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GMATPREP ChallengeQ -The general density dependence model

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GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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Updated on: 09 Jul 2017, 06:41
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Passage-15 GMATPrep RCs-Collection(Main article)
The general density dependence model can be applied to explain the founding of specialist firms (those attempting to serve a narrow target market). According to this model, specialist foundings hinge on the interplay between legitimation and competitive forces, both of which are functions of the density (total number) of firms in a particular specialist population. Legitimation occurs as a new type of firm moves from being viewed as unfamiliar to being viewed as a natural way to organize. At low density levels, each founding increases legitimation, reducing barriers to entry and easing subsequent foundings. Competition occurs because the resources that firms seek—customers, suppliers, and employees—are limited, but as long as density is low relative to plentiful resources, the addition of another firm has a negligible impact on the intensity of competition. At high density levels, however, competitive effects outweigh legitimation effects, discouraging foundings. The more numerous the competitors, the fiercer the competition will be and the smaller will be the incentive for new firms to enter the field.

While several studies have found a significant correspondence between the density dependence model and actual patterns of foundings, other studies have found patterns not consistent with the model. A possible explanation for this inconsistency is that legitimation and competitive forces transcend national boundaries, while studies typically restrict their analysis to the national level. Thus a national-level analysis can understate the true legitimation and competitive forces as well as the number of foundings in an industry that is internationally integrated. Many industries are or are becoming international, and since media and information easily cross national borders, so should legitimation and its effects on overseas foundings. For example, if a type of firm becomes established in the United States, that information transcends borders, reduces uncertainties, and helps foundings of that type of firm in other countries. Even within national contexts, studies have found more support for the density dependence model when they employ broader geographic units of analysis—for example, finding that the model's operation is seen more clearly at the state and national levels than at city levels.

1. According to the passage, which of the following may account for the inconsistency between the general density dependence model and the evidence provided by certain studies of foundings?

A. Such studies have overemphasized the impact of preexisting firms on the establishment of new firms.
B. Such studies have not focused strongly enough on the role of competition among newly established firms operating at the city and state levels.
C. Such studies fail to differentiate among specialist firms with regard to the degree to which they deviate from familiar forms of organization.
D. Such studies have not taken into account the fact that many industries are internationally integrated.
E. Such studies have neglected to investigate firms that attempt to serve only a narrow target market.

2. In the second paragraph, the author is primarily concerned with

A. noting various exceptions to a certain general finding
B. examining the impact of one type of industry on another
C. proposing a possible explanation for an inconsistency
D. providing specific examples of a particular phenomenon
E. defending the validity of a particular study's conclusions

3. The passage suggests that when a population of specialist firms reaches a high density level, which of the following is likely to occur?

A. Foundings will decline despite legitimation that has occurred in these industries.
B. Increasing competition will encourage many firms to broaden their target market.
C. Competition for resources will become stabilized and thus foundings will be encouraged.
D. Many customers will abandon their loyalty to older firms as more innovative firms enter the market.
E. Firms will begin to cross national borders in an attempt to gain a competitive advantage.

4. The primary purpose of the passage is to

A. question the validity of an economic model
B. point out some inconsistencies within an economic model
C. outline an economic model and suggest revisions to it
D. describe an economic model and provide specific examples to illustrate its use
E. explain why an economic model remains valid despite inconsistent research results

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Originally posted by PiyushK on 12 Aug 2014, 06:56.
Last edited by hazelnut on 09 Jul 2017, 06:41, edited 5 times in total.
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Re: GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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15 Aug 2014, 12:51
5
JarvisR wrote:
Hi Piyush,
I took around 9:20 mins. P1 stumped me and I was not very clear about the topic until i reached last of 1 para.And by 2nd Para, I was comfortable with wht i was reading
All correct except last question Q4.
Could you please help me to understand how to infer E. [I am more inclined toward B and C but none of them are completely true.]
Regards.

Hi JarvisR,

Answer of last question lies in the last paragraph of the passage.

