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14 May 2025, 00:30
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Difficulty:
25%
(medium)
Question Stats:
77% (01:44) correct
23%
(01:57)
wrong
based on 150
sessions
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Industry analysts feel that Bluecorp paid far too much to acquire rival firm Strickland. While doing so limited competition they face in the marketplace, this approach cannot be profitable in the long run. Once two rival firms merge in order to increase profits, the higher prices would only provide other competitors an opportunity to enter the field at a lower price, cutting into Bluecorp's profits and making the acquisition of Strickland an expensive mistake.
Which of the following, if true, most seriously weakens the argument?
(A) In some countries it is legal for two companies to merge even if the resulting entity would nearly monopolize the market.
(B) The combination of Bluecorp and Strickland creates an entity whose size allows it to produce items at a far lower cost than could any smaller enterprise.
(C) In addition to eliminating competition, Bluecorp's acquisition gives it a much more substantial presence in urban areas.
(D) As a result of the acquisition, the new corporate entity will create two smaller entities to operate as independent suppliers to Bluecorp.
(E) When two large companies in the same field combine, entrepreneurs tend to shy away from the field due to the single entity's perceived dominance.
Which of the following, if true, most seriously weakens the argument?
(A) In some countries it is legal for two companies to merge even if the resulting entity would nearly monopolize the market.
(B) The combination of Bluecorp and Strickland creates an entity whose size allows it to produce items at a far lower cost than could any smaller enterprise.
(C) In addition to eliminating competition, Bluecorp's acquisition gives it a much more substantial presence in urban areas.
(D) As a result of the acquisition, the new corporate entity will create two smaller entities to operate as independent suppliers to Bluecorp.
(E) When two large companies in the same field combine, entrepreneurs tend to shy away from the field due to the single entity's perceived dominance.
14 May 2025, 06:34
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Let’s identify which statement most weakens the argument that Bluecorp’s acquisition of Strickland is an expensive mistake.
The argument claims Bluecorp overpaid for Strickland, and while the merger reduces competition, higher prices will attract competitors, eroding profits, making the acquisition unprofitable.
Question: Which of the following, if true, most seriously weakens the argument?
(A) In some countries it is legal for two companies to merge even if the resulting entity would nearly monopolize the market.
Explanation: Legality of near-monopolistic mergers doesn’t address the argument’s claim that higher prices invite competitors, reducing profits. It neither challenges the assumption of price increases nor prevents competitor entry, so it fails to weaken the argument.
(B) The combination of Bluecorp and Strickland creates an entity whose size allows it to produce items at a far lower cost than could any smaller enterprise.
Explanation: The argument assumes the merged entity must raise prices to increase profits, inviting competitors. This statement weakens that assumption by showing the merged entity can increase profits through lower production costs, maintaining competitive prices that deter new entrants, thus preserving profitability.
(C) In addition to eliminating competition, Bluecorp's acquisition gives it a much more substantial presence in urban areas.
Explanation: A stronger urban presence may enhance market reach, but it doesn’t counter the argument’s claim that higher prices will attract competitors. It fails to address the mechanism of profit erosion or the price increase assumption, so it doesn’t weaken the argument.
(D) As a result of the acquisition, the new corporate entity will create two smaller entities to operate as independent suppliers to Bluecorp.
Explanation: Creating smaller supplier entities doesn’t address the argument’s focus on higher prices attracting competitors. The merged entity could still raise prices, remaining vulnerable to market entrants, so this doesn’t weaken the argument’s profitability concern.
(E) When two large companies in the same field combine, entrepreneurs tend to shy away from the field due to the single entity's perceived dominance.
Explanation: While this suggests fewer new competitors, the argument specifically claims competitors will enter at lower prices. This statement doesn’t negate the possibility of some competitors entering, nor does it challenge the price increase assumption, so it doesn’t sufficiently weaken the argument.
The argument hinges on the assumption that profitability requires higher prices, inviting competitors. Option B directly weakens this by showing profitability can be achieved without price increases.
Answer: B
The argument claims Bluecorp overpaid for Strickland, and while the merger reduces competition, higher prices will attract competitors, eroding profits, making the acquisition unprofitable.
Question: Which of the following, if true, most seriously weakens the argument?
(A) In some countries it is legal for two companies to merge even if the resulting entity would nearly monopolize the market.
Explanation: Legality of near-monopolistic mergers doesn’t address the argument’s claim that higher prices invite competitors, reducing profits. It neither challenges the assumption of price increases nor prevents competitor entry, so it fails to weaken the argument.
(B) The combination of Bluecorp and Strickland creates an entity whose size allows it to produce items at a far lower cost than could any smaller enterprise.
Explanation: The argument assumes the merged entity must raise prices to increase profits, inviting competitors. This statement weakens that assumption by showing the merged entity can increase profits through lower production costs, maintaining competitive prices that deter new entrants, thus preserving profitability.
(C) In addition to eliminating competition, Bluecorp's acquisition gives it a much more substantial presence in urban areas.
Explanation: A stronger urban presence may enhance market reach, but it doesn’t counter the argument’s claim that higher prices will attract competitors. It fails to address the mechanism of profit erosion or the price increase assumption, so it doesn’t weaken the argument.
(D) As a result of the acquisition, the new corporate entity will create two smaller entities to operate as independent suppliers to Bluecorp.
Explanation: Creating smaller supplier entities doesn’t address the argument’s focus on higher prices attracting competitors. The merged entity could still raise prices, remaining vulnerable to market entrants, so this doesn’t weaken the argument’s profitability concern.
(E) When two large companies in the same field combine, entrepreneurs tend to shy away from the field due to the single entity's perceived dominance.
Explanation: While this suggests fewer new competitors, the argument specifically claims competitors will enter at lower prices. This statement doesn’t negate the possibility of some competitors entering, nor does it challenge the price increase assumption, so it doesn’t sufficiently weaken the argument.
The argument hinges on the assumption that profitability requires higher prices, inviting competitors. Option B directly weakens this by showing profitability can be achieved without price increases.
Answer: B
14 May 2025, 16:36
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IMO B
(B) The combination of Bluecorp and Strickland creates an entity whose size allows it to produce items at a far lower cost than could any smaller enterprise.
Clearly disregards the point regarding newer competition cutting into profits
Lower prices after acquisition -> Higher Profit % -> Acquisition becomes successful!!
(B) The combination of Bluecorp and Strickland creates an entity whose size allows it to produce items at a far lower cost than could any smaller enterprise.
Clearly disregards the point regarding newer competition cutting into profits
Lower prices after acquisition -> Higher Profit % -> Acquisition becomes successful!!
Bunuel
