In an attempt to draw manufacturing companies from Calonia,

A. tax credits are the most popular and effective incentive by which to lure manufacturing companies to a new country.

but if tax credit is not the most effective incentive, then why would the companies want to move from C to A. what if the costs of moving business, and building new factories are that high, that even tax credit is not a solution.

D. most Calonian manufacturing companies expect to employ at least twenty workers in the manufacturing sector within ten years.
10 years!!!!
what if they need only 10? why would they want to move? maybe in 10 years they will have more than 20, but since then, they have to pay taxes.

we can come up with few assumptions:
Calonian gvt will not respond with the same tax credits
Tax credits is the only thing that scares manufacturing companies to enter Alusia
Companies that will come to Alusia will actually have more than 20 workers.

The success of the plan instituted by the government of Alusia relies on the assumption that

A. tax credits are the most popular and effective incentive by which to lure manufacturing companies to a new country.
negate this one - conclusion stands, so out. moreover, this one talks about popularity, so incorrect.

B. the Calonian government will respond by offering a similar tax credit for manufacturing companies that remain in Calonia.
this one actually weakens the conclusion.

C. manufacturing companies that have succeeded in Calonia are less likely to succeed if they move operations to a neighboring country.
talks about things not concerned in the argument, so out.

D. most Calonian manufacturing companies expect to employ at least twenty workers in the manufacturing sector within ten years.
ok, so if we negate this one, we see that most of the companies have <20 workers. tax credit in A applies only if companies have >20 workers. thus, there is no need for the companies to move to A, if they have <20 workers, since they will not receive any tax credits. D looks good.

E. Calonian manufacturing companies tend to continue paying each worker, on average, more than $1000 per year.
payment for workers - irrelevant.

So nice to see how I've improved myself

Maybe posting a response and my own analysis will help me study, too.

I was a little confused at first but I think I can see why D is the correct answer.

For this question I found the conclusion and worked backwards. The intended result was that companies would move from C to A because companies are very responsive to tax credits. This specific reward of $1000/worker/year would depend on there being 20+ workers in the manufacturing sector.

A. tax credits are the most popular and effective incentive by which to lure manufacturing companies to a new country.
- - This was the trap I fell for. It certainly seems to address the line of reasoning behind country A's government. At the same time, if we negate this and replace the answer with "tax credits are the least popular and least effective incentive by which to lure manufacturing companies into a new country," it doesn't necessarily mean that such a plan couldn't work, just that it's not likely to happen.

B. the Calonian government will respond by offering a similar tax credit for manufacturing companies that remain in Calonia.
- - Well if this were true it's easy to see that the plan from A's government would definitely not happen.

C. manufacturing companies that have succeeded in Calonia are less likely to succeed if they move operations to a neighboring country.
- - Even if it were a bad decision on part of company owners in C, that doesn't mean they won't move to A.

D. most Calonian manufacturing companies expect to employ at least twenty workers in the manufacturing sector within ten years.
- - This is kind of one that I overlooked initially but if we negate it and say that such companies will NOT be employing 20 or more workers within the next 10 years, there would be NO incentive for them to move into country A whatsoever. This one really tripped me up but if it were false, it would most definitely harm the conclusion.

E. Calonian manufacturing companies tend to continue paying each worker, on average, more than $1000 per year.
- - I crossed this one off the list because while it does bring in the figure of $1000 into the picture, cost of employment is out of the scope of the stimulus doesn't even bring in the idea of cost/profits.

In an attempt to draw manufacturing companies from Calonia, a neighboring country, the government of Alusia is instituting a tax credit of $1000 per worker per year for any company that employs more than twenty workers in the manufacturing sector. Because companies are highly responsive to tax credit incentives, the Alusian government expects that most Calonian manufacturing companies will move into Alusia within ten years.