"A possible explanation for this inconsistency is that legitimation and competitive forces transcend national boundaries, while studies typically restrict their analysis to the national level. "

"Many industries are or are becoming international, and since media and information easily cross national borders, so should legitimation and its effects on overseas foundings. For example, if a type of firm becomes established in the United States, that information transcends borders, reduces uncertainties, and helps foundings of that type of firm in other countries. Even within national contexts, studies have found more support for the density dependence model when they employ broader geographic units of analysis--for example, finding that the model's operation is seen more clearly at the state and national levels than at city levels."

Author is raising question on the studies that, in current scenario in which many companies operating internationally, information or impact of their international operations were not included in these studies. Author is taking side of dependence model.

4. The primary purpose of the passage is to
E. explain why an economic model remains valid despite inconsistent research results.

Further we can outline entire passage per paragraph:
1. (GDDM) General density dependence model's importance to specialized firms and how legitimation and competitive forces react to density.
2. Defending GDDM and justifying that it works fine.

4. The primary purpose of the passage is to
A. question the validity of an economic model --- no author is not questioning, instead s/he is defending.
B. point out some inconsistencies within an economic model --- narrow scope -- s/he is also defending.
C. outline an economic model and suggest revisions to it --- not suggesting revision.
D. describe an economic model and provide specific examples to illustrate its use -- no examples illustrated
E. explain why an economic model remains valid despite inconsistent research results --- so we left with E.

I hope it helps.
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Re: GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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Updated on: 13 Aug 2014, 21:30
1

1. According to the passage, which of the following may account for the inconsistency between the general density dependence model and the evidence provided by certain studies of foundings?
A. Such studies have overemphasized the impact of preexisting firms on the establishment of new firms.
B. Such studies have not focused strongly enough on the role of competition among newly established firms operating at the city and state levels.
C. Such studies fail to differentiate among specialist firms with regard to the degree to which they deviate from familiar forms of organization.
D. Such studies have not taken into account the fact that many industries are internationally integrated.
E. Such studies have neglected to investigate firms that attempt to serve only a narrow target market.

2. In the second paragraph, the author is primarily concerned with
A. noting various exceptions to a certain general finding
B. examining the impact of one type of industry on another
C. proposing a possible explanation for an inconsistency
D. providing specific examples of a particular phenomenon
E. defending the validity of a particular study's conclusions

3. The passage suggests that when a population of specialist firms reaches a high density level, which of the following is likely to occur?
A. Foundings will decline despite legitimation that has occurred in these industries.
B. Increasing competition will encourage many firms to broaden their target market.
C. Competition for resources will become stabilized and thus foundings will be encouraged.
D. Many customers will abandon their loyalty to older firms as more innovative firms enter the market.
E. Firms will begin to cross national borders in an attempt to gain a competitive advantage.

4. The primary purpose of the passage is to
A. question the validity of an economic model
B. point out some inconsistencies within an economic model
C. outline an economic model and suggest revisions to it
D. describe an economic model and provide specific examples to illustrate its use
E. explain why an economic model remains valid despite inconsistent research results

Originally posted by bb61 on 12 Aug 2014, 09:46.
Last edited by PiyushK on 13 Aug 2014, 21:30, edited 1 time in total.
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Re: GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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15 Aug 2014, 02:47
9min 40sec.
IMO D C A E (all correct)

OA updated.

One can solve this passage in 6-7min, questions are very easy. I put much time in reading passage.
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Re: GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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15 Aug 2014, 09:54
1
Hi Piyush,
I took around 9:20 mins. P1 stumped me and I was not very clear about the topic until i reached last of 1 para.And by 2nd Para, I was comfortable with wht i was reading
All correct except last question Q4.
Could you please help me to understand how to infer E. [I am more inclined toward B and C but none of them are completely true.]
Regards.
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Re: GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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16 Aug 2014, 00:27
PiyushK wrote:
JarvisR wrote:
Hi Piyush,
I took around 9:20 mins. P1 stumped me and I was not very clear about the topic until i reached last of 1 para.And by 2nd Para, I was comfortable with wht i was reading
All correct except last question Q4.
Could you please help me to understand how to infer E. [I am more inclined toward B and C but none of them are completely true.]
Regards.

Hi JarvisR,

Answer of last question lies in the last paragraph of the passage.

