Investment Analyst: Now is not an optimal time to invest in

Question

Investment Analyst: Now is not an optimal time to invest in the construction industry. We have been tracking the volume of concrete ordered by construction companies for decades, and the total volume has decreased only during or just before a construction industry downturn. So, the fact that the total volume of concrete ordered by construction companies has been decreasing steadily for months indicates poor near-future prospects for the industry.

Which of the following is an assumption on which the analyst has relied in making the recommendation?

(A) If a construction industry downturn occurs in the near future, it will have been caused by industry-specific factors and not resulted from a general economic downturn.

(B) All construction companies have in recent months reduced the volumes of concrete they are ordering.

(C) No new material that is a superior alternative to concrete has recently become available for purchase.

(D) The number of companies whose primary business is construction has not been decreasing in recent months.

(E) There are other indicators that point to a downturn in business for the construction industry in the near future.

Source:  Marty Murray Coaching

MartyMurray · Answer

Investment Analyst: Now is not an optimal time to invest in the construction industry. We have been tracking the volume of concrete ordered by construction companies for decades, and the total volume has decreased only during or just before a construction industry downturn. So, the fact that the total volume of concrete ordered by construction companies has been decreasing steadily for months indicates poor near-future prospects for the industry.

The analyst has concluded the following:

Now is not an optimal time to invest in the construction industry.

The conclusion is supported by the following premise:

We have been tracking the volume of concrete ordered by construction companies for decades, and the total volume has decreased only during or just before a construction industry downturn.

and by the following intermediate conclusion:

So, the fact that the total volume of concrete ordered by construction companies has been decreasing steadily for months indicates poor near-future prospects for the industry.

We see that the reasoning of the argument is basically that, since decreases in volume of concrete ordered have been associated with construction industry downturns in the past, the currently ongoing decrease in the volume of concrete ordered indicates poor near-future prospects for the industry.

Which of the following is an assumption on which the analyst has relied in making the recommendation?

This is an Assumption question, and the correct answer will state something that must be true for the premises to effectively support the conclusion.

(A) If a construction industry downturn occurs in the near future, it will have been caused by industry-specific factors and not resulted from a general economic downturn.

The conclusion is not about the cause of the predicted downturn. It's simply that now is not an optimal time to invest because the prospects for the industry are poor.

So, the argument works regardless of whether the predicted downturn will have been caused by industry-specific factors or resulted from a general economic downturn.

Eliminate.

(B) All construction companies have in recent months reduced the volumes of concrete they are ordering.

This choice is a little tricky to eliminate.

All the same time, this choice is not the correct answer because the conclusion is not that "all construction companies" are doing poorly  currently . It's that "Now is not an optimal time to invest in the construction industry" in general because of poor prospects for  the future .

So, even if NOT ALL construction companies have in recent months reduced the volumes of concrete they are ordering, the argument still works. After all, even in that case, it could still be true that the decrease in total volume of concrete ordered indicates poor future prospects for the industry.

Eliminate.

(C) No new material that is a superior alternative to concrete has recently become available for purchase.

This choice is interesting.

The analyst has noted that past decreases in the total volume of concrete ordered have been associated with construction industry downturns and concluded that, therefore, the current decrease in volume indicates poor prospects for the industry.

But, what if this choice is not true, and a "new material that is superior alternative to concrete HAS recently become available for purchase"?

In that case, the decrease in volume of concrete ordered may not indicate poor prospects for the industry. Rather, the prospects may be good, and what's going on is that companies are ordering less concrete because they are using a new material instead.

So, the argument works only if this choice is true and NO such new material has recently become available for purchase.

Thus, this choice states an assumption on which the the argument depends.

Keep.

(D) The number of companies whose primary business is construction has not been decreasing in recent months.

This choice could be tempting because it could seem to state, basically, that there's not an alternative cause for the decrease in volume of concrete ordered. In other words, this choice could seem to be indicating that the issue is indeed an overall industry downturn and not a decrease in the number of construction companies.

Here's the thing though.

Even if the number of construction companies HAS been decreasing, the prospects for the industry could still be poor. Maybe that there are poor prospects for the industry is WHY the number of companies has been decreasing.

So, the argument works even if this choice is not true.

Eliminate.

(E) There are other indicators that point to a downturn in business for the construction industry in the near future.

This choice strengthens the case for the analyst's conclusion but is not an assumption on which the argument depends.

After all, even if there are NOT other indicators that point to a downturn, the decrease in volume of concrete ordered indicates that a downturn is imminent. So, the analyst's conclusion is supported by the premises regardless of whether other indicators provide additional support.

Eliminate.

Correct answer:   C

pratiksha1998 · Answer

I have a doubt in the correct answer, are we not assuming another point in our correct answer that the companies are indeed buying the new alternative? The option says that a new alternative is available but how do we know that the companies are actually buying it?

MartyMurray · Answer

The assumption is something that must be true for the premise to effectively support the conclusion.

In this case, it must be true that "No new material that is a superior alternative to concrete has recently become available for purchase."