The success of the plan instituted by the government of Alusia relies on the assumption that

A. tax credits are the most popular and effective incentive by which to lure manufacturing companies to a new country. it doesn't matter whether tax credits are the most effective or most popular as long as they can get companies to relocate. Not a necessary assumption.
B. the Calonian government will respond by offering a similar tax credit for manufacturing companies that remain in Calonia.this actually weakens the argument: if the Calonian government responded tit-for-tat, then the plan of Alusia would not work
C. manufacturing companies that have succeeded in Calonia are less likely to succeed if they move operations to a neighboring country. Like B, this weakens the argument. No company would want to move, so the tax credits would be ineffective in lurring companies from Calonia
D. most Calonian manufacturing companies expect to employ at least twenty workers in the manufacturing sector within ten years. For a company to receive the tax credit, it must employ at least 20 workers. Companies would only relocate to get the tax credit if they know they would employ at least workers. Keep this one in.
E. Calonian manufacturing companies tend to continue paying each worker, on average, more than $1000 per year. Irrelevant at best. Eliminate

D is the correct answer.

Kudos if you like the response

The plan to institute a tax credit of $1000 per worker can be implemented only if the company employs more than twenty workers. So, less than twenty workers equal no tax credit for manufacturing companies, and therefore no benefit for manufacturing companies to move into Alusia. Hence, the success of the plan relies on the assumption that (D) most Calonian manufacturing companies expect to employ at least twenty workers in the manufacturing sector within ten years

This is an Assumption question, so we need to either find a whole in the logic or identify the challenge to the argument.

Premise 1: Gvt of A wants to attract manufacturing companies from C by offering a tax credit for any company with > 20 workers in the manufacturing sector.
Premise 2: Companies are responsive to tax incentives.
Conclusion: Gvt of A expects that most manufacturing companies from C will move within 10 years.

There is a hole in the argument, that is, A plans to attract manufacturing companies from C by offering a tax credit, but the argument says that "companies are responsive to tax incentives". What companies? All companies? Startups? Some specific companies such as manufacturing companies? This is definitely a hole, and one of the option choices may plug that hole. There is also a possibility that the plan of A may not work because of some other reason, and in that case we may need to find an answer choice that denies the possibility of plan's failure. Let's begin the hunt:

A. tax credits are the most popular and effective incentive by which to lure manufacturing companies to a new country.

- Incorrect. We are looking for a reason why plan of the Gvt A may not work. Do we care about the effectiveness of incentives? Not really. Maybe tax credit is the best incentive in the Universe, maybe it is just an average incentive. The argument says that there is a tax incentive and companies are responsive to it. We cannot charge the premises of the argument, rather, we should look at the reasoning and the conclusion. So, this option is not correct.

B. the Calonian government will respond by offering a similar tax credit for manufacturing companies that remain in Calonia.

- Incorrect. If the Gvt of C will respond, then the plan of the Gvt of A won't work at all. This option by default breaks the argument. Actually, if this option said "the C gvt will NOT respond", it would have been a very good option.

C. manufacturing companies that have succeeded in Calonia are less likely to succeed if they move operations to a neighboring country.

- Incorrect. Do we care about operations in C? This option does not even mention A... Clearly out.

D. most Calonian manufacturing companies expect to employ at least twenty workers in the manufacturing sector within ten years.

- Correct. Let's negate this option. If most manufacturing companies in C do not employ > 20 workers or won't employ in the next 10 years, the tax incentive that the Gvt of A is proposing does not make much sense... The entire argument breaks into pieces. So, most companies in C must have more than 20 workers in order for A's plan to work.

E. Calonian manufacturing companies tend to continue paying each worker, on average, more than $1000 per year.

- Incorrect. Sure, good for workers in C. Again, we need something that will establish the success of the plan of A. This option is a bit similar to option B.

P.S. Initially, I wanted to say that there is no obvious whole in the argument, but there is one. However, I have not seen many (any?) OG arguments which have both a whole and an area for challenge. This is a non-official 3rd party question, so this may explain why the question is a bit "weird".

nightblade354 and GMATNinja, what are your thoughts on the above?

This is less about "negation" more about logic.

The plan is premised on the notion that companies employee at least 20 workers as to be eligible for the rebate otherwise it won't attract anyone.

D is this.

Here the statement says that the tax credit will be beneficial only if the company employees minimum 20 for tax credit
and there is no point of shifting if a company is having less than 20 employees
the assumption is most of the companies are having more than 20 employees or going to have in the days to come

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