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# The Economist Reading Comprehension Challenge #2

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Manager
Joined: 27 Jan 2013
Posts: 230
GMAT 1: 780 Q49 V51
The Economist Reading Comprehension Challenge #2 [#permalink]

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29 Apr 2013, 08:02
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Question 1
00:00

Question Stats:

58% (01:39) correct 42% (03:45) wrong based on 26

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Question 2
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48% (01:42) correct 52% (00:17) wrong based on 21

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Question 3
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38% (01:18) correct 62% (00:59) wrong based on 21

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Question 4
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21% (01:42) correct 79% (00:44) wrong based on 19

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Hi All,

Thank you everyone for working on the first challenge. I'm glad that there was participation and I hope that everyone who did the challenge found it useful. Practice makes perfect so here is the 2nd challenge. For those of you who haven't done the first challenge or would like some background information please visit the first post:
[url]http://gmatclub.com/forum/the-economist-reading-comprehension-challenge-151479.html[/url]

Go ahead and post your questions and I will try to get back ASAP. Let's try to keep things as on topic as possible (only relating to this passage) so that this can stay organized and easy for every one to use and learn from:).

Happy Studies,

HG.

In the experiment mentioned in the third paragraph it can be reasonably inferred that orthodox economics would have expected:
A. a pleasurable experience to create longer lasting and more vibrant memories
B. a more exaggerated response to painful experiences
C. the sequence of events to have less influence on the memory of the experience
D. most people to have preferred a longer but less painful procedure
E. most people to have preferred a shorter but more painful procedure

[Reveal] Spoiler:
C

According to the passage it could be reasonably inferred that some economists:
A. believe that a majority of people behave in ways that can be predicted by standard models
B. believe that some exceptions to the standard models of economics can be explained by theories developed in fields outside of economics
C. use only real people as the basis for their economic models
D. incorrectly apply the standard economic models to predict the behavior of real people
E. would benefit by drawing information from various competing fields of economics

[Reveal] Spoiler:
B

According the passage, which of following is an example of the endowment effect?
A. Buying a new car for more money than you had expected to spend because you felt emotionally attached to the brand name.
B. Cancelling a vacation which has been planned for six months so that you can avoid missing a potentially lucrative business deal.
C. Selling an old coffee mug that you no longer use for more than the market value only because you consider it yours.
D. Putting a high value on your parents furniture because you associate it with childhood memories.
E. Placing a lower value on a baseball card that you plan to buy because you already own a card of comparable value.

[Reveal] Spoiler:
C

Which of the following best expresses the main idea of the passage?
A. To describe some flaws in traditional economic thinking and to recommend a course of action to improve economic models and the accuracy of their predictions.
B. To provide a history of a certain type of economics along with a prediction for its future.
C. To describe a flaw in standard economic theory and provide several examples of how the flaw manifests itself in practical applications.
D. To describe several ways in which economists can benefit from the decision making theories of other fields and provide experimental evidence of these benefits.
E. To propose an adjustment to standard economic theory incorporating new ideas from other scientific fields.

[Reveal] Spoiler:
A

The author would most likely agree with which of the following statements?
A. Other sciences outside of economics have developed decision making models which incorporate altruism, kindness, and loss aversion that can accurately predict human behavior.
B. Decision making models created by some biologists are superior to models created by economists who adhere to the standard economic models .
C. Some of the principles that are being incorporated into modern economics contradict the beliefs of some famous classic economists.
D. Self-interest should not be considered as a major contributor to rational decision making.
E. Traditional economics has not considered increased pleasure and reduced pain as two distinct sources of happiness.

[Reveal] Spoiler:
E
[Reveal] Spoiler: Question #1 OA
[Reveal] Spoiler: Question #2 OA
[Reveal] Spoiler: Question #3 OA
[Reveal] Spoiler: Question #4 OA

_________________

"It is a curious property of research activity that after the problem has been solved the solution seems obvious. This is true not only for those who have not previously been acquainted with the problem, but also for those who have worked over it for years." -Dr. Edwin Land

GMAT vs GRE Comparison

If you found my post useful KUDOS are much appreciated.

