Recent years have brought minority-owned businesses in the United Stat

The best answer is B. The author begins by describing in the first two paragraphs the, new opportunities for minority-owned businesses in the United States engendered by changes in federal law. The author then goes on in the last three paragraphs to point out three specific risks for minority-owned businesses posed by the new federal laws. Thus a situation is described and the drawbacks that it might entail are suggested.



The best answer is E. Choices A and B can be eliminated because the passage mentions only "some federal and local agencies" (lines 14-15), not any specific ones. C and D can be eliminated because no specific data are provided about minority-owned firms except in the area of the value of their corporate contracts. Only E is clearly answered by the passage; the author describes in lines 33-36 the possibility of a reduction in subcontracts leaving a small business that had just expanded (lines 28-33) financially overextended.



The best answer is C because lines 4-9 state that civil rights activists have long argued that a problem for members of minority groups who are attempting to establish businesses has been that minority groups "lack access to the sizable orders and subcontracts that are generated by large companies."



The best answer is A. In lines 28-36 the author points out that small businesses might have to make substantial new investments to meet the demands of a large subcontract, and that small business could thus "face potentially crippling fixed expenses." Large businesses, the author suggests in line 30, would not have to make such investments, and therefore would not face serious financial consequences. In lines 39-42 the author notes that if a company is small, it must get orders quickly, or "the financial health of the business will suffer." Thus, although any firm would suffer if it did not receive orders for subcontracts quickly, only small firms facing large fixed expenses would experience serious financial harm. Large firms do not face or can handle these expenses.



The best answer is C. The passage states in lines 55-57 that becoming dependent on one large corporate customer constitutes a "danger" for a minority enterprise. It is then noted in lines 58-64 that it is "difficult for small concerns to broaden their customer bases" even at the best of times, but that it is important that they "struggle against complacency." Thus, the author implies that a minority firm should attempt to escape the danger of dependency on a single corporate customer, and that in order to do so such a firm must try to expand its customer base.



The best answer is B. Lines 9-14 state that the law mandates that businesses simply do their best" to use minority subcontractors and report their efforts to the federal government. In contrast, the author notes in lines 14-17 that some federal and local agencies have gone much further, "so far as to set specific percentage goals." Thus, it can be inferred that the author considers the percentage goals of the federal and local agencies to be more specific than the more general requirements of federal law.



The best answer is E. The author's assertion that, in the 1970's, the corporate response to federal requirements was substantial rests on the fact that "corporate contracts with minority businesses rose from $77 million in 1972 to $1.1 billion in 1977" (lines 20-22). The author's claim that such a rise indicates a substantial corporate response to federal requirements would be weakened if other factors were at work. Such a condition is presented only in choice E, where it is stated that the percentage of corporate spending remained constant; this implies that the increased dollar amount allocated to minority businesses was due simply to general economic growth and that minority businesses proportionally gained nothing during those years.



The best answer is A. The passage presents general information about a business topic in a manner accessible to the interested reading public. The language is not technical, the statistics are few, and yet the focus is resolutely on a contemporary business phenomenon. This 'style suggests a publication oriented toward presenting general news and analysis of the business world to the interested public. Of the five choices, only A does this. B focuses on the wrong time period, C on a task-definition of financial terms-not performed by the passage, and D and E on information not
present to any significant degree in the passage



The best answer is C because the author states in lines 22-25 that "no letup [is] anticipated" in the projected total of corporate contracts with minority businesses throughout the next decade. There is no support in the passage for any of the other choices.
_________________

1. The primary purpose of the passage is to

(A) present a commonplace idea and its inaccuracies
Wrong. The passage is not presenting any idea. It is stating facts. Thought the word "inaccuracies"
can be tempting.

(B) describe a situation and its potential drawbacks
Right.I arrived at this through POE. The passage is describing a situation where black and Hispanics
aka minority groups are getting government support in accessing sizable orders.
Later in the passage it is also describing it's drawbacks of acquiring such sizable orders.

(C) propose a temporary solution to a problem
Wrong. Though there is an issue that Minority groups are being kept as "fronts" and that they
would have to invest heavily to access such orders. But the author has not proposed any
solution to it.

