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14 Nov 2021, 10:06
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I think the reason why a lot of people get question 3 wrong is because it's tough to eliminate D without a good grasp of the passage.
We can quickly eliminate A, C, and E because they're stated, almost verbatim, in the passage. This leaves us with B and D.
In D: Is reliability of a source of necessary components a benefit associated with background integration?
The first paragraph mentions "Modern manufacturers, who need reliable sources of materials and technologically advanced components to operate profitably, face an increasingly difficult choice between owning the producers of these items (a practice known as backward integration) and buying from independent producers.
We can infer that one reason modern manufacturers decide to go through with the practice of backward integration is to operate profitably. In order to operate profitably, modern manufacturers need reliable sources of materials and technologically advanced components. Reliability of a source of necessary components, therefore, is a benefit associated with background integration.
B is wrong because manufacturers are not selling components -- manufacturers are selling an end-product.
We can quickly eliminate A, C, and E because they're stated, almost verbatim, in the passage. This leaves us with B and D.
In D: Is reliability of a source of necessary components a benefit associated with background integration?
The first paragraph mentions "Modern manufacturers, who need reliable sources of materials and technologically advanced components to operate profitably, face an increasingly difficult choice between owning the producers of these items (a practice known as backward integration) and buying from independent producers.
We can infer that one reason modern manufacturers decide to go through with the practice of backward integration is to operate profitably. In order to operate profitably, modern manufacturers need reliable sources of materials and technologically advanced components. Reliability of a source of necessary components, therefore, is a benefit associated with background integration.
B is wrong because manufacturers are not selling components -- manufacturers are selling an end-product.
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07 Mar 2022, 03:26
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I think the passage was easy to understand but the questions were a bit tricky. Though I got all correct but it took me 9 minutes to solve this one. Here are my two cents on each question.
1. According to the passage, which of the following relationships between profits and investments in research and development holds true for producers of technologically advanced components?
1) Modest investments are required and the profit margins on component sales are low.
2) Modest investments are required but the profit margins on component sales are quite high.
3) Despite the huge investments that are required, the profit margins on component sales are high.
4) Because huge investments are required, the profit margins on component sales are low.
5) Long-term contractual relationships with purchasers of components ensure a high ration of profits to investment costs.
Refer to the second line of the last paragraph.
"Developing innovative technologies requires independent suppliers of components to invest huge sums in research and development. The resulting low profit margins on the sale of components threaten the long-term financial stability of these firms."
High investment, low return.
Only D matches this.
2. According to passage, when an assembler buys a firm that makes some important component of the end product that the assembler produces, independent suppliers of the same component may
A. withhold technological innovations from the assembler
B. experience improved profit margins of on sales of their products
C. lower their prices to protect themselves from competition
D. suffer financial difficulties and go out of business
E. stop developing new versions of the component
Refer to the second line of the third paragraph.
"Independent suppliers may be unwilling to share innovations with assemblers with whom they are competing."
Not sharing technological innovations with assemblers in consideration
Only A matches this.
3. According to the passage, all of the following are benefits associated with backward integration EXCEPT:
A. improvement in the management of overhead expenses
B. enhancement of profit margins on sales of components
C. simplification of purchasing and marketing operations
D. reliability of a source of necessary components
E. elimination of unnecessary research efforts
Notice in option B, it says "sales of components". The passage talks about the profit from the end product (implied) and that too only in certain industries. Reliability is talked about in the first paragraph.
4. Which of the following best describes the way the last paragraph functions in the context of the passage?
A. The last in a series of arguments supporting the central argument of the passage is presented.
B. A viewpoint is presented which qualifies one presented earlier in the passage.
C. Evidence is presented in support of the argument developed in the preceding paragraph.
D. Questions arising from the earlier discussion are identified as points of departure for further study of the topic.
E. A specific example is presented to illustrate the main elements of argument presented in the earlier paragraphs.
Qualify means to reduce the intensity or credibility of something. Remembering the meaning of this word would come in handy as this word is quite often used by the GMAT.
Notice the first word "However" in the last paragraph - this indicates contrast.
However, moving away from backward integration is not a complete solution either.
The first line indicates that whatever solution is presented in the previous paragraphs is not complete. Whatever follows will tell us WHY is the solution mentioned in the previous paragraphs "not complete". Here, we are reducing the intensity/credibility of the solution.
