In Country X in 1996, 84% of political donations from businesses came

Question

In Country X in 1996, 84% of political donations from businesses came from those with annual sales of over $100 million. In that same year, 24 companies in the software industry, all of which had shown increases in the valuation of their stock of over 40% in the preceding year, accounted for 19% of business political donations.

If the above statements are true, which of the following must also be true?

(A) Computer companies made more political donations than did pharmaceutical companies.
(B) At least one of the businesses with annual sales of over $100 million showed an increase in the value of its stock in 1995.
(C) Most software companies had sales of less than $100 million in 1995.
(D) Individual contributions accounted for 16% of all political campaign contributions.
(E) The stock of most businesses with annual sales over $100 million did not increase by over 40% in 1996.

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ThickRiver · Accepted Answer

This is one of those CR questions that's actually just a numbers problem wearing a critical reasoning costume, and I kind of love it for that.

Here's the setup: 84% of business donations came from companies with sales over $100 million. That means at most 16% came from smaller companies, since those two groups have to add up to 100%. Then you're told the 24 software companies, all of which had stock gains over 40% in the preceding year, accounted for 19% of business donations.

19 is bigger than 16. That's the whole question, honestly. If small companies can only ever account for 16% of donations, and software companies alone account for 19%, then software companies can't all be small companies. At least a sliver of that 19%, at least 3 points of it, has to be coming from software companies with sales over $100 million.

So at least one of those 24 software companies, the ones with the stock run-up, had sales over $100 million in that same year. That's choice B, just stated from the other direction.

I got tripped up on questions shaped like this early on because I read them as pure logic puzzles instead of doing the arithmetic. The GMAT isn't testing whether you can do the math here, it's testing whether you notice there's math to do at all. Once you set up the 84 versus 16 split, the rest falls out on its own.

Vivek1707 · Answer

A. There's no comparison between software and pharmaceutical companies.
B. Yes. The 24 software companies gave 19% of all business donations, but only 16% of donations came from companies with sales under $100 million. So at least one of those 24 companies must have had sales over $100 million—and all 24 had stock gains of over 40%.
C. We know nothing about the sales of most software companies.
D. The passage only talks about business donations, not total campaign contributions.
E. The stock increase mentioned is for the preceding year (1995), not 1996. It also says nothing about most large businesses.

dhart · Answer

A. Software and pharmaceutical companiesa re not being compared
B. Yes , since 84% are donators with 100 million or more turnover and 19 % donators are those software companies who have seen incrase in value of thier stock last year , the there are some of it with 100 million turnover Right
C. Sales of most software companies npt known
D. The passage only talks about business donations, not other contributions.
E. Stock incrase is for 1995 not 1996. It also says nothing about most large businesses

Minka99 · Answer

This is a necessary assumption task.

A - "pharmaceutical companies" is irrelevant here. 
B - CORRECT we don't know how many companies has a greater than 40% increase in their stock. Since 24 software companies did though, and we know they donated, this fills the assumption that at least one company that donated enjoyed this stock price rise. 
C - we do not have enough information to make this assumption
D - the passage does not mention TOTAL donations, only BUSINESS DONATIONS. So again, not enough information
E - the stock increase is 1) based on the year 1995, not 1996, and 2) only software companies are mentioned, not "most large businesses"

Bunuel · Answer

KAPLAN OFFICIAL EXPLANATION

Identify the Question Type:

This is an Inference question, as it asks for a choice that must be true if the statements in the stimulus are true.

Untangle the Stimulus:

Inference stimuli rarely contain complete arguments. Rather, they contain statements from which a deduction will be made. To untangle, just read and paraphrase the statements in the stimulus, noting any statements than can be combined. Here, there are two statements about the source of business political donations in a certain year. The first says that 84% of the donations came from businesses with annual sales of over $100 million. The second says that 19% came from 24 software companies, all of whose stock had increased by over 40% in value the previous year.

Predict the Answer:

Inference questions are typically not predictable. Here, however, the two statements may be combined in an obvious way. If 84% of the donations came from one group, and 19% came from another, there must be some overlap between the two groups. Otherwise, the percentages would add up to more than 100%. That means at least one of the software companies with a major stock increase must be part of the the $100 millon+ companies. The answer doesn't have to come from this combination, but it's helpful to consider it a tentative prediction to be aware of when evaluating the choices.

Evaluate the Choices:

(B) is correct, as it matches the predicted combination of statements. There must be some overlap between the two groups mentioned in the stimulus. In other words, there must be at least one business in the first group (sales of over $100 million) that is also in the second group (a software company that showed an increase in the value of its stock in the previous year).

(A) is not something that must be true from the stimulus, because the stimulus doesn't say anything about pharmaceutical companies. Less obviously, the stimulus doesn't even make a statement about “computer” companies. It refers only to “companies in the software industry,” which may or may not be considered “computer companies.”

(C) is not something that must be true from the numbers in the stimulus. First of all, the stimulus only refers to “24 companies in the software industry.” It doesn't indicate how many companies there are in the entire industry. Thus, (C), which refers to “most software companies,” is not something that can be known for sure from the stimulus. Additionally, even of the 24 companies mentioned, a majority of them can overlap with the first group, having sales of over $100 million. There is nothing in the stimulus to prevent that.

(D) has no direct support whatsoever from the stimulus. The statements don't mention individual contributions at all. The stimulus only deals with political donations from businesses, describing two subsets of that group. Eliminate (D).

(E) is not supported by the stimulus, as nothing is mentioned about the stock of the businesses with annual sales of over $100 million. Even though the 24 software companies were singled out as having their stock increase by over 40%, the stimulus leaves open the possibility that a majority, or even all, of the businesses with sales over $100 million also saw a stock increase of over 40%.

TAKEAWAY:  Always keep in mind that an Inference on the GMAT is something that must be true from the stimulus.

In Country X in 1996, 84% of political donations from businesses came

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­In Country X in 1996, 84% of political donations from businesses came

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615 to 715 in 15 Days (Ria's Strategies)

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Perfect 805 Score Debrief by Julia

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In Country X in 1996, 84% of political donations from businesses came