(D) analyze a frequent source of disagreement
Wrong. There is only one voice that is giving it's views in the passage. So there cannot be any
disagreement.

(E) explore the implications of a finding.
Wrong. There is no experiment being conducted and hence there is no finding being presented.

2. The passage supplies information that would answer which of the following questions?

(A) What federal agencies have set percentage goals for the use of minority-owned businesses in public works contracts?
Wrong. The passage does not give the names of particular department of the federal agency or
percentage value of it.

(B) To which government agencies must businesses awarded federal contracts report their efforts to find minority subcontractors?
Wrong. No mention of government agencies names have been given in the passage.

(C) How widespread is the use of minority-owned concerns as “fronts” by White backers seeking to obtain subcontracts?
Wrong.The passage does mention about minority owned business being fronts. But they have not
mentioned the widespread phenomena meaning how many industries had this practice been practiced.
Or what was the percentage of people who were practicing this.

(D) How many more minority-owned businesses were there in 1977 than in 1972?
Wrong. We are not given any information about the number of minority owned business in any year.

(E) What is one set of conditions under which a small business might find itself financially overextended?
Right. This information is given in the last paragraph.
minority firms risk expanding too fast and overextending themselves financially, since most are small
concerns and, unlike large businesses, they often need to make substantial investments
in new plants, staff, equipment, and the like in order to perform work subcontracted to
them.

3. According to the passage, civil rights activists maintain that one disadvantage under
which minority-owned businesses have traditionally had to labor is that they have

(A) been especially vulnerable to governmental mismanagement of the economy
The passage does not state anything about miss management of the economy.

(B) been denied bank loans at rates comparable to those afforded larger competitors
The passage does not say anything about bank loan rates.

(C) not had sufficient opportunity to secure business created by large corporations
Right. In the paragraph one it states " Civil rights activists have long argued that one
of the principal reasons why Blacks, Hispanics, and other minority groups have
difficulty establishing themselves in business is that they lack access to the
sizable orders and subcontracts that are generated by large companies."

(D) not been able to advertise in those media that reach large numbers of potential customers
Wrong. The passage does not contain any information about advertisement.

(E) not had adequate representation in the centers of government power
Wrong. The passage does not give any information about representation in the centers of government power.

4. The passage suggests that the failure of a large business to have its bids for
subcontracts result quickly in orders might cause it to

(A) experience frustration but not serious financial harm
Right. You can come to this through POE as it not exclipilty mentioned in the passage.
"Both consume valuable time and resources, and a small company’s efforts must soon
result in orders, or both the morale and the financial health of the business will suffer."

(B) face potentially crippling fixed expenses
Wrong. This is a trick choice. In the paragraph its written that if the orders are reduced
then the company fill face crippling fixed expense. Not when there is a faliure to receive
an order.

(C) have to record its efforts on forms filed with the government
Wrong. How can you record it's effort on forms filled when the company does not given any order.

(D) increase its spending with minority subcontractors
Wrong. No mention of this in the passage.

(E) revise its procedure for making bids for federal contracts and subcontracts
Wrong. Why will you revise your bid if you don't get the final order.

5. The author implies that a minority-owned concern that does the greater part of its
business with one large corporate customer should

(A) avoid competition with larger, more established concerns by not expanding
Wrong. Author's main concern is that these companies don't expand by acquiring more customers.

(B) concentrate on securing even more business from that corporation
Wrong. Author wants the business to also look for other business from other corporation
so that the company does not become dependent.

(C) try to expand its customer base to avoid becoming dependent on the corporation
Right. Exactly what the author is trying to say.
"Even in the best of circumstances, fierce competition from larger, more established
companies makes it difficult for small concerns to broaden their customer bases:
when such firms have nearly guaranteed orders from a single corporate benefactor,"

(D) pass on some of the work to be done for the corporation to other minority-owned concerns
Wrong. No mention of this in the passage.

(E) use its influence with the corporation to promote subcontracting with other minority concerns
Wrong. No mention of this in passage.