Option B fits is the perfect fit.
A. The last in a series of arguments supporting the central argument of the passage is presented.
This cannot be true because of the word "however", which indicates contrast so, whatever follows will contradict whatever was mentioned in the previous paragraphs.
C. Evidence is presented in support of the argument developed in the preceding paragraph.
Evidence means data, numbers, figures, findings etcetera. The paragraph discusses a viewpoint.
D. Questions arising from the earlier discussion are identified as points of departure for further study of the topic.
The paragraph in no way explicitly or implicitly mentioning that the topic needs to be further studied.
E. A specific example is presented to illustrate the main elements of argument presented in the earlier paragraphs.
There is no example mentioned. Moreover, this point implies that the last paragraph is on the same page as the earlier paragraphs, however, that is not the case as previously discussed (because of the contradiction word - HOWEVER).
1. According to the passage, which of the following relationships between profits and investments in research and development holds true for producers of technologically advanced components?
1) Modest investments are required and the profit margins on component sales are low.
2) Modest investments are required but the profit margins on component sales are quite high.
3) Despite the huge investments that are required, the profit margins on component sales are high.
4) Because huge investments are required, the profit margins on component sales are low.
5) Long-term contractual relationships with purchasers of components ensure a high ration of profits to investment costs.
Refer to the second line of the last paragraph.
"Developing innovative technologies requires independent suppliers of components to invest huge sums in research and development. The resulting low profit margins on the sale of components threaten the long-term financial stability of these firms."
High investment, low return.
Only D matches this.
2. According to passage, when an assembler buys a firm that makes some important component of the end product that the assembler produces, independent suppliers of the same component may
A. withhold technological innovations from the assembler
B. experience improved profit margins of on sales of their products
C. lower their prices to protect themselves from competition
D. suffer financial difficulties and go out of business
E. stop developing new versions of the component
Refer to the second line of the third paragraph.
"Independent suppliers may be unwilling to share innovations with assemblers with whom they are competing."
Not sharing technological innovations with assemblers in consideration
Only A matches this.
3. According to the passage, all of the following are benefits associated with backward integration EXCEPT:
A. improvement in the management of overhead expenses
B. enhancement of profit margins on sales of components
C. simplification of purchasing and marketing operations
D. reliability of a source of necessary components
E. elimination of unnecessary research efforts
Notice in option B, it says "sales of components". The passage talks about the profit from the end product (implied) and that too only in certain industries. Reliability is talked about in the first paragraph.
4. Which of the following best describes the way the last paragraph functions in the context of the passage?
A. The last in a series of arguments supporting the central argument of the passage is presented.
B. A viewpoint is presented which qualifies one presented earlier in the passage.
C. Evidence is presented in support of the argument developed in the preceding paragraph.
D. Questions arising from the earlier discussion are identified as points of departure for further study of the topic.
E. A specific example is presented to illustrate the main elements of argument presented in the earlier paragraphs.
Qualify means to reduce the intensity or credibility of something. Remembering the meaning of this word would come in handy as this word is quite often used by the GMAT.
Notice the first word "However" in the last paragraph - this indicates contrast.
However, moving away from backward integration is not a complete solution either.
The first line indicates that whatever solution is presented in the previous paragraphs is not complete. Whatever follows will tell us WHY is the solution mentioned in the previous paragraphs "not complete". Here, we are reducing the intensity/credibility of the solution.
Option B fits is the perfect fit.
A. The last in a series of arguments supporting the central argument of the passage is presented.
This cannot be true because of the word "however", which indicates contrast so, whatever follows will contradict whatever was mentioned in the previous paragraphs.
C. Evidence is presented in support of the argument developed in the preceding paragraph.
Evidence means data, numbers, figures, findings etcetera. The paragraph discusses a viewpoint.
D. Questions arising from the earlier discussion are identified as points of departure for further study of the topic.
The paragraph in no way explicitly or implicitly mentioning that the topic needs to be further studied.
E. A specific example is presented to illustrate the main elements of argument presented in the earlier paragraphs.
There is no example mentioned. Moreover, this point implies that the last paragraph is on the same page as the earlier paragraphs, however, that is not the case as previously discussed (because of the contradiction word - HOWEVER).
