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    Strategies and techniques for approaching featured GMAT topics

The consolidation of industry, which so agitated a large segment of th

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The consolidation of industry, which so agitated a large segment of th  [#permalink]

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New post Updated on: 14 Aug 2018, 09:34
Question 1
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A
B
C
D
E

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49% (03:32) correct 51% (03:46) wrong

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The consolidation of industry, which so agitated a large segment of the public during the late 19th and early 20th century, inevitably gave rise to a countermovement – an antimonopoly or antitrust movement. The antitrust movement is easily explained and understood. It stemmed from the basic belief in an open society, a society in which there were to be no rigid or class lines, a society in which a person or a company ought to be able to rise to the extent to which one’s abilities permitted. But the consolidation of the late 19th and early 20th century threatened this open society and free competition itself.

In the 1880’s and 1890’s, in response to these threats, the antitrust movement became a political issue of importance. There was a marked division of thought as to how the so-called trust problem should be handled. One school of thought – advocated by small businessman and farmers particularly – wanted the trusts destroyed. These people believed that trusts stifled competition and equality of opportunity, and therefore should be wiped out. Many of them, it seems, wanted to get back to a simpler society and economy.

During the 1880s and 1890s, there were other people who believed that the process of business consolidation was perfectly natural and completely inevitable. Moreover, some of them argued that large-scale business was nothing to be frightened about, and that it offered the public certain potential advantages – cheaper production; lower prices, etc. These people recognized, however, that big corporations or trusts might not pass on lower prices to the public, and felt that the government should make sure that the potential benefits of size were indeed obtained by the public. This more reasonable view held that the trusts should not be destroyed, as the other school advocated, but rather regulated and controlled by the government in order to guarantee that the public interest was upheld.

1. The author would most likely support government intervention and regulation in which of the following situations:

A) A company creates a new lifesaving cancer drug that, because of patent protection, is extremely expensive and cannot be afforded by most people suffering from the disease.

B) By purchasing its major rival, a company creates a monopoly for its most important product. Consumers no longer have several options for that product, but prices have gone down.

C) Several companies who sell a similar product collude to keep prices down for that product in order to stifle a major international company that has entered the market.

D) A major electronics company has entered into an arrangement with its two main competitors to make all of their products in the same facility, resulting in cheaper production.

E) A petroleum firm has gained control of 90% of oil reserves in the country. Its strong position has allowed the country to greatly reduce domestic gas prices by undercutting international firms.




I am confused, I think D is a better answer , need expert opinion , why D is wrong?

Originally posted by rkdhardubey on 12 Aug 2018, 10:26.
Last edited by workout on 14 Aug 2018, 09:34, edited 1 time in total.
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Re: The consolidation of industry, which so agitated a large segment of th  [#permalink]

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New post 12 Aug 2018, 10:30
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New post 28 Aug 2018, 19:10
its said benefits should be given to public in first option price is high
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New post 01 Sep 2018, 07:26
The 3rd paragraph mentions that the 2nd school of though wants the government to intervene to make the benefits available to general public.

This is in line with what is mentioned in option A.

Option D mentions that the company is having cheaper production, so no intervention from government is required. Because, the product is cheaper general public can buy it.

so A is the answer.
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Re: The consolidation of industry, which so agitated a large segment of th  [#permalink]

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New post 02 Sep 2018, 11:31
if possible kindly add other questions also
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Re: The consolidation of industry, which so agitated a large segment of th  [#permalink]

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New post 17 Oct 2018, 07:10
rkdhardubey wrote:
The consolidation of industry, which so agitated a large segment of the public during the late 19th and early 20th century, inevitably gave rise to a countermovement – an antimonopoly or antitrust movement. The antitrust movement is easily explained and understood. It stemmed from the basic belief in an open society, a society in which there were to be no rigid or class lines, a society in which a person or a company ought to be able to rise to the extent to which one’s abilities permitted. But the consolidation of the late 19th and early 20th century threatened this open society and free competition itself.

In the 1880’s and 1890’s, in response to these threats, the antitrust movement became a political issue of importance. There was a marked division of thought as to how the so-called trust problem should be handled. One school of thought – advocated by small businessman and farmers particularly – wanted the trusts destroyed. These people believed that trusts stifled competition and equality of opportunity, and therefore should be wiped out. Many of them, it seems, wanted to get back to a simpler society and economy.

