Bunuel
Harunia Province has a relatively dry climate and is attracting a fast-growing population that has put increasing demands on its water supply. The two companies that supply water to the region have struggled to keep up with demand and still remain profitable. Yet now they are asking Harunian authorities to write residential water-use regulations that could reduce their revenues and restrict their future flexibility in supplying water profitably.
Which of the following would, if true, most logically help explain why the water-supply companies are asking the authorities to regulate residential water use?
A. The companies are planning large water-transportation and irrigation systems that require the approval of neighboring provinces.
B. The companies believe regulation is inevitable and that having it in place now will allow better planning and thus future profitability.
C. Few, if any, Harunian government officials have investments in the companies or serve on their boards of directors.
D. The companies believe that the population is not likely to continue to grow.
E. Long-term climate projections suggest that greater rainfall will eventually increase the amount of water available.
CR79041.01
OG2020 NEW QUESTION
Premises: Harunia is dry and 2 water companies supply water to the fast-growing population.
They are struggling to keep up with demand and are profitable (since they are struggling to keep up with demand, their cost may have increased but they are still profitable)
Unexpected Observation: They are asking Harunian authorities to regulate use of water. This could reduce their revenues and restrict their future flexibility in supplying water profitably.
This is unexpected. The companies are facing high demand and are profitable. Why would they ask the govt to regulate use which will likely reduce their revenues (regulations such as each household can consume only A litres of water in a day) and restrict their future flexibility?
We assume that all companies want to make profit. So this observation is unexpected. What will help explain why the companies are pushing for regulations?
A. The companies are planning large water-transportation and irrigation systems that require the approval of neighboring provinces.Schemes with neighboring provinces are irrelevant. We have no info on how regulations will help in this plan.
B. The companies believe regulation is inevitable and that having it in place now will allow better planning and thus future profitability.Correct. If the companies believe that regulations will come sooner or later and sooner is better because they will be able to plan for future profitability, then their action makes sense. The company's action has to be something to do with profitability.
C. Few, if any, Harunian government officials have investments in the companies or serve on their boards of directors.Irrevelant.
D. The companies believe that the population is not likely to continue to grow.In that case, they will not expect regulations. This would want to maximize profit now. Then it doesn't explain why they would ask for regulations now.
E. Long-term climate projections suggest that greater rainfall will eventually increase the amount of water available.If the dry climate of Hurania is expected to change in time, the water companies would want to make the best of the current dry climate. Why would they want regulations right now? It doesn't help resolve the paradox.
Answer (B)