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frankqxq
Honestly, I find option E to be a very good answer. Since large companies diversify, regulation on industry will not have as big an impact on large firms as on small firms, since production is diversified. So in fact smaller firms will fare worse when they face industry regulation because they are solely focusing on a single industry. If this doesn't weaken the argument I don't know what does. In addition, option A says small firms have a hard time reserving capital. Sure, large firms can reserve more, but they also need to spend more capital, so that doesn't necessarily make the situation any better.

AndrewN GMATNinja KarishmaB

This was my exact line of reasoning. How is option A superior to E? The passage specifically mentions federal government's safety regulations and industry, and option E attacks both in one fell swoop for the reasons stated by frankqxq.
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frankqxq
Honestly, I find option E to be a very good answer. Since large companies diversify, regulation on industry will not have as big an impact on large firms as on small firms, since production is diversified. So in fact smaller firms will fare worse when they face industry regulation because they are solely focusing on a single industry. If this doesn't weaken the argument I don't know what does. In addition, option A says small firms have a hard time reserving capital. Sure, large firms can reserve more, but they also need to spend more capital, so that doesn't necessarily make the situation any better.

AndrewN GMATNinja KarishmaB

This was my exact line of reasoning. How is option A superior to E? The passage specifically mentions federal government's safety regulations and industry, and option E attacks both in one fell swoop for the reasons stated by frankqxq.
Hello, achloes. To me, answer choice (E) looks more like a strengthener, supporting the argument that large companies do everything on a more massive scale [than small companies] and must alter more complex operations and spend much more money to meet governmental requirements. It takes a major assumption to reason that diversification means less regulation. The regulations could just as easily apply to each arm of the diversified company. We are looking for a hurdle for small companies to meet governmental requirements. Answer choice (A) does just that: if small companies have less capital to devote to meeting governmental safety requirements, then they face an obstacle that larger companies may not face to meet those requirements. This is straight-arrow GMAT logic at its best. Sure, there are real-world concerns that complicate the picture, but (A) directly touches on the argument, whereas (E) rests on the assumption that diversifying allows larger companies to avoid the same safety regulations that would be applied to what, exactly, its parent company exclusively? There is no reason to believe that each subsidiary would not also be subject to the same requirements.

Answer choice (E) fits into what I call a one-step-removed option. If it takes an extra step to link an answer choice to the argument—the exact argument presented in the passage—then that answer choice is almost assuredly incorrect.

Thank you for asking for my input on the question, and good luck with your studies.

- Andrew
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