IMPROVE YOUR READING COMPREHENSION with the ECONOMIST READING COMPREHENSION CHALLENGE:

Here is the first set along with some strategies for approaching this work: http://gmatclub.com/forum/the-economist-reading-comprehension-challenge-151479.html

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Senior Manager
Joined: 19 Apr 2011
Posts: 277
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Re: The Economist Reading Comprehension Challenge #2 [#permalink]

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29 Apr 2013, 21:54
Good passage Herrgrau. Kudos for you !!
_________________

+1 if you like my explanation .Thanks

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Re: The Economist Reading Comprehension Challenge #2 [#permalink]

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01 May 2013, 11:17
Hi HG

Passage is g8. The way u suggest "how to be an active reader" i read in similar way. Even though face a lot to comprehend but some how reach to the answer.

Q.1,24 gone wrong

Need to explain....................

1.a
2.a
3.c...correct
4.a...correct
5.a
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Re: The Economist Reading Comprehension Challenge #2 [#permalink]

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05 May 2013, 09:50
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Can you explain why the answer for Q2 is B. I believe that B is the view of one economist , and he is advising others. Generally speaking A would fit as best ans.
Manager
Joined: 27 Jan 2013
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Re: The Economist Reading Comprehension Challenge #2 [#permalink]

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08 May 2013, 06:58
Hi,

Thanks for participating. I will post explanations when I am done teaching today.

Happy Studies,

HG.
_________________

"It is a curious property of research activity that after the problem has been solved the solution seems obvious. This is true not only for those who have not previously been acquainted with the problem, but also for those who have worked over it for years." -Dr. Edwin Land

GMAT vs GRE Comparison

If you found my post useful KUDOS are much appreciated.

IMPROVE YOUR READING COMPREHENSION with the ECONOMIST READING COMPREHENSION CHALLENGE:

Here is the first set along with some strategies for approaching this work: http://gmatclub.com/forum/the-economist-reading-comprehension-challenge-151479.html

Manager
Joined: 27 Jan 2013
Posts: 230
GMAT 1: 780 Q49 V51
Re: The Economist Reading Comprehension Challenge #2 [#permalink]

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09 May 2013, 22:42
Hi,

Here is the explanation for question #2.

Happy Studies,

HG.

According to the passage it could be reasonably inferred that some economists:

A. believe that a majority of people behave in ways that can be predicted by standard models
It is tempting to choose this but this isn't stated anywhere in the passage. Just because some economists use the standard models does not mean that these economists believe that a majority of people behave in ways that can be predicted by standard models

B. believe that some exceptions to the standard models of economics can be explained by theories developed in fields outside of economics
The whole article supports this idea but especially paragraph 1 (He wants economists to accept that evidence from other disciplines does not just explain those bits of behaviour that do not fit the standard models.), paragraph 3, and paragraph 5.

C. use only real people as the basis for their economic models
this isn't stated in the passage

D. incorrectly apply the standard economic models to predict the behavior of real people
There is no discussion of how the standard economic models are applied

E. would benefit by drawing information from various competing fields of economics
The article talks about benefit from other scientific fields but not other fields of economics
_________________

"It is a curious property of research activity that after the problem has been solved the solution seems obvious. This is true not only for those who have not previously been acquainted with the problem, but also for those who have worked over it for years." -Dr. Edwin Land

GMAT vs GRE Comparison

If you found my post useful KUDOS are much appreciated.