6. It can be inferred from the passage that, compared with the requirements of law, the
percentage goals set by “some federal and local agencies” in highlighted text are

(A) more popular with large corporations
Wrong. The passage talks about specific agencies setting specific percentage goals

(B) more specific
Correct.

(C) less controversial
Wrong. Talking nothing about being controversial.

(D) less expensive to enforce
Wrong. Not talking anything about being expensive to enforce or not.

(E) easier to comply with
Wrong. Not talking about anything to comply with.

7. Which of the following, if true, would most weaken the author’s assertion that, in
the 1970’s, corporate response to federal requirements (highlighted text) was substantial

(A) Corporate contracts with minority-owned businesses totaled $2 billion in 1979.
Wrong. This actually strengthen the argument that minority business is rising.

(B) Between 1970 and 1972, corporate contracts with minority-owned businesses declined by
25 percent.
Wrong. The time period we are talking about is 1972 to 1977. We are not concerned before that.

(C) The figures collected in 1977 underrepresented the extent of corporate contracts with minority-owned businesses.
Wrong. This is a conclusion and not a fact. We need a fact to negate a fact and weaken the
argument.

(D) The estimate of corporate spending with minority-owned businesses in 1980 is approximately $10 million too high.
The fact is wrong. It's 53 billion dollar.

(E) The $1.1 billion represented the same percentage of total corporate spending in 1977 as did $77 million in 1972.
Right. This means even though the corporate spending increased maybe because of good economy,
the percentage of contracts given to minority owned business remained the same.

8. The passage most likely appeared in

(A) a business magazine
Right. I came to question through POE. A business magazine in large will present with a
common situation in the current economy and its drawbacks.

(B) an encyclopedia of Black history to 1945
Wrong. We are concerned with 1972 - 1977 period.

(C) a dictionary of financial terms
No definition of any financial term is given

(D) a yearbook of business statistics
Only once, the statistics have been given. Largely the article talks about a situation.

(E) an accounting textbook
No business accounting topics have been covered.

9. The author would most likely agree with which of the following statements about
corporate response to working with minority subcontractors?

(A) Annoyed by the proliferation of “front” organizations, corporations are likely to
reduce their efforts to work with minority-owned subcontractors in the near future.
Wrong. Minority being used as "fronts" is frustrating for minority group and not the corporations.

(B) Although corporations showed considerable interest in working with minority
businesses in the 1970’s, their aversion to government paperwork made them reluctant
to pursue many government contracts.
Wrong. It is true that there are alot of government paper work but it does not tell state that
this prevents them from taking up government projects.

(C) The significant response of corporations in the 1970’s is likely to be sustained and conceivably be increased throughout the 1980’s.
Right. As mentioned. "The projected total of corporate contracts with minority businesses
for the early 1980’s is estimated to be over 53 billion per year with no letup anticipated
in the next decade."

(D) Although corporations are eager to cooperate with minority-owned businesses, a
shortage of capital in the 1970’s made substantial response impossible.
No information about this has been given.

(E) The enormous corporate response has all but eliminated the dangers of over-expansion
that used to plague small minority-owned businesses.
Wrong. The expansion needs to be from the minority side business to be able to accept the
corporation orders.

1. B

2. E

First, minority firms risk expanding too fast and overextending themselves financially, since most are small concerns and, unlike large businesses, they often need to make substantial investments in new plants, staff, equipment, and the like in order to perform work subcontracted to them.

3. C
Even in the best of circumstances, fierce competition from larger, more established companies makes it difficult for small concerns to broaden their customer bases:

4. C
Now Congress, in apparent agreement, has required by law that businesses awarded federal contracts of more than $500,000 do their best to find minority subcontractors and record their efforts to do so on forms filed with the government.

5. C
Third, a minority enterprise that secures the business of one large corporate customer often runs the danger of becoming—and remaining—dependent. Even in the best of circumstances, fierce competition from larger, more established companies makes it difficult for small concerns to broaden their customer bases: when such firms have nearly guaranteed orders from a single corporate benefactor, they may truly have to struggle against complacency arising from their current success.


