Last year, Scienterrific doubled its research and development budget,

Question

Last year, Scienterrific doubled its research and development budget, and nearly doubled its profit. Fantascientific, a competitor of Scienterrific, should triple its research and development budget, and in this way, significantly increase its profitability.

A major flaw in the argument above is that

A major flaw in the argument above is that

A. Fantascientific plans to triple, rather than double, its research and development budget

B. it assumes that the market can grow endlessly

C. the reason for the increase in Scienterrific's profitability is not necessarily its investment in research and development

D. it ignores the possibility that investing in other departments of Fantascientific may improve profitability more than investing in the research and development department

E. it fails to mention anything about the services that the two companies offer.

Bunuel · Accepted Answer

OFFICIAL EXPLANATION

Last year, Scienterrific doubled its research and development budget, and nearly doubled its profit. Fantascientific, a competitor of Scienterrific, should triple its research and development budget, and in this way, significantly increase its profitability.

A major flaw in the argument above is that

A major flaw in the argument above is that

A. Fantascientific plans to triple, rather than double, its research and development budget

Incorrect.

This is an Argument Flaw question. You are required to locate the inherent flaw in the argument's conclusion or in its underlying assumption. In this argument, sentence 1 is a premise, citing a fact. Sentence 2 uses the recommendation word should, and is the conclusion:

Premise A: Scienterrific doubled its R&D budget, and doubled its profit in the same year
 ≠
Conclusion: If Fantascientific triples its R&D budget, it will greatly increase its profit

The fact that the author would like Fantascientifc to increase its profits threefold rather than merely double them is not a flaw. The author implies that there is a direct relation between the R&D budget and the profits, not that specifically doubling the budget is profitable. Therefore, it would make sense to increase the budget by more than Scienterrific did.

B. it assumes that the market can grow endlessly

Incorrect.

While this answer choice exposes an assumption on which the conclusion is based, there is another answer choice that exposes a more fundamental assumption.

Remember that in Critical Reasoning questions, you need to choose the best of the five answer choices.

C. the reason for the increase in Scienterrific's profitability is not necessarily its investment in research and development

The conclusion is based on the assumption that Scienterrific's profits were a direct result of their R&D budget. Put differently, it assumes a cause-and-effect relationship between the two, the cause being the budget increase, and the effect being the profit increase.

However, the premise merely states that these two increases happened in the same year. There could be other reasons for the increased profit, in which case increasing the R&D budget of Fantascientific will not necessarily increase its profit.

D. it ignores the possibility that investing in other departments of Fantascientific may improve profitability more than investing in the research and development department

Incorrect.

This is an Argument Flaw question. You are required to locate the inherent flaw in the argument's conclusion or in its underlying assumption. In this argument, sentence 1 is a premise, citing a fact. Sentence 2 uses the recommendation word should, and is the conclusion:

Premise A: Scienterrific doubled its R&D budget, and doubled its profit in the same year
 ≠
Conclusion: If Fantascientific triples its R&D budget, it will greatly increase its profit

Because this is an Argument Flaw question, the flaw must be either in the argument's conclusion or in an assumption underlying the conclusion. However, the conclusion neither states nor assumes that investing in the R&D department will improve profitability more than investing in any other department will.

E. it fails to mention anything about the services that the two companies offer.

Incorrect.

While the argument indeed fails to provide this information, this cannot be considered a flaw. The conclusion does not revolve around the services offered by the companies, so there is no need to provide data on that matter.

sumitkrocks · Answer

(c)  is the answer IMO

A. Fantascientific plans to triple, rather than double, its research and development budget
 Eliminate- Even if Fantascientific plans to double, flaw would still exist.

B. it assumes that the market can grow endlessly
 Such an assumption is not required

C. the reason for the increase in Scienterrific's profitability is not necessarily its investment in research and development
 Yes, there could be other reasons- merely investing in R&D would not necessarily help -Correct choice

D. it ignores the possibility that investing in other departments of Fantascientific may improve profitability more than investing in the research and development department
 More profitability is not a concern, rather copying an investment strategy is

E. it fails to mention anything about the services that the two companies offer.
 Irrelevant

mSKR · Answer

If something happens in X, doesn’t mean it should happen in Y

The argument assumes this flaw.

A : irrelevant: the core meaning of argument is that Fantascientific can increase its profits similarly like Scienterrific
B: Yes , this could be flaw but it’s not a good option. We don’t know double or three times profit can end the market shared. Hence reject
 
C: Correct: matches our pre-thinking. Whatever happens in X doesn’t mean would happen in Y.

D: It is little diverted point as the core meaning of argument if something happens in X , doesn’t mean would happen in Y. D option talks about same thought with alternate in option Y. Hence can be rejected.

E:Even if same services, still it is not necessary to do the comparison

Hence C is the final answer.

asishron29181 · Answer

Scienterrific doubled its research and development budget, and nearly doubled its profit.
Fantascientific should triple its research and development budget, and in this way, significantly increase its profitability.

A major flaw in the argument above is that it clearly believes that the profit of Scienterrific was a result of doubling its research and development budget.

C. the reason for the increase in Scienterrific's profitability is not necessarily its investment in research and development

C matches with our pre thinking. 
IMO C

IanStewart · Answer

It's barely an argument, so it has dozens of flaws. I think at least two answers are justifiable here. Just because one company profited by increasing its research budget does not mean another company will, so C is right. D though is also a good answer. The argument says what the company  should  do. If the company's goal is to maximize profits, then, since the company presumably can only spend a finite amount, to decide what the company  should  do, we need to know which expenditures will produce the most profit. If spending all the available money on the Marketing budget will increase profitability tenfold, but spending it all on the R+D budget will only double profitability, the company obviously shouldn't spend it all on the R+D budget. Or at least they shouldn't if their goal is to increase profitability by as much as possible. So D is certainly relevant to the argument, as it's worded, because the argument is about what the company  should  do, and we need to compare all of the company's options if that's the conclusion.

DD06 · Answer

The argument says that A ate protien and won the race so B should eat more protien and he will win the race.

Not the best comparison but you get the point. Lets look at options which help you identify why the reasoning is flawed.

A. Fantascientific plans to triple, rather than double, its research and development budget.  So if we translate this option to our hypothetical scenario it means that you know what A ate twice the amount of protien so maybe that's the key. Doesn't make sense. Eliminate.

B. it assumes that the market can grow endlessly  Market growth has got nothing to do with profitability in the context of this question. Eliminate.

C. the reason for the increase in Scienterrific's profitability is not necessarily its investment in research and development  Make the comparison to our hypothetical scenario again. The argument says maybe protien isn't necessarily the reason for winning. Hmm, makes sense. Keep.

D. it ignores the possibility that investing in other departments of Fantascientific may improve profitability more than investing in the research and development department  Again, compare with the race scenario. It says that we are ignoring the possibility that B may do better at race by exercising. Fair. But it doesn't tell us why the premise isn't correct. Eliminate

E. it fails to mention anything about the services that the two companies offer.  Clearly out of scope. Eliminate.

Ans B

Last year, Scienterrific doubled its research and development budget,

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GMAT Critical Reasoning (CR) Questions

Last year, Scienterrific doubled its research and development budget,

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