IMPROVE YOUR READING COMPREHENSION with the ECONOMIST READING COMPREHENSION CHALLENGE:

Here is the first set along with some strategies for approaching this work: http://gmatclub.com/forum/the-economist-reading-comprehension-challenge-151479.html

Intern
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Re: The Economist Reading Comprehension Challenge #2 [#permalink]

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16 Jun 2013, 20:58
Hi,

Can you please exaplin the Third and Fifth question.
And why in third question why option a. is wrong.
Manager
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Re: The Economist Reading Comprehension Challenge #2 [#permalink]

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19 Jun 2013, 06:15
Hi there,

I hope you are well. Here are the explanations for the last three.

Happy Studies,

HG.

3.

The endowment effect makes you give more value to things that you own. So we are looking for an example of the something that is owned that is being given more value than it should have.

According the passage, which of following is an example of the endowment effect?
A. Buying a new car for more money than you had expected to spend because you felt emotionally attached to the brand name.
Nothing is owned
B. Cancelling a vacation which has been planned for six months so that you can avoid missing a potentially lucrative business deal.
Nothing is owned
C. Selling an old coffee mug that you no longer use for more than the market value only because you consider it yours.
You own the mug and you assign it more value because you own it. Correct
D. Putting a high value on your parents furniture because you associate it with childhood memories.
You don't own the furniture
E. Placing a lower value on a baseball card that you plan to buy because you already own a card of comparable value.
This is not endowment effect. This is saying that you have a certain priced card and because of that you don't necessarily need another in that category therefore you are not willing to pay a lot for this other card of comparable value.

4.

Which of the following best expresses the main idea of the passage?
A. To describe some flaws in traditional economic thinking and to recommend a course of action to improve economic models and the accuracy of their predictions.
This has the right content and tone. The passage does describe flaws and then suggests incorporating other fields of study to improve the models. Correct
B. To provide a history of a certain type of economics along with a prediction for its future.
Overall it is not history.
C. To describe a flaw in standard economic theory and provide several examples of how the flaw manifests itself in practical applications.
This is missing the recommendation part.
D. To describe several ways in which economists can benefit from the decision making theories of other fields and provide experimental evidence of these benefits.
There was no experimental evidence of the benefits
E. To propose an adjustment to standard economic theory incorporating new ideas from other scientific fields.
This is close but the ideas from the other fields are not new

5.

The author would most likely agree with which of the following statements?
A. Other sciences outside of economics have developed decision making models which incorporate altruism, kindness, and loss aversion that can accurately predict human behavior.
This goes too far by saying accurately predict human behavior. The models have certain characteristics that are better than the economic models but that's about as far as we can go.
B. Decision making models created by some biologists are superior to models created by economists who adhere to the standard economic models.
We know that the evidence from other fields can help economic models but we do not know if the models of biology are better than the models of economics.
C. Some of the principles that are being incorporated into modern economics contradict the beliefs of some famous classic economists.
We don't know about famous classic economists beliefs
D. Self-interest should not be considered as a major contributor to rational decision making.
Although self-interest is mentioned and the passage says it is overemphasized the passage does not say that it should not be considered a major contributor..
E. Traditional economics has not considered increased pleasure and reduced pain as two distinct sources of happiness.
The passage emphasizes that Economics generally frames people as pleasure seeking but forgets that they are loss averting. CORRECT
_________________

"It is a curious property of research activity that after the problem has been solved the solution seems obvious. This is true not only for those who have not previously been acquainted with the problem, but also for those who have worked over it for years." -Dr. Edwin Land

GMAT vs GRE Comparison

If you found my post useful KUDOS are much appreciated.

IMPROVE YOUR READING COMPREHENSION with the ECONOMIST READING COMPREHENSION CHALLENGE:

Here is the first set along with some strategies for approaching this work: http://gmatclub.com/forum/the-economist-reading-comprehension-challenge-151479.html

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Re: The Economist Reading Comprehension Challenge #2 [#permalink]

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13 Oct 2014, 10:56
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Re: The Economist Reading Comprehension Challenge #2 [#permalink]

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01 Dec 2015, 09:42
Hello from the GMAT Club VerbalBot!