6. E
Indeed, some federal and local agencies have gone so far as to set specific percentage goals for apportioning parts of public works contracts to minority enterprises.

7. E "same percentage"

8. C
The projected total of corporate contracts with minority businesses for the early 1980’s is estimated to be over 53 billion per year with no letup anticipated in the next decade.

i got 6 correct out of 8..

Can somebody please explain question number 4 and question number 7?
i couldnt even understand the question 4 and it's options and got B and the correct ans for question 7.

Also, can people share the time taken to do this ? i got all thes ans in 13:42 mins..i know its too late but had to face some disturbance in between. How long should we ideally take to finish this huge paggage?

Regards,
Krish..

I think q4 has a mix up. The passage clearly indicates that small businesses that cannot get bids turned to orders soon can face frustration.

"The world of corporate purchasing can be frustrating for small entrepreneurs who get requests for elaborate formal estimates and bids. Both consume valuable time and resources, and a small company’s efforts must soon result in orders, or both the morale and the financial health of the business will suffer."

However the actual questions talks about big enterprises --

"The passage suggests that the failure of a large business to have its bids for subcontracts result quickly in orders might cause it to:"

and choice A, represented in the passage is for small businesses.

choice B also appears in the passage.

I am guessing someone mixed up small business and large business in the question?

My take.

1. B

2. E

First, minority firms risk expanding too fast and overextending themselves financially, since most are small concerns and, unlike large businesses, they often need to make substantial investments in new plants, staff, equipment, and the like in order to perform work subcontracted to them.

3. C
Even in the best of circumstances, fierce competition from larger, more established companies makes it difficult for small concerns to broaden their customer bases:

4. C
Now Congress, in apparent agreement, has required by law that businesses awarded federal contracts of more than $500,000 do their best to find minority subcontractors and record their efforts to do so on forms filed with the government.

5. C
Third, a minority enterprise that secures the business of one large corporate customer often runs the danger of becoming—and remaining—dependent. Even in the best of circumstances, fierce competition from larger, more established companies makes it difficult for small concerns to broaden their customer bases: when such firms have nearly guaranteed orders from a single corporate benefactor, they may truly have to struggle against complacency arising from their current success.


6. E
Indeed, some federal and local agencies have gone so far as to set specific percentage goals for apportioning parts of public works contracts to minority enterprises.

7. E "same percentage"

8. C
The projected total of corporate contracts with minority businesses for the early 1980’s is estimated to be over 53 billion per year with no letup anticipated in the next decade.

I did this RC and scored 6/8. My concern is with Q4. As per my understanding the answer should be C. Can anyone help with the detailed explanation please. I tried a lot but could not figure out the answer A as mentioned in the OA. Pls help.

Text from passage - ... If, thereafter, their subcontracts are for some reason reduced, such firms can face potentially crippling fixed expenses. ....

What this means with respect to the question--
If the bids fail for small companies, they will incur fixed prices. You may imagine that a small company has rented a place for completing a large number of orders. Suddenly they have stopped receiving such orders, they still will have to pay the rent(fixed price) that is not the case with large companies as they usually have many rented place and multiple orders. So if one bid fails, sure, they will be annoyed or frustrated but will never we financially harmed unlike the smaller ones.

Great passage.Got all right but one, in 13 minutes. Loved this question 4 particularly- had tricked me too.

Hope it helps.
_________________

Could any expert help with question no 4?

Also, how long should we be taking to read this kind of passage?

I took 17 min to read and solve all the questions with 2 incorrect answer.

Is it too long for this kind of passage?

Adi93, I can help you with Q 8 as I also got that question wrong but found out the right answer.

The passage says "Corporate response appears to have been substantial. According to figures collected in 1977, the total of corporate contracts with minority businesses rose from $77 million in 1972 to $1.1 billion in 1977. The projected total of corporate contracts with minority businesses for the early 1980’s is estimated to be over 53 billion per year with no letup anticipated in the next decade."

8. The author would most likely agree with which of the following statements about corporate response to working with minority subcontractors?