"A possible explanation for this inconsistency is that legitimation and competitive forces transcend national boundaries, while studies typically restrict their analysis to the national level. "

"Many industries are or are becoming international, and since media and information easily cross national borders, so should legitimation and its effects on overseas foundings. For example, if a type of firm becomes established in the United States, that information transcends borders, reduces uncertainties, and helps foundings of that type of firm in other countries. Even within national contexts, studies have found more support for the density dependence model when they employ broader geographic units of analysis--for example, finding that the model's operation is seen more clearly at the state and national levels than at city levels."

Author is raising question on the studies that, in current scenario in which many companies operating internationally, information or impact of their international operations were not included in these studies. Author is taking side of dependence model.

4. The primary purpose of the passage is to
E. explain why an economic model remains valid despite inconsistent research results.

Further we can outline entire passage per paragraph:
1. (GDDM) General density dependence model's importance to specialized firms and how legitimation and competitive forces react to density.
2. Defending GDDM and justifying that it works fine.

4. The primary purpose of the passage is to
A. question the validity of an economic model --- no author is not questioning, instead s/he is defending.
B. point out some inconsistencies within an economic model --- narrow scope -- s/he is also defending.
C. outline an economic model and suggest revisions to it --- not suggesting revision.
D. describe an economic model and provide specific examples to illustrate its use -- no examples illustrated
E. explain why an economic model remains valid despite inconsistent research results --- so we left with E.

I hope it helps.

Aaah.. Now i understand what i missed
"Even within national contexts, studies have found more support for the density dependence model when ....."
Thanks. I appreciate you inputs.
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Re: GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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24 Nov 2014, 01:42
10:35 seconds; all correct. The P1 was hard to crack and took close to 3 minutes. P2 got me much comfort. The questions were way too easy.
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Re: GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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26 Jun 2015, 08:01
1D 2C 3A 4E All correct
Total time :3 minutes 44 seconds .

I always prefer to read questions first and then the passage .Finding answers becomes easier.

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Re: GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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03 Aug 2016, 11:57
11 minutes all correct
questions were easy but passage was very difficult for me.
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Re: GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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16 Aug 2016, 06:58
Took 7 mins 40 seconds , including 2 mins 20 seconds to read the passage .

1.
The Passage talks about inconsistency between the General Density Dependance model and the evidence provided by certain studies in Paragraph 2
"A possible explanation for this inconsistency is that legitimation and competitive forces transcend national boundaries, while studies typically restrict their analysis to the national level. "
. The inconsistency is attributed to the fact that the studies did not take into account the international forces that affect Legtimation and competitive forces. Hence Option (D).

2.
In the Second Paragraph, the author seeks to explain the inconsistency between the General Density Dependance model and the findings of certain studies . Hence Option (C)

3.
"At high density levels, however, competitive effects outweigh legitimation effects, discouraging foundings."
Here the author clearly mentions that when there is a high density level of firms, further foundings will be discouraged. Hence Option (A)

4. Was not very sure about main purpose answer . Was in a fix between B and E .
(A) question the validity of an economic model- Incorrect – The author does not question of the validity of the economic model anywhere in the passage. In fact, the first line suggests that it can be applied to explain foundings. The author is also looking to explain discrepant findings in Paragraph 2.
(B) point out some inconsistencies within an economic model -Incorrect – Though the author does point of inconsistencies between certain studies and the economic model, that is not the primary purpose of the passage as the author is consistently trying to justify the model's use.
(C) outline an economic model and suggest revisions to it- Incorrect – The author is not suggesting any revisions in his passage.
(D) describe an economic model and provide specific examples to illustrate its use- Incorrect – The author does not provide multiple examples illustrating the use of the the General Density Dependance model.
(E) explain why an economic model remains valid despite inconsistent research results - Correct – The author explains that the Economic Model can be used by justifying inconsistent results of study findings.
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Re: GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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28 Oct 2016, 00:06
1
Time taken 6 mins.

Easy Passage.