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Re: The Economist Reading Comprehension Challenge #2 [#permalink]

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01 Jun 2016, 15:35
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I think 2 should be A. Considering it is some economist believe ...xyz.... according to the passage
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Re: The Economist Reading Comprehension Challenge #2 [#permalink]

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02 Jun 2016, 03:02
Hi Rachit,

Thanks for participating! Choice A is a trap answer in that it somewhat goes along with the text, and seems believable, but drifts incorrect by being too strong. It's true that some Economists use standard models but it is too far to say that these economists believe that a MAJORITY of people behave in ways that can be predicted by standard models. If "majority" had been switched with "some" then I think you might have a case. But as is, choice A is too strong. If you still feel that choice A is the correct answer, try to find evidence in the passage that supports it. I don't think that you will find anything that you can quote from the passage to support it. Follow up with any questions!

Happy Studies,

A.
_________________

"It is a curious property of research activity that after the problem has been solved the solution seems obvious. This is true not only for those who have not previously been acquainted with the problem, but also for those who have worked over it for years." -Dr. Edwin Land

GMAT vs GRE Comparison

If you found my post useful KUDOS are much appreciated.

IMPROVE YOUR READING COMPREHENSION with the ECONOMIST READING COMPREHENSION CHALLENGE:

Here is the first set along with some strategies for approaching this work: http://gmatclub.com/forum/the-economist-reading-comprehension-challenge-151479.html

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The Economist Reading Comprehension Challenge #2 [#permalink]

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08 Sep 2016, 02:23
HerrGrau wrote:
Hi,

Here is the explanation for question #2.

Happy Studies,

HG.

According to the passage it could be reasonably inferred that some economists:

A. believe that a majority of people behave in ways that can be predicted by standard models
It is tempting to choose this but this isn't stated anywhere in the passage. Just because some economists use the standard models does not mean that these economists believe that a majority of people behave in ways that can be predicted by standard models

B. believe that some exceptions to the standard models of economics can be explained by theories developed in fields outside of economics
The whole article supports this idea but especially paragraph 1 (He wants economists to accept that evidence from other disciplines does not just explain those bits of behaviour that do not fit the standard models.), paragraph 3, and paragraph 5.

C. use only real people as the basis for their economic models
this isn't stated in the passage

D. incorrectly apply the standard economic models to predict the behavior of real people
There is no discussion of how the standard economic models are applied

E. would benefit by drawing information from various competing fields of economics
The article talks about benefit from other scientific fields but not other fields of economics

Hi HG,

I donot understand how Daniel McFadden's optinion can be generalised for some economists.

Regards
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Re: The Economist Reading Comprehension Challenge #2 [#permalink]

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08 Sep 2016, 02:33
Quote:
Hi HG,

I donot understand how Daniel McFadden's optinion can be generalised for some economists.

Regards

Hi there,

Daniel McFadden is "some economists". It's not that we are saying because Daniel McFadden believes something that other economists also believe that thing. Not at all. Daniel McFadden is an economist and believes this so some economists believe this because he is a part of that group. Hope that is helpful to you.

Happy Studies,

A.
_________________

"It is a curious property of research activity that after the problem has been solved the solution seems obvious. This is true not only for those who have not previously been acquainted with the problem, but also for those who have worked over it for years." -Dr. Edwin Land

GMAT vs GRE Comparison

If you found my post useful KUDOS are much appreciated.

IMPROVE YOUR READING COMPREHENSION with the ECONOMIST READING COMPREHENSION CHALLENGE:

Here is the first set along with some strategies for approaching this work: http://gmatclub.com/forum/the-economist-reading-comprehension-challenge-151479.html

Re: The Economist Reading Comprehension Challenge #2   [#permalink] 08 Sep 2016, 02:33
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# The Economist Reading Comprehension Challenge #2

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