(A) Annoyed by the proliferation of “front” organizations, corporations are likely to reduce their efforts to work with minority-owned subcontractors in the near future.
Although it is listed as on of the dangers for the minority businesses, no where in the passage it says the corporations are likely to reduce their efforts to work with minority-owned subcontractors.

(B) Although corporations showed considerable interest in working with minority businesses in the 1970’s, their aversion to government paperwork made them reluctant to pursue many government contracts.
Government seems to be quite helpful to MOB. It is quite unlikely that government, in any case, is going to make it difficult to do business for the large corporation with MOB.

(C) The significant response of corporations in the 1970’s is likely to be sustained and conceivably be increased throughout the 1980’s.
Yes, this is exactly what the excerpt says.

(D) Although corporations are eager to cooperate with minority-owned businesses, a shortage of capital in the 1970’s made substantial response impossible.
No where the shortage of capital is discussed in the passage.

(E) The enormous corporate response has all but eliminated the dangers of over-expansion that used to plague small minority-owned businesses.
All I could understand is that the over-expansion is the existing risk and it has not been eliminated.

I hope this helps.

Press Kudos, if it does

Answer --Because it referring to the year 190-72 whereas to prove that point unsubstantial the stats should've been between 1972 to 1980

P1 - Some efforts to improve minority groups status.
P2 - effects + risks
P3 - another risk
P4 - risk +1

1. The primary purpose of the passage is to

(A) present a commonplace idea and its inaccuracies
(B) describe a situation and its potential drawbacks - only this one is correctly describes the situation.
(C) propose a temporary solution to a problem
(D) analyze a frequent source of disagreement
(E) explore the implications of a finding

------------------------------------------
2. The passage supplies information that would answer which of the following questions?

By POE all other can be eliminated.

(E) What is one set of conditions under which a small business might find itself financially overextended? - this is given in P1.

-------------------------------------------
3. According to the passage, civil rights activists maintain that one disadvantage under which minority-owned businesses have traditionally had to labor is that they have

Civil rights activists have long argued that one of the principal reasons why Blacks, Hispanics, and other minority groups have difficulty establishing themselves in business is that they lack access to the sizable orders and subcontracts that are generated by large companies.

(C) not had sufficient opportunity to secure business created by large corporations
-----------------------------------------
4. The passage suggests that the failure of a large business to have its bids for subcontracts result quickly in orders might cause it to

The world of corporate purchasing can be frustrating for small entrepreneurs who get requests for elaborate formal estimates and bids.Both consume valuable time and resources, and a small company’s efforts must soon result in orders, or both the morale and the financial health of the business will suffer.

(A) experience frustration but not serious financial harm

-----------------------------------------------

5. The author implies that a minority-owned concern that does the greater part of its business with one large corporate customer should

(C) try to expand its customer base to avoid becoming dependent on the corporation

---------------------------------------------------
6. It can be inferred from the passage that, compared with the requirements of law, the percentage goals set by “some federal and local agencies” in highlighted text are

some federal and local agencies have gone so far as to set "specific" percentage goals for apportioning parts of public works contracts to minority enterprises.

(A) more popular with large corporations
(B) more specific - correct
(C) less controversial
(D) less expensive to enforce
(E) easier to comply with

-----------------------------------------------------

7. Which of the following, if true, would most weaken the author’s assertion that, in the 1970’s, corporate response to federal requirements (highlighted text) was substantial

Pre-think - We need to weaken this statement, Well this can be done if we prove that not substantial part of spending is given to minority.

(A) Corporate contracts with minority-owned businesses totaled $2 billion in 1979. - strenthening.

(B) Between 1970 and 1972, corporate contracts with minority-owned businesses declined by 25 percent. - but it might be still possible that spending increased.

(C) The figures collected in 1977 underrepresented the extent of corporate contracts with minority-owned businesses. - strenthening

(D) The estimate of corporate spending with minority-owned businesses in 1980 is approximately $10 million too high. - strenthening

(E) The $1.1 billion represented the same percentage of total corporate spending in 1977 as did $77 million in 1972. --- percentage spending is still the same. this can be termed as "substantial" for sure. - amswer.

