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Profits pay for a company's research and development, which is the

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Profits pay for a company's research and development, which is the  [#permalink]

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New post 16 Aug 2018, 08:51
5
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A
B
C
D
E

Difficulty:

  85% (hard)

Question Stats:

49% (01:35) correct 51% (01:53) wrong based on 301 sessions

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Profits pay for a company's research and development, which is the company's primary source of innovation that helps the company maintain its position in the market. During the recession when the profits decline, companies are unable to generate enough profits to sustain prior levels of research and development. However, even during the recession, the competitive pressure to innovate don't decline.

The information given most strongly supports which of the following general claims?


A. A company that does not cut back on research and development expenses during the recession most likely funds the same by other means such as cutting expenses or dipping into cash reserves.

B. A company that lost its market share during the recession can earn the same back by increasing spending on research and development once the recession is over

C. Companies that lose their market position do not maintain a steady research and development budget.

D. A company can cuts its research and development budget and still maintain its market position provided its research and development budget is higher than its competition, to begin with.

E. Companies that significantly cut their research and development budget during the recession generally lose a large proportion of their scientist.

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New post 16 Aug 2018, 09:39
Only A stands.
Alterative source of funding for R&D wings.
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Re: Profits pay for a company's research and development, which is the  [#permalink]

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New post 18 Aug 2018, 08:53
since the competitive pressure to innovate doesn't decline-- there must be something that is supporting the Research and Development in the absence of funding from profits. Hence, A.
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New post 18 Aug 2018, 09:23
I do not feel that this is a good question! A is a clear winner & the question stem formation is also very unusual. Can you please specify the source?
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Profits pay for a company's research and development, which is the  [#permalink]

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New post 23 Aug 2018, 03:13
Hi,

Is this a good quality question because it makes us assume that companies yield to the "competitive pressure" and increase spending on R&D. Also, nowhere it is mentioned that companies are obligated to keep up their market position.

Thanks,
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New post 24 Aug 2018, 19:31
mgcon wrote:
I do not feel that this is a good question! A is a clear winner & the question stem formation is also very unusual. Can you please specify the source?


Friend, there is a possibility that you are very good in critical reasoning. The Source is EGMAT and i am told it is a reliable source for verbal. But certainly nothing can come close to official questions .
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Re: Profits pay for a company's research and development, which is the  [#permalink]

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New post 13 Oct 2018, 03:13
The key point is - " profits are the PRIMARY ( not ONLY) source for R and D"

When recession- profits decline- therefore primary source no longer there.

Still competition exits

If competition still exits then R and D are still getting funded ,but the funding is not from PRIMARY SOURCE .
Inference- other sources are LIKELY providing funding
A fits well

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Re: Profits pay for a company's research and development, which is the  [#permalink]

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New post 12 Nov 2018, 11:56
Raksat wrote:
Profits pay for a company's research and development, which is the company's primary source of innovation that helps the company maintain its position in the market. During the recession when the profits decline, companies are unable to generate enough profits to sustain prior levels of research and development. However, even during the recession, the competitive pressure to innovate don't decline.

The information given most strongly supports which of the following general claims?


A. A company that does not cut back on research and development expenses during the recession most likely funds the same by other means such as cutting expenses or dipping into cash reserves.

B. A company that lost its market share during the recession can earn the same back by increasing spending on research and development once the recession is over

C. Companies that lose their market position do not maintain a steady research and development budget.

D. A company can cuts its research and development budget and still maintain its market position provided its research and development budget is higher than its competition, to begin with.

E. Companies that significantly cut their research and development budget during the recession generally lose a large proportion of their scientist.


GMATNinja can you please help me? Although I eliminated others based on logic, still feel that choice A doesn't necessarily need to be true. I have highlighted the text that seems to bother me. for all i know, there could be hundred things (how about debt?) a company can do to maintain R&D expenses . As far as i understand, for an inference choice to be true, every aspect of the answer choice needs to be true. Am i missing something here? ''fun times'' :cry:
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Re: Profits pay for a company's research and development, which is the &nbs [#permalink] 12 Nov 2018, 11:56
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