During the 1880s and 1890s, there were other people who believed that the process of business consolidation was perfectly natural and completely inevitable. Moreover, some of them argued that large-scale business was nothing to be frightened about, and that it offered the public certain potential advantages – cheaper production; lower prices, etc. These people recognized, however, that big corporations or trusts might not pass on lower prices to the public, and felt that the government should make sure that the potential benefits of size were indeed obtained by the public. This more reasonable view held that the trusts should not be destroyed, as the other school advocated, but rather regulated and controlled by the government in order to guarantee that the public interest was upheld.
1. The author would most likely support government intervention and regulation in which of the following situations:

A) A company creates a new lifesaving cancer drug that, because of patent protection, is extremely expensive and cannot be afforded by most people suffering from the disease.

B) By purchasing its major rival, a company creates a monopoly for its most important product. Consumers no longer have several options for that product, but prices have gone down.

C) Several companies who sell a similar product collude to keep prices down for that product in order to stifle a major international company that has entered the market.

D) A major electronics company has entered into an arrangement with its two main competitors to make all of their products in the same facility, resulting in cheaper production.

E) A petroleum firm has gained control of 90% of oil reserves in the country. Its strong position has allowed the country to greatly reduce domestic gas prices by undercutting international firms.




I am confused, I think D is a better answer , need expert opinion , why D is wrong?


Hi,

Option D doesn't mention anything about the cost of the product. It just mentions that the production was less expensive.

Hope this helps.
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Re: The consolidation of industry, which so agitated a large segment of th  [#permalink]

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New post 25 Oct 2018, 05:16
Hi workout
can you add this question to the passage?


Which of the following is the primary purpose of the passage above?

a. To analyze the role of monopolies and trusts in the late 19th and early 20th century.

b. To suggest that one of two alternative hypotheses regarding trusts and monopolies in the late 19th and early was wrong.

c. To describe two alternative viewpoints regarding the regulation of trusts and monopolies in the late 19th and early 20th century.

d. To present a new opinion regarding government regulation and trusts in the late 19th and early 20th century.

e. To suggest that trusts and monopolies damaged the public interest during the late 19th and early 20th century.

OA:
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Re: The consolidation of industry, which so agitated a large segment of th  [#permalink]

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New post 03 Nov 2018, 11:54

Passage Map:


1) Consolidation vs antimonopoly
2) Support for antimonopoly
3) Support for consolidation. 3rd view.
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Re: The consolidation of industry, which so agitated a large segment of th  [#permalink]

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New post 06 Nov 2018, 21:47
These people recognized, however, that big corporations or trusts might not pass on lower prices to the public, and felt that the government should make sure that the potential benefits of size were indeed obtained by the public.

- "to pass on " , a company has to obtain the intended product at lower prices .ie it should be cheap to the company itself and only the can they PASS ON the lower prices... but if the company itself has spent a lot in development of the product , then why would they PASS ON lower prices ??

A) A company creates a new lifesaving cancer drug that, because of patent protection, is extremely expensive and cannot be afforded by most people suffering from the disease. - This may sound promising , but nowhere is it stated that the company produced the product at lower prices to PASS ON the lower prices ... !!! we need an assumption here...

D) A major electronics company has entered into an arrangement with its two main competitors to make all of their products in the same facility, resulting in cheaper production. -- This says that the company produced product at cheap proudction costs ... now there is a possibilty this comapny may not PASS ON the lower prices to consumers ...so govt.th intervention here may be fruitful...but even this AC needs an assumption that the comapny did not actually pass on the lower prices to consumers ,resulting in futile govt. intervention.


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A and D both seem credible ...please explain... if we strictly adhere to the context in the passage , D seems to be a better one
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Re: The consolidation of industry, which so agitated a large segment of th  [#permalink]

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New post 07 Nov 2018, 14:12
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I'd look at the fact that the question asks about when the author would most likely support intervention *and* regulation.

With D, you don't know either way whether those lower costs are being passed on, so you don't have a 100% case for intervention (if consumers are getting a better deal, then there's no need to intervene). Whereas with A we know that consumers and the "public good" (as referenced in author's most editorial statement in the last sentence) are being violated, so you do have a good case for intervention and regulation.

With A, you do know that the public good is being violated as most people with the disease cannot afford the medication. And the reason is called out as "patent protection" (and the monopoly it affords), not something like an expensive manufacturing process or raw material or something like that. So that is a company using its market power in violation of the public good.
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