------------------------------------------------------------
8. The passage most likely appeared in

(A) a business magazine - can be

(B) an encyclopedia of Black history to 1945 - 1977 stats cant be given in 1945.

(C) a dictionary of financial terms - i think passage is beyond that.

(D) a yearbook of business statistics - it is more than statistics.

(E) an accounting textbook - no for sure.

A is only option, though it is a bit wide.

-------------------------------------------------------

9. The author would most likely agree with which of the following statements about corporate response to working with minority subcontractors?

(A) Annoyed by the proliferation of “front” organizations, corporations are likely to reduce their efforts to work with minority-owned subcontractors in the near future. - no

(B) Although corporations showed considerable interest in working with minority businesses in the 1970’s, their aversion to government paperwork made them reluctant to pursue many government contracts. - no

(C) The significant response of corporations in the 1970’s is likely to be sustained and conceivably be increased throughout the 1980’s. - has to be. defined in P2

(D) Although corporations are eager to cooperate with minority-owned businesses, a shortage of capital in the 1970’s made substantial response impossible. - no

(E) The enormous corporate response has all but eliminated the dangers of over-expansion that used to plague small minority-owned businesses. - no
_________________

Passage Map:

1) New effort to promote minority-owned businesses carries significant risk
2) #s for showing progress. Risk 1: Fixed costs
3) Risk 2: “fronts” with White backing
4) Risk 3: Dependency on 1 company & competition from others

In Q9, E can also be true since the huge corporate response has undoubtedly helped small minority owned biz to expand but still the dangers associated with over expansion that used to affect these small businesses have not been eliminated.

4. The passage suggests that the failure of a large business to have its bids for subcontracts result quickly in orders might cause it to

(A) experience frustration but not serious financial harm

(B) face potentially crippling fixed expenses

(C) have to record its efforts on forms filed with the government

(D) increase its spending with minority subcontractors

(E) revise its procedure for making bids for federal contracts and subcontracts


Hi Experts / GMATNinja / GMATNinjaTwo / Skywalker18,

Can someone please distinguish between options A and B clearly?

tejanaraharisetti
The question is asking about what happens to large businesses not the minority businesses. option A answers the question asked.

GMATNinja

Would you mind taking a loot at this question? Is this passage really OG?

These are my thoughts on the question.
First we have to ascertain what pronoun "it" refers to in the question
it = large companies

Now let us come to this excerpt from the passage -
"First, minority firms risk expanding too fast and overextending themselves financially, since most are small concerns and, unlike large businesses, they often need to make substantial investments in new plants, staff, equipment, and the like in order to perform work subcontracted to them."

small firms over-extend financially unlike large businesses

This is essentially what option A is.

Also this part of the question in bold -
The passage suggests that the failure of a large business to have its bids for subcontracts result quickly in orders might cause it to
Well that might be a stretch to assume, and I understand. But its not completely irrational.

Furthermore, if we have ascertained that 'it' = large companies and look for the other options, we can easily eliminate b,D,E
Coming to C,
(C) have to record its efforts on forms filed with the government
This is true but not relevant for this particular question in hand.
I think from a PoE perspective, we also arrive at A.

Hope this helps.

AjiteshArun

Kindly help with
Q-4: The passage suggests that the failure of a large business to have its bids for subcontracts result quickly in orders might cause it to

Sadly, I could not figure the meaning of question itself.
Also, in the answer choice " experience frustration but not serious financial harm, the highlighted part is difficult to infer.

Hi experts, I am confused on question 4 after reading the other expert reply on this thread. It seems like a far stretch for an inference question on the GMAT to infer that large corporations may be frustrated. The passage simply states that large businesses do not face the same issues as small businesses/it is the small businesses that may be frustrated. What am I missing? Thank you!

Highlighting what part of the passage I am drawing on below:
"First, minority firms risk expanding too fast and overextending themselves financially, since most are small concerns and, unlike large businesses, they often need to make substantial investments in new plants, staff, equipment, and the like in order to perform work subcontracted to them...The world of corporate purchasing can be frustrating for small entrepreneurs who get requests for elaborate formal estimates and bids."