HOT Competition 27 Aug/8AM: The Mayor of Hortwitz, an economy mostly

Question

The Mayor of Hortwitz, an economy mostly supported by large scale businesses, planned to create Special Economic Zones(SEZ) which would attract small and medium sized businesses to set up their establishments but would not have much to offer largescale business. The idea was to attract more investors to SEZs by making the SEZs a more financially viable place to set up businesses in.

Which of the following would, if true, most strongly indicate that the plan was successful in achieving its goal?

A. Tax benefits, special rates of interest and other financial subsidies have in the past helped many economies similar to Hortwitz grow.

B. In Greenwitz, Hortwitz’s twin city, post the creation of SEZs, the economy grew by an unprecedented 6% when measures were taken to encourage investments in businesses.

C. In Hortwitz, although the few existing small and medium scale industries did not register growth, the creation of SEZs led to a significant increase in the contribution made to the economy by small and medium scale businesses

D. Most of the SEZs were planned in remote areas where the costs of transportation and labour were very high.

E. Many investors are reluctant to invest in small and medium scale businesses as the return on investments are often low and risks comparatively high.

Bunuel · Accepted Answer

GMATWhiz Explanation

Step 1 – Analysing the stimulus and question stem

The Mayor of Hortwitz, an economy mostly supported by large scale businesses, planned to create Special Economic Zones(SEZ) which would attract small and medium sized businesses to set up their establishments but would not have much to offer largescale business. 
 • A plan and goal have been mentioned.
 o  Plan : Create Special Economic Zones
o  Goal : Attract small and medium sized businesses to set up their establishments 
o  Note : 
  The SEZs are not meant to attract large scale businesses
 Hortwitz is an economy which has majorly large scale businesses.   
 
The idea was to attract more investors to SEZs by making the SEZs a more financially viable place to set up businesses in.
 • Mechanism of the plan:
 o The SEZs would be made attractive such that investors would want to invest in the businesses set up in the SEZs since such a move would bring them returns on their investment

The Question Stem 
It is asking to identify a choice that shows that the plan was successful.

Step 2 – Pre-thinking

Since this is a plan and goal construction, we can easily use the pre-thinker’s guide framework.

Framework 
 1. Identify the plan and goal:
 a. Goal – Create Special Economic Zones
b. Plan – Attract small and medium sized businesses to set up their establishments .

2. Follow the guidelines:
 a.  What happened during the planning stage? 
 i. The Mayor has assumed that there are investors who would be interested in setting up small and medium scale industries provided they get good ROI.
 1.  Strengthener #1 : Any statement indicating the presence of such investors leading to the setting up of many small and medium scale industries in the SEZs  
 ii. It is just mentioned in the passage that the SEZs were made attractive to investors from the perspective of finance.
 1.  Strengthener#2 : Any information stating the details of financially attractive policies
 a. For example: special subsidies or tax benefits were given which led to the setting up of many small and medium scale industries in the SEZs.

b.  What happened during the execution stage? 
 i. The SEZs muct have been specially planned. 
 1. What if some unforseen problems were encountered by the people intending to set up business in the SEzs?.
2.  Strengthener#3:  No unforeseen financial drawbacks came up and the small and medium scale industries flourished in the SEZs

c.  What connects the plan to the goal? 
 i. The success of the plan can best be indicated by data about the new small and medium scale industries that were set up in the SEZs. We have to remember that most industries in Hortwitz are large scale and maximum contribution is made by them.
 1.  Strengthener #4:  Any statement giving data that shows that the small and medium scale industries in the SEZs flourished and added to the economy of Hortwitz.

Step 3 – Answer Choice Elimination

Option A Analysis 
This choice does mention some financial benefits. However, this choice does not tell us whether these benefits were given to small and medium scale industries or to large scale industries or both. Also, it does not tell us whether similar SEZs were created. This choice is a distortion of the idea of SEZs being made financially attractive.
Incorrect Choice.

Option B Analysis 
This choice does not tell us whether the small and medium scale industries flourished and added significantly to the economy’s growth. The growth could have taken place without the SEZ scheme being successful. The growth could have come from large scale industries.
This choice is very ambiguous
Incorrect Choice.

Option C Analysis 
This choice is in line with strengthener#4. This choice clearly tells us the impact of the SEZs on the growth of small and medium scale industries. The existing ones did not grow. Yet the contribution made to the economy by small and medium scale businesses increased significantly. This can mean only one thing. That more and more small and medium scale businesses were set up in the SEZs.
 Correct Choice

Option D Analysis 
This choice weakens the idea of financial viability of the SEZs and therefore also weakens the conclusion.
Incorrect Choice.

