In Varisland, when a subscriber of one telecom operator calls a subscr

Question

In Varisland, when a subscriber of one telecom operator calls a subscriber of a different telecom operator, the latter’s telecom company charges a small connection fee to the originating operator, a fee stipulated by the regulator and same for every operator. Almost all the new telecom operators are enticing customers by charging much lower call rates than charged by the existing operators. Since the connection fee is one of the sources of revenue for new companies, an increase in the fee will significantly improve the financials of the new operators and enable them to compete better in the market.

Which of the following statements is an assumption made by the author?

A. The regulator will most probably agree with the author’s recommended course of action

B. To improve the financials of the new companies, all the possible sources of revenues should be utilized in the best manner possible.

C. One of the goals of the regulator is to make the telecom market highly competitive, which will ensure consumer welfare.

D. For the new telecom operators, the connection fee does not form an insignificant proportion of their revenues

E. New companies will not have to pay increased connection fee to the existing companies

winterschool · Answer

A. The regulator will most probably agree with the author’s recommended course of action  Incorrect

cant be an assumption

B. To improve the financials of the new companies, all the possible sources of revenues should be utilized in the best manner possible.  Incorrect

weakens conclusion, increase fee is not enough to make a competitive market

C. One of the goals of the regulator is to make the telecom market highly competitive, which will ensure consumer welfare.  Correct

possible assumption,

D. For the new telecom operators, the connection fee does not form an insignificant proportion of their revenues  Incorrect

so that action will not be helpful for new companies

E. New companies will not have to pay increased connection fee to the existing companies  Incorrect

contradicts with argument

Jaychoudhary · Answer

Although I see why "D" is correct, I am unable to eliminate E. Could anyone help?

PyjamaScientist · Answer

Because (E) contradicts the premise-  " a fee stipulated by the regulator and same for every operator. " 
So, as the "fee" will be same, they all (including new companies) will have to pay.

Hope it helps.

Posted from my mobile device

MartyTargetTestPrep · Answer

(E) is not an assumption of the argument. It actually contradicts what the passage says. After all, the passage says, "a fee stipulated by the regulator and same for every operator."

However, (E) brings up an important point, which is the following.

Since all the operators pay the fee to each other, the fees paid by the operators to each other should cancel out, with the result that the argument's underlying idea, which is that the fees can be financially beneficial for the new operators, is logically impossible.

GMATcracker101 · Answer

In this statement, first understand the premise and the conclusion -

Premise -   In Varisland, when a subscriber of one telecom operator calls a subscriber of a different telecom operator, the latter’s telecom company charges a small connection fee to the originating operator, a fee stipulated by the regulator and same for every operator. Almost all the new telecom operators are enticing customers by charging much lower call rates than charged by the existing operators.  
 conclusion - S  ince the connection fee is one of the sources of revenue for new companies, an increase in the fee will significantly improve the financials of the new operators and enable them to compete better in the market.

A. The regulator will most probably agree with the author’s recommended course of action.  INCORRECT. the conclusion does not talk about the actual possibility hence whether or not the regulator agrees is irrelevant.

B. To improve the financials of the new companies, all the possible sources of revenues should be utilized in the best manner possible.  INCORRECT. If all possible then this one is not that signigicant.

C. One of the goals of the regulator is to make the telecom market highly competitive, which will ensure consumer welfare.  INCORRECT. competitive market results in competitive pricing and the increase pricing may not work.

D. For the new telecom operators, the connection fee does not form an insignificant proportion of their revenues.  CORRECT. Negate and see, if insignificant then how will there be a significant improvement? so not insignificant is correct.

E. New companies will not have to pay increased connection fee to the existing companies.  INCORRECT. If new companies have to pay more to existing companies it means prices of existing companies have increased but the conclusion says price if new companies increases.

In Varisland, when a subscriber of one telecom operator calls a subscr

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In Varisland, when a subscriber of one telecom operator calls a subscr

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