Whenever a company loses a major product-liability lawsuit, the value

Question

Whenever a company loses a major product-liability lawsuit, the value of the company's stocks falls significantly within hours after the announcement. Cotoy has long been involved in a major product-liability lawsuit, and its stocks fell significantly in value today. Therefore, we can be sure that an unfavorable judgment against Cotoy in that lawsuit was announced earlier today.

Which one of the following contains flawed reasoning that most closely parallels that in the argument above?

(A) Whenever a business treats its customers discourteously, its customers begin to shop elsewhere. Shopwell wants to keep all of its customers; therefore, its employees will never treat customers discourteously.

(B) Whenever the large airlines decrease fares, the financial stability of smaller competing airlines is adversely affected. Therefore, the smaller competing airlines' financial stability must be seriously threatened when the large airlines announce a large price decrease.

(C) Whenever a country shows a lack of leadership on international issues, respect for the countryтАЩs policies begins to decline. Therefore, to gain respect for its policies, a country should show leadership on international issues.

(D) Whenever an entering student at Cashman College wins the Performance Fellowship, he or she receives $10,000. Therefore, Eula, a student who has enrolled at Cashman, must have won the Performance Fellowship, because she just received $10,000 from the college.

(E) Whenever a company advertises its products effectively, the company's sales increase. Oroco's sales have not increased; therefore, it is likely that the company did not advertise its products effectively.

stolyar · Answer

of course it is D.

The wrong pattern in the initial stem:
If A, then B
If B, then A

D 100% matches it.

arvind910619 · Answer

The logic is that A leads to B 
Given that B happened A was the cause.

Thinking on these line we can easily remove A, B, C.
Between D and E 
D has the proper structure so it is our answer.
A note on E

A leads to B in choice E but B has not happened and A Not happening is the cause is not the structure we want.

MasteringGMAT · Answer

Hi  GMATNinja   KarishmaB

Could you please explain why option E is incorrect. I thought that the decrease in sales may have other factors involved, and this decline cannot necessarily be attributted to effective advt. Similarly, in option D, I assumed that Eula could have received $10k from other mediums such as grants or winning any olympiad or so. I am not able to distinguish the flawed reasoing (from the argument) between Option D & E.

Please help!!

KarishmaB · Answer

Flawed Logic of original argument:

If lawsuit loss (A) , value of stocks falls (B). 
X's value of stocks fell (B happened)
Hence, X suffered lawsuit loss (A happened)
 
The logic is flawed because other reasons could lead to stock falling too. We are not given that only lawsuit loss leads to stocks falling. 
The argument says "B leads to A" which is not implied.

Note that in deductive reasoning, we discuss that

If A, then B implies two things:
"A leads to B" and "Not B leads to A"
It does not imply "B leads to A"
Hence our logic is flawed in the original argument.

We need to parallel this.

(A) Whenever a business treats its customers discourteously, its customers begin to shop elsewhere. Shopwell wants to keep all of its customers; therefore, its employees will never treat customers discourteously.

If discourteous (A) , customers leave (B).
X wants to keep customers. (Not B)
Hence X will not be discourteous. (Not A)

This logic makes sense. It is not flawed. Not B does imply Not A.

(B) Whenever the large airlines decrease fares, the financial stability of smaller competing airlines is adversely affected. Therefore, the smaller competing airlines' financial stability must be seriously threatened when the large airlines announce a large price decrease.
 
If fares down (A), smaller ones destabilise (B)
Fares are down (A)
Hence, smaller ones must be destabilised. (B)

This logic makes sense too. A does imply B.

(C) Whenever a country shows a lack of leadership on international issues, respect for the countryтАЩs policies begins to decline. Therefore, to gain respect for its policies, a country should show leadership on international issues.
 
If lack of leadership (A), respect down (B)
Show leadership (Not A) 
Hence, respect will increase (Opposite B)

This is flawed logic though not parallel to our original argument. Not A does not imply that opposite of B will happen (respect will actually increase)

(D) Whenever an entering student at Cashman College wins the Performance Fellowship, he or she receives $10,000. Therefore, Eula, a student who has enrolled at Cashman, must have won the Performance Fellowship, because she just received $10,000 from the college.
 
If win Fellowship (A), get $10k (B)
Eula got $10k (B)
Hence, she must have won fellowship (A)

This is flawed logic. The argument says "B leads to A" which is not implied. It is exactly like our original argument.

(E) Whenever a company advertises its products effectively, the company's sales increase. Oroco's sales have not increased; therefore, it is likely that the company did not advertise its products effectively.
 
If effective ad (A) , sales increase (B).
No sales increase (Not B)
Hence, no effective ad (Not A)

This logic is not flawed. It is correct. Not B does imply Not A.

Answer (D)

unraveled · Answer

Whenever a  company loses  a major product-liability lawsuit, the value of the  company's stocks falls significantly  within hours after the announcement.  Cotoy  has long been involved in a major product-liability lawsuit, and its  stocks fell significantly  in value today.  Therefore , we can be sure that an  unfavorable judgment against Cotoy in that lawsuit  was announced earlier today.

Which one of the following contains flawed reasoning that most closely parallels that in the argument above?

(A) Whenever a business  treats its customers discourteously , its  customers  begin to  shop elsewhere . Shopwell wants to  keep all of its customers ; therefore, its employees will  never treat customers discourteously . - WRONG. Logical reasoning.  A  ---->  B .  Not B  ---->  Not A .

(B) Whenever the large airlines decrease fares, the financial stability of smaller competing airlines is adversely affected. Therefore, the smaller competing airlines' financial stability must be seriously threatened when the large airlines announce a large price decrease.

(C) Whenever a country shows a lack of leadership on international issues, respect for the countryтАЩs policies begins to decline. Therefore, to gain respect for its policies, a country should show leadership on international issues.

(D) Whenever an entering student at Cashman College wins the Performance Fellowship, he or she receives $10,000. Therefore, Eula, a student who has enrolled at Cashman, must have won the Performance Fellowship, because she just received $10,000 from the college.

(E) Whenever a company advertises its products effectively, the company's sales increase. Oroco's sales have not increased; therefore, it is likely that the company did not advertise its products effectively.

Answer D.

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Whenever a company loses a major product-liability lawsuit, the value

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Whenever a company loses a major product-liability lawsuit, the value

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