Option E Analysis 
This choice is almost the opposite of our strengthener#1. This choice therefore weakens the conclusion.
Incorrect Choice.

Nevernevergiveup · Answer

The Mayor of Hortwitz, an economy mostly supported by large scale businesses, planned to create Special Economic Zones(SEZ) which would attract small and medium sized businesses to set up their establishments but would not have much to offer largescale business. The idea was to attract more investors to SEZs by making the SEZs a more financially viable place to set up businesses in.

Which of the following would, if true, most strongly indicate that the plan was successful in achieving its goal?

We need supporting info to indicate plan was successful

A. Tax benefits, special rates of interest and other financial subsidies have in the past helped many economies similar to Hortwitz grow................. it was not a SEZ in past so does not apply

B. In Greenwitz, Hortwitz’s twin city, post the creation of SEZs, the economy grew by an unprecedented 6% when measures were taken to encourage investments in businesses........... .twin city info is out of scope here

C. In Hortwitz, although the few existing small and medium scale industries did not register growth, the creation of SEZs led to a significant increase in the contribution made to the economy by small and medium scale businesses............ perfectly relates that plan was successful.
 
D. Most of the SEZs were planned in remote areas where the costs of transportation and labour were very high.......... .not good enough

E. Many investors are reluctant to invest in small and medium scale businesses as the return on investments are often low and risks comparatively high........... weakens the argument

Jks3000 · Answer

First Rule of CR is to understand the question statement clearly.

Here we need to findvthe option that indicate the success of plan. Plan is to make SEZ more viable place to do business.

Remember, it's not asking any assumption, inference etc. It is just asking for some sort of proof that SEZ are viable in doing business.

This proof is clearly given by Option C by showing that creation of SEZ led to increase in contribution to Government. Now contribution increase means that SEZ doing good. Hence success of plan.

Correct Option C.

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Sushil117 · Answer

A. Tax benefits, special rates of interest and other financial subsidies have in the past helped many economies similar to Hortwitz grow.
Out of scope

B. In Greenwitz, Hortwitz’s twin city, post the creation of SEZs, the economy grew by an unprecedented 6% when measures were taken to encourage investments in businesses.
Ambiguous. Which business? Big or small? Incorrect

C. In Hortwitz, although the few existing small and medium scale industries did not register growth, the creation of SEZs led to a significant increase in the contribution made to the economy by small and medium scale businesses
Correct. It means more sme were established and contributed

D. Most of the SEZs were planned in remote areas where the costs of transportation and labour were very high.
Out of scope

E. Many investors are reluctant to invest in small and medium scale businesses as the return on investments are often low and risks comparatively high.
Out of scope

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HowdyPartner · Answer

Howdy Partners!

Question and  explanation  below. Feel free to reach out if you have any questions!

----------------------------------------
The Mayor of Hortwitz, an economy mostly supported by large scale businesses, planned to create Special Economic Zones(SEZ) which would attract small and medium sized businesses to set up their establishments but would not have much to offer largescale business. The idea was to attract more investors to SEZs by making the SEZs a more financially viable place to set up businesses in.

Which of the following would, if true, most strongly indicate that the plan was successful in achieving its goal?  Identify question -- this is a sneaky strengthen question. What result would strengthen the conclusion, meaning that the proposed plan was successful?

A. Tax benefits, special rates of interest and other financial subsidies have in the past helped many economies similar to Hortwitz grow.   Out of scope  -- while these may be part of SEZ's, the argument does not mention any of these.  Eliminate A.

B. In Greenwitz, Hortwitz’s twin city, post the creation of SEZs, the economy grew by an unprecedented 6% when measures were taken to encourage investments in businesses.  You may be tempted to say that a similar city implemented the same plan, and was successful -- so this strengthens, right?  WRONG!  Be sure to read the statement carefully -- statement states that the ECONOMY grew. The plan is to attract more investors by making it more financially viable to set up businesses, i.e., create businesses. Does not state whether more investors were attracted or whether more businesses were set up.  Eliminate B

C. In Hortwitz, although the few existing small and medium scale industries did not register growth, the creation of SEZs led to a significant increase in the contribution made to the economy by small and medium scale businesses   While the existing small and medium scale industries did not growth (pay attention to industries vs businesses), there was an increase in contribution to the economy by small and medium scale businesses. Therefore, more businesses were created (i.e., more investors), as was the intent of the plan from NEW industries of small and medium size businesses. This is a tricky answer -- and the best answer out of the rest if you were unsure whether this answer was correct. Remember, goal is to eliminate definitely WRONG answers. If we are left with an answer after that, then we choose that answer."

D. Most of the SEZs were planned in remote areas where the costs of transportation and labour were very high.  Out of scope.  Eliminate D.

