In the United States, the Postal Service has a monopoly on first-class

Question

In the United States, the Postal Service has a monopoly on first-class mail, but much of what is sent first class could be transmitted electronically. Electronic transmittal operators argue that if the Postal Service were to offer electronic transmission, it would have an unfair advantage, since its electronic transmission service could be subsidized from the profits of the monopoly.

Which of the following, if each is true, would allay the electronic transmittal operators' fears of unfair competition?

(A) If the Postal Service were to offer electronic transmission, it could not make a profit on first -class mail.

(B) If the Postal Service were to offer electronic transmission, it would have a monopoly on that kind of service.

(C) Much of the material that is now sent by first class mail could be delivered much faster by special package couriers, but is not sent that way because of cost.

(D) There is no economy of scale in electronic transmission -that is, the cost per transaction does not go down as more pieces of information are transmitted.

(E) Electronic transmission will never be cost effective for material not sent by first-class mail such as newspapers and bulk mail.

Sid0403 · Accepted Answer

First of all, "Allay" Means to diminish or to put to rest.So this is basically a weaken question.

Option A states that

(A) If the Postal Service were to offer electronic transmission, it could not make a profit on first -class mail.

So if the postal service is not able to make a profit, then it cannot subsidize the electronic transmission.

So in this case the fears of the electronic transmittal operators' fears of unfair competition are put to rest.

Hope this helps.

Skywalker18 · Answer

In the United States, the Postal Service has a monopoly on first-class mail, but much of what is sent first class could be transmitted electronically. Electronic transmittal operators argue that if the Postal Service were to offer electronic transmission, it would have an unfair advantage, since its electronic transmission service could be subsidized from the profits of the monopoly.

Which of the following, if each is true, would allay the electronic transmittal operators' fears of unfair competition?
Type -weaken

(A) If the Postal Service were to offer electronic transmission, it could not make a profit on first -class mail. - Correct - If most of the first-class mail is sent via electronic transmission, then profits from first-class mail will reduce substantially and thus the postal service will not be able to subsidize electronic transmission.

(B) If the Postal Service were to offer electronic transmission, it would have a monopoly on that kind of service. - Incorrect

(C) Much of the material that is now sent by first class mail could be delivered much faster by special package couriers, but is not sent that way because of cost. - Irrelevant

(D) There is no economy of scale in electronic transmission -that is, the cost per transaction does not go down as more pieces of information are transmitted. - Irrelevant - sending more items will not have benefit in electronic transmission but this does not help with the fact that postal service could subsidize electronic transmission

(E) Electronic transmission will never be cost-effective for material not sent by first-class mail such as newspapers and bulk mail. - Irrelevant - we are not bothered about items that are not sent by first-class mail

Answer A

rakeshtewatia0105 · Answer

I still don't get wht question is asking and what we need to weak....

Please help... ?

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ChiraKaimook · Answer

Let me share with you how I viewed the question. Premise: Postal service has monopoly in first class email + First class mail can be sent electronically + Postal Service is making profit from its first class mail Conclusion: Profit from monopoly can create unfair advantage to Postal Service if it were to enter electronic transfer business So what we have to weaken is "Profit from monopoly in first class mail will give advantage to Postal Service" (A) Says outright that if Postal Service enter electronic transfer, it will no longer make profit on first-class biz -> thus, no fund to grant its unfair advantage (B) Strengthen the conclusion that Postal Service will still have monopoly over electronic transfer -> giving it profit to keep its unfair advantage (C) Introduce new method of sending but does not address electronic transfer (D) Says no matter how large you are in electronic transfer, you will not have competitive edge -> this might actually strengthen the conclusion that if Postal Service come in with additional profit to fuel the electronic business -> It will have competitive edge over other players (E) Says electronic is only good for first class mail -> but gives nothing about whether profit can create unfair comp.

David nguyen · Answer

How often does GMAT use these kinds of language? I could not understand what Allay means; hence i picked A as if the stem is asking to strengthen the operator's concern.

sayan640 · Answer

GMATNinja   VeritasKarishma   GMATGuruNY   mikemcgarry 
Can you please explain this question ?

CrackverbalGMAT · Answer

Hi Sayan

Let me try to address your query.

Pre-thinking:

The US Postal Service (USPS) has a monopoly on first class mail, most of which could also be transmitted electronically. Electronic transmittal operators fear that if USPS also offers electronic transmission, this service could be subsidized by the profits from first class mail (over which it has a monopoly).

We are required to allay (reduce) the fears of the electronic operators of USPS subsidizing its electronic transmission service by profits from monopoly first class mail business. Hence, we are looking for some answer option that does not permit this subsidization.

Let us look at the answer options:

(A) If the Postal Service were to offer electronic transmission, it could not make a profit on first -class mail.  Correct answer. This fits in perfectly with what we are looking for in our pre-thinking. If there are no profits on first class mail (either by scale economies or by regulation), then it cannot be used to subsidize the electronic transmission business.

(B) If the Postal Service were to offer electronic transmission, it would have a monopoly on that kind of service.  This does not prevent subsidization of electronic transmission business by profits of first class mail. Eliminate.

(C) Much of the material that is now sent by first class mail could be delivered much faster by special package couriers, but is not sent that way because of cost.  This does not prevent subsidization of electronic transmission business by profits of first class mail. Eliminate.

(D) There is no economy of scale in electronic transmission -that is, the cost per transaction does not go down as more pieces of information are transmitted.  This does not prevent subsidization of electronic transmission business by profits of first class mail. Eliminate.

(E) Electronic transmission will never be cost effective for material not sent by first-class mail such as newspapers and bulk mail.  This does not prevent subsidization of electronic transmission business by profits of first class mail. Eliminate.

Hope this helps.

Bambi2021 · Answer

E made me confused here.

E) Electronic transmission will never be cost effective for material not sent by first-class mail such as newspapers and bulk mail.

Now, why would the operators care about first-class mails being transmitted electronically when there is already a monopoly? Do they think that people will start sending everything electronically?

But E says that other items wont be cost effective to send eletronically so they can be quite certain that the Postal Service wont care about competing with them anyway.

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Vibhatu · Answer

Allay= Diminish or Alleviate or reduce

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Sonia2023 · Answer

My two cents on this one: The conclusion is a conditional statement - "If the Postal Service were to offer electronic transmission, it would have an unfair advantage, since its electronic transmission service could be subsidized from the profits of the monopoly".

Postal service offer ET (sufficient condition) ---> Unfair advantage (necessary condition).

Whenever there is a weaken question and a conditional conclusion, we can weaken the argument by showing that even though sufficient happens, the necessary doesn't happen. Answer choice A does the same thing by showing that even if the postal service were to offer ET, it will not have unfair advantage.

VerbalBot · Answer

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In the United States, the Postal Service has a monopoly on first-class

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