Marked last one incorrect initially then realized E is the correct answer as per the lines
"Even within national contexts, studies have found more support for the density dependence model when they employ broader geographic units of analysis--for example, finding that the model's operation is seen more clearly at the state and national levels than at city levels."
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Re: GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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19 Oct 2017, 11:33

Except Q4 got all the answers right.
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Re: GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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19 Nov 2017, 01:56
manishkhare wrote:
1D 2C 3A 4E All correct
Total time :3 minutes 44 seconds .

I always prefer to read questions first and then the passage .Finding answers becomes easier.

Regards,
Manish Khare

Wow 3minutes 44 seconds!!!!
How do you finish it so quickly??
Took me 11mins..
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GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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24 Nov 2017, 22:46
GMATNinja mikemcgarry

Can you please explain why C is incorrect and E correct while identifying main purpose of the passage?
Was subtle difference between inconsistency and revision the trap I fell for ?
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Re: GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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11 Apr 2018, 06:35
GMATNinja mikemcgarry

Can you please explain why C is incorrect and E correct while identifying main purpose of the passage?
Was subtle difference between inconsistency and revision the trap I fell for ?

C is incorrect because author never states that revisions are required. It simply says that DDM(density dependence model) works fine in case of national contexts. Thats why its E
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Re: GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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30 May 2018, 12:47
3 correct 1 wrong 10 min
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Re: GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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01 Jun 2018, 08:45
4 min 20 sec - All correct. For me, Passage was intense but I only focussed on the right details.
I stumbled only over P4, but using process of elimination, I got it right.
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Re: GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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01 Jun 2018, 11:22
Passage Breakdown in my simplest way:
Para 1: The application of a model is discussed. (GDDM --> SF )
2 main forces: LE and CF (density dependent)
at low density--> LE >> CF
at high density--> CF >> LE , foundings go down.

Para 2: inconsistencies in model GDDM.
Explanation for incons.
GDDM till national, but industries moving international. Example.
Still Support for GDDM.

1. According to the passage, which of the following may account for the inconsistency between the general density dependence model and the evidence provided by certain studies of foundings?
--> incons are described in Para 2. National and international factors are discussed. Only Option D deals with that. D is correct.

A. Such studies have overemphasized the impact of preexisting firms on the establishment of new firms.
B. Such studies have not focused strongly enough on the role of competition among newly established firms operating at the city and state levels.
C. Such studies fail to differentiate among specialist firms with regard to the degree to which they deviate from familiar forms of organization.
D. Such studies have not taken into account the fact that many industries are internationally integrated.
E. Such studies have neglected to investigate firms that attempt to serve only a narrow target market.

2. In the second paragraph, the author is primarily concerned with
--->Obvious inconsistencies. Pick C.

A. noting various exceptions to a certain general finding
B. examining the impact of one type of industry on another
C. proposing a possible explanation for an inconsistency
D. providing specific examples of a particular phenomenon
E. defending the validity of a particular study's conclusions

3. The passage suggests that when a population of specialist firms reaches a high density level, which of the following is likely to occur?
--> See para1 notes for high density. Pick A.

A. Foundings will decline despite legitimation that has occurred in these industries.
B. Increasing competition will encourage many firms to broaden their target market.
C. Competition for resources will become stabilized and thus foundings will be encouraged.
D. Many customers will abandon their loyalty to older firms as more innovative firms enter the market.
E. Firms will begin to cross national borders in an attempt to gain a competitive advantage.

4. The primary purpose of the passage is to
---> read out the notes and try to make a map. E is the only possible winner.

A. question the validity of an economic model
B. point out some inconsistencies within an economic model
C. outline an economic model and suggest revisions to it
D. describe an economic model and provide specific examples to illustrate its use
E. explain why an economic model remains valid despite inconsistent research results

Easy passage if you understand the map. I took 7.5 mins, all correct. Could have done before 6 mins, I am working on my accuracy first.

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GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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08 Sep 2018, 06:04
Slightly dense passage! Took 9:24 but got all 4/4 correct!
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Re: GMATPREP ChallengeQ -The general density dependence model  [#permalink]

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17 Dec 2018, 08:45
Time taken 11min 30sec
All Correct.
Questions are relatively easy. Found the passage dense so took 7:30 for reading only.
Re: GMATPREP ChallengeQ -The general density dependence model   [#permalink] 17 Dec 2018, 08:45

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