E. Many investors are reluctant to invest in small and medium scale businesses as the return on investments are often low and risks comparatively high.  While the above could have resulted in lower risk and higher return, the argument does not state that this was in fact the result. How does this ensure that the plan was successful in achieving its goal? Even though the projected, returns could have been insanely high, maybe no one even invested. So this does not satisfy the question and we can  Eliminate E.

Answer C is our answer.

JonShukhrat · Answer

Argument:  mayor plans to create SEZ in order to attract small and medium businesses. 
Such small and medium firms must not compete with large scale businesses, as states the stem.

Target:  to attract more investors who set up businesses under financially viable conditions. 
The overall aim is TO ATTRACT INVESTORS.

We need a choice that supports the idea of the mayor. 
That choice should demonstrate that the plan indeed ATTRACTED investors and their investments. 
With this in mind let’s analyze the choices:

A.  Tax benefits, special rates of interest and other financial subsidies have in the past helped many economies similar to Hortwitz grow.

A common trap answer: the logic behind is that A succeeded, so B also should succeed. The fact that other similar economies were helped by a akin plan doesn’t necessarily mean that this plan will work for other economies too. It sounds as if someone claims: high gmat score helped X, Y, Z to get admitted to a business school, so N with high score will get admitted too. 
Moreover, “helped” is broad term and it doesn’t necessarily mean “to attract investors, investments”.

B.  In Greenwitz, Hortwitz’s twin city, post the creation of SEZs, the economy grew by an unprecedented 6% when measures were taken to encourage investments in businesses.

The very same logic that uses A. even though twin cities, they may have different policy, legal basis, and terms for businesses. Without the additional information we cannot say that the plan will succeed. “the economy grew” and “encourage investments” don’t necessarily mean that the economy grew because of “attracted investments”.

C.  In Hortwitz, although the few existing small and medium scale industries did not register growth, the creation of SEZs led to a significant increase in the contribution made to the economy by small and medium scale businesses

Seems to be correct. “the few existing” means all of the existing small and medium businesses in the area. The choice says that such businesses made significant contribution to the economy. Most probably such contribution implies that such business made investments in setting up firms, creating jobs, binging new technology, and create work places. All of this indicates an investment made by investors. 
“did not register growth” doesn’t mean that the number of businesses increased, but their scale did not increase. And that’s what we want because as mayor plans small businesses MUST NOT compete with large scale ones, by rising into a large scale. 
As mayor plans small plans should remain small, must create competition, but bring investment. That’s what this choice says.

D.  Most of the SEZs were planned in remote areas where the costs of transportation and labour were very high.

This choice weakens rather than supports the plan. If choice D is true, the small business holders will not be interested in investing to set up business in such SEZ. So, choice is out.

E.  Many investors are reluctant to invest in small and medium scale businesses as the return on investments are often low and risks comparatively high.

Once again this choice weakens rather than supports the plan. Let it be true, small business holder do not invest in small businesses. 
This choice is also too broad too tackle mayors plan, because it states an overall tendency. So, it is out.

Hence   C

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Hovkial · Answer

Stimulus: The mayor states that SEZs would benefit the town of Hortwitz by making the SEZs financially attractive for investors. The SEZs would attract mainly small and medium sized businesses, but not larger ones.

What event(s) would make it more likely that the plan was successful in the achieving its goal? If the SEZs made it possible for the small and medium sized businesses to contribute to the town's economy, then investors would have found it attractive to invest in these businesses.

Let's examine the choices.

A. Tax benefits, special rates of interest and other financial subsidies have in the past helped many economies similar to Hortwitz grow.

This statement points to other similar economies that grew because of different benefits such as tax benefits, special interest rates and financial subsidies. But pointing to other economies, no matter how similar they may be, provides no hints about how the economy of the town would be helped by small and medium sized businesses.

B. In Greenwitz, Hortwitz’s twin city, post the creation of SEZs, the economy grew by an unprecedented 6% when measures were taken to encourage investments in businesses.

Pointing to a positive result that occurred to a similar town in the past provides no hints about how the economy of the town of Hortwitz would be helped by small and medium sized businesses. Perhaps the twin city of Greenwitz was the recepient of an exceptionally lucky set of circumstances that cannot be expected to occur again.

C. In Hortwitz, although the few existing small and medium scale industries did not register growth, the creation of SEZs led to a significant increase in the contribution made to the economy by small and medium scale businesses

This statement correctly states that the SEZs helped small and medium sized businesses to contribute to the town's economy.

D. Most of the SEZs were planned in remote areas where the costs of transportation and labour were very high.

This possibility actually weakens the support for SEZs. If SEZs are located in remote areas that increase the costs of doing business, then that would result in fewer small and medium sized businesses contributing to the economy.