It's true that we don't know whether companies are purchasing such a new material if it is available. Still, if it has become available, the fact that they may be purchasing it means that it doesn't make sense to conclude from the fact that concrete purchases are down. that "Now is not an optimal time to invest in the construction industry."

napolean92728 · Answer

The correct answer is:  (C) No new material that is a superior alternative to concrete has recently become available for purchase. 
 Why (C) is correct: 
The analyst is using the  decrease in concrete orders  as a  proxy indicator  of a downturn in the construction industry. For this conclusion to be valid, it must be assumed that  concrete is still the main material used  in construction and  has not been replaced by a superior alternative .
 If a better material had replaced concrete, the decrease in concrete orders would not necessarily reflect a slowdown in construction activity — it could simply reflect a shift in material usage.
 Thus,  (C)  identifies an assumption  necessary  for the analyst’s argument to hold.

Elimination of Other Options:
 (A)  If a construction industry downturn occurs in the near future, it will have been caused by industry-specific factors and not resulted from a general economic downturn. 
 
 This is irrelevant to the argument. The analyst is concerned with  predicting  a downturn, not its  cause . Whether the cause is general or industry-specific doesn't weaken or strengthen the argument.
 ❌  Not necessary .

(B)  All construction companies have, in recent months, reduced the volumes of concrete they are ordering. 
 
 The analyst only needs  total volume  to be decreasing, not that  every single company  is reducing orders. A few large companies could be reducing their orders significantly, causing an overall decline.
 ❌  Too strong , not a required assumption.

(D)  The number of companies whose primary business is construction has not been decreasing in recent months. 
 
 Even if some companies went out of business, the total concrete volume decrease could still indicate a downturn. What matters is the volume trend, not the number of firms.
 ❌  Not essential  to the logic.

(E)  There are other indicators that point to a downturn in business for the construction industry in the near future. 
 
 This would  strengthen  the argument but is  not an assumption . The analyst's argument is based solely on concrete volume; they don't depend on other indicators.
 ❌  Not assumed , just potentially supportive evidence.

adarshgmat25 · Answer

MartyMurray  
Hey Marty, 
I got confused because of the usage of the word "recently" in option C. Yes, I understand why option D is incorrect, but how can we be sure that new material available "recently" is the reason for the "recent months" decrease in the purchase of concrete?

MartyMurray · Answer

We don't know for sure, but we don't need to.

The correct answer must state an assumption that's necessary for the evidence to support the conclusion effectively.

The evidence is that, in the past, when concrete sales decreased, there was an industry downturn.

The conclusion is that a recent decrease in concrete sales means that there will be an industry downturn in the future.

The evidence supports the conclusion effectively only if something key, such as the nature of available products, hasn't changed significantly. After all, if something relevant has changed significantly, then it doesn't make sense to conclude on the basis of observations of past patterns that a similar pattern will occur in the future.

So, the argument works only if it's true that no new material that is a superior alternative to concrete has recently become available for purchase.

Omgupta556656456 · Answer

But they are using not in the statement which state start no other alternative have been found yet so how is that the statement is true, and if the statement is Even true but still we cannot assume anything rather than given in the paragraph and this thing is not mentioned in the paragraph

himanshi1172 · Answer

Hi Marty! I got thrown off by the use of "superior" in option C. Even if a new material  equally good  as concrete but let's say, is cheaper is being more avidly used - it could negate the conclusion. So i believe we can assume superiority to not necessarily be an indicator of better quality - it could be better price at the same quality to?

PocusFocus · Answer

Investment Analyst: Now is not an optimal time to invest in the construction industry. We have been tracking the volume of concrete ordered by construction companies for decades, and the total volume has decreased only during or just before a construction industry downturn. So, the fact that the total volume of concrete ordered by construction companies has been decreasing steadily for months indicates poor near-future prospects for the industry.

Which of the following is an assumption on which the analyst has relied in making the recommendation?

(A) If a construction industry downturn occurs in the near future, it will have been caused by industry-specific factors and not resulted from a general economic downturn.

The reasoning is that in the past a decrease on the volume of concrete has coincided with a construction industry downturn, so as the volume is decreasing, it is not an optimal moment to invest. 
 The industry downturn signals that is not a good moment to invest in that industry, but the reason why this industry downturn happen are not important for this argument.

(B) All construction companies have in recent months reduced the volumes of concrete they are ordering.

Is not necessary that all construction companies have reduced in recent months their volumes of concrete ordered, there could exist the case that some were affected and other not, it still will represent a decrease of the total volume in the industry.

(C) No new material that is a superior alternative to concrete has recently become available for purchase.

I eliminate in first instance this, because I make an error in the reasoning I said: If there is a new material superior to concrete it could do even worse the option to invest right?, but I was wrong because I was not precise with the conclusion, is not about invest in concrete, is about to invest in the industry, so if there is a new material that is superior, of course it will affect -vely to the orders of concrete, and at the same time could make the investments in the industry increase. This is our guy! 😊

(D) The number of companies whose primary business is construction has not been decreasing in recent months.

if the number of construction companies has maintained its number, it does not affect the fact that the volume of the industry was decreasing, so it does not affect the argument

(E) There are other indicators that point to a downturn in business for the construction industry in the near future.

It was the choice that I selected, my reasoning was the results of the past are not enough to determine the future, so if it is the case that there is a downturn, the results of the past are not enough to indicate it, so should exist other indicators that point out to a downturn. Let’s negate it: There are not other indicators that point out to the downturn, the conclusion does not break right? It is not an assumption. My reasoning was wrong this additional indicators could exist or could not.

Hopes this helps to anybody.

Investment Analyst: Now is not an optimal time to invest in

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