“Over time, the costs of processing go down because as organizations l

I took the very first AWA prompt given by GMAC:

The following appeared as part of an annual report sent to stockholders by Olympic Foods, a processor of frozen
foods:

“Over time, the costs of processing go down because as organizations learn how to do things better, they become
more efficient. In color film processing, for example, the cost of a 3-by-5-inch print fell from 50 cents for five-day
service in 1970 to 20 cents for one-day service in 1984. The same principle applies to the processing of food. And
since Olympic Foods will soon celebrate its 25th birthday, we can expect that our long experience will enable us to
minimize costs and thus maximize profits.”

Essay:

The argument presented relies on important considerations that it fails to explore in order to reach the conclusion that Olympic Foods will minimize costs and maximize profits in the near future. Primarily, the argument attempts to compare past results of one industry, color film processing, with future results of an entirely different industry, food processing.

The argument omits several aspects of the color film industry at the time referenced in the example. Forces such as being positioned in a fledgling market could have allowed the color print pricing in 1970 to begin high. The market may have developed for the following 14 years in a way that supply and demand factors equilibrated, pricing color prints in a more appropriate way. The food processing industry has a long history throughout the world, and would probably not have room to expand in most markets. There is no analysis of this possibility by the argument, and therefore the argument is weakened.

Technology was rapidly advancing during this period as well. Modern technologies typically undergo an exponential growth of improvement from the outset, whereas developed technologies do not. Even if Olympic Foods has only existed for 25 years, the food processing industry as a whole has a long history and most likely has already undergone its phase of rapid technological advancement. If the argument could have proved otherwise, then this argument could have been strengthened.

Finally, the argument also assumes that the economic dynamics of today are the same as they were in the period of 1970 – 1984. Employee minimum wage, labor protections, energy costs, and raw material costs are all factors that contribute to minimizing costs, not simply processing technology improvements. Had the argument presented information on a broad basis of input costs instead of just focusing on a narrow segment, the argument would have been improved.

In summary, the argument presented is poor because it compares two starkly different industries, neglects considerations of market development, and relies on an assumption of equating different time periods. It is therefore deeply flawed and not logically sound.