow cholesterol testing?

The reason is clearly given in the passage that it allows it to save money that would have been spent on treatment of cholesterol, once its employees gets affected (after some years).

Now, what makes us think that a similar policy won't help Renco save money? Are employees of Renco any different from Garnet?

Some people have opined that it would lead to a lot of upfront cost for Renco because it has significantly more employees than Garnet. But with the same reason, one can say that allowing cholesterol testing should save Renco significantly more since it has larger number of employees.

So, if the proportion of employees that are going to be treated for cholesterol are same for Garnet and Renco, both the companies have the financial incentive to support cholesterol testing.

So, Renco has the same financial incentive as Garnet if there is no difference in the employees of the two companies.

Option E specifically talks about the difference in employees of Renco and Garnet. Renco employees stay in the company for shorter period of time than Garnet employees.

Therefore, option E is correct.

Hope this helps

Let me know if further clarity is needed.

Thanks,
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Re: Garnet and RenCo each provide health care for their [#permalink]

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14 Nov 2013, 03:56
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Re: Garnet and RenCo each provide health care for their [#permalink]

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27 Jan 2014, 01:44
I don't know whether my view on the Qs is right.But if it give helps,I would be appreciated.

First I chose C like you guys and then when I looked the question and paragraph again,I have noticed why E is BETTER than C.

BETTER in GMAT is important.not saying that C is wrong.

the main point about the policy is whether the TIME is OK. Garnet gave us reason why he make it real " since high cholesterol left untreated for many years leads to conditions that require very expensive treatment. " So in my mind it is all about the time. If C is BETTER than E, I think the whole paragraph would be nonsense, cuz we could assume that without any information.

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Re: Garnet and RenCo each provide health care for their [#permalink]

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27 Jan 2014, 10:15
The argument rests upon the proof that R's employees do not stay with it for as long as G's do which is provided by E.
That's because R won't have to worry about employees' long term health if they do not stay for such a long time so as to develop a serious condition.

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Re: Garnet and RenCo each provide health care for their [#permalink]

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29 Jan 2014, 09:04
"Average length of time an employee stays with R is less than G" still does not justify that they wont have problems related to high cholesterol. Its not that cholesterol problems shall start once they join R or G. What if they already had high cholesterol when they joined R? Probably the work culture or type of work at R is better which leads to its employees having less chances of problems due to high cholesterol. In that context isn't option D most reliable?

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Re: Garnet and RenCo each provide health care for their [#permalink]

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30 Jan 2014, 09:35
Garnet and RenCo each provide health care for their employees.
Garnet pays for both testing of its employees' cholesterol levels and treatment of high cholesterol. This policy saves Garnet money, since high cholesterol left untreated for many years leads to conditions that require very expensive treatment.
However, RenCo dose not have the same financial incentive to adopt such a policy, because ______.

A. early treatment of high cholesterol does not entirely eliminate the possibility of stroke later in life....that may apply to both firms...irrelevant
B. the mass media regularly feature stories encouraging people to maintain diets that are low in cholesterol...so what?
C. RenCo has significantly more employees than Garnet has....employee strength is irrelevant
D. RenCo's employees are unlikely to have higher cholesterol levels than Garnet's employeeseven if it is equal...the financial benefit should have accrued...
E. the average length of time an employee stays with RenCo is less than it is with Garnetcorrect..note the premise-[color=#0000ff]""This policy saves Garnet money, since high cholesterol left untreated for many years leads to conditions that require very expensive treatment""...if average time spent is less less benefit accrues from it as cases of " high cholesterol left untreated for many years leading to conditions requiring very expensive treatment " .. may not be there.....[/color]

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Re: Garnet and RenCo each provide health care for their   [#permalink] 30 Jan 2014, 09:35

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