E. Many investors are reluctant to invest in small and medium scale businesses as the return on investments are often low and risks comparatively high.

This possibility actually weakens the support for SEZs. If SEZs primarily benefit small and medium sized businesses, then investors would be reluctant to invest in these businesses because of perceived risks of investment, regardless of whether these businesses contribute to the economy.

BenjaminS · Answer

Strength Question. 
 Premise: 
1. The Mayor of Hortwitz, an economy mostly supported by large scale businesses, planned to create Special Economic Zones(SEZ) 
2. SEZ would attract small and medium sized businesses to set up their establishments but would not have much to offer largescale business. 
3. The idea was to attract more investors to SEZs by making the SEZs a more financially viable place to set up businesses in.

Conclusion: 
the plan was successful in achieving its goal.

Pre-thinking: 
1. SEZ supports small and medium sized businesses to increase the opportunity of successful business.

Analysis of the choices. 
 
The other beneficial finance factors do not help to strengthen the conclusion.  Out.

The situation in Greenwitz is unlikely to happen in Hortwitz's even though there is twin city. I think it's non-sense.  Out.

The creation of SEZ supports the economy of small and medium businesses. That is my pre-thinking.  Keep it.

This absolutely is out of scope.  Out.

This weakens the conclusion.  Out.

So I choose C.

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MrBaby · Answer

The Mayor of Hortwitz, an economy mostly supported by large scale businesses, planned to create Special Economic Zones(SEZ) which would attract small and medium sized businesses to set up their establishments but would not have much to offer largescale business. The idea was to attract more investors to SEZs by making the SEZs a more financially viable place to set up businesses in.

The Mayor of Hortwitz’ plan is that  the mayor wants to attract more investors to SEZs by making the SEZs a more financially viable place to set up businesses in and he focus on small and medium sized businesses.

Which of the following would, if true, most strongly indicate that the plan was successful in achieving its goal?

I use Eliminating choice to answer this one.

A. Tax benefits, special rates of interest and other financial subsidies have in the past helped many economies similar to Hortwitz grow.  --> IRRELEVANT. Tax benefits  in the past  is nothing to do with the plan  in the future .

B. In Greenwitz, Hortwitz’s twin city, post the creation of SEZs, the economy grew by an unprecedented 6% when measures were taken to encourage investments in businesses.  --> OUT OF SCOPE. A Hortwitz’s twin city, Greenwitz, is out of scope of The Mayor of Hortwitz’ plan.

C. In Hortwitz, although the few existing small and medium scale industries did not register growth, the creation of SEZs led to a significant increase in the contribution made to the economy by small and medium scale businesses

D. Most of the SEZs were planned in remote areas where the costs of transportation and labour were very high.  --> OUT OF SCOPE. The Mayor of Hortwitz’ plan focus on small and medium sized businesses, not specific in metropolis or remote areas.

E. Many investors are reluctant to invest in small and medium scale businesses as the return on investments are often low and risks comparatively high.  --> This choice is actually WEAKEN the plan.

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Superman249 · Answer

Hortwitz,  an economy mostly supported by large scale businesses,  planned to create Special Economic Zones(SEZ) which would attract small and medium-sized businesses to set up their establishments.

The idea  was to  attract more investors  to SEZs by  making the SEZs a more financially viable place to set up businesses in

Lets analyse Options :-  
 
 Option A :- Incorrect

Tax benefits, special rates of interest and other financial subsidies have in the past helped many economies similar to Hortwitz grow

These points are irrelevant with respect to Goal i.e. attracting investors or economic benefit.

Option B:- Incorrect

In Greenwitz, Hortwitz’s twin city, post the creation of SEZs, the economy grew by an unprecedented 6% when measures were taken to encourage investments in businesses.

We are not concerned about the economy of Twin City as there can be many more conditions which are unknown.

Option C :- Correct

In Hortwitz, although the few existing small and medium scale industries did not register growth, the creation of SEZs led to a significant increase in the contribution made to the economy by small and medium scale businesses

Clearly, this argument Clearly indicates growth in the economy, supports the initiative .

Option D:- Incorrect

Most of the SEZs were planned in remote areas where the costs of transportation and labour were very high

The negative argument for SEZs, while result on Goal is unknown

Option E :- Incorrect

Many investors are reluctant to invest in small and medium scale businesses as the return on investments are often low and risks comparatively high.

The negative argument, Stress on unsuccessful of SEZs.

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HOT Competition 27 Aug/8AM: The Mayor of Hortwitz, an economy mostly

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HOT Competition 27 Aug/8AM: The Mayor of Hortwitz, an economy mostly

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My Rewards