RC#11 Long Passage {18 mins - 3/4 correct}
Paraphrasing:
Para 1: Circumstances which drives founding of specialist firms at low density and high density, their hinge on the interplay between legitimation and competitive forces
Para 2: The study shows economic model to be valid despite possible level of inconsistency occurred in multi-level analyses that can suggest if an industry is multi-domestic (density dependence model) or globally integrated (patterns of founding), which depends on, legitimation and competitive force understanding level at national and international, accessibility of information and media, and founding effects on oversea. E.g., if any specialist firm is successful in US or small city, state, national or international, factors to be successful will vary depending on industry model and pattern of founding.
1. According to the passage, which of the following may account for
the inconsistency between
the general density dependence model and
the evidence provided by certain studies of foundings?
(A) Such studies have overemphasized the impact of pre-existing firms on the establishment of new firms.
Wrong: as mentioned in para 2, studies of impact of pre-existing firm is not mentioned, it gives information only to “While several studies have found a significant correspondence between the density dependence model and actual patterns of foundings”
(B) Such studies have not focused strongly enough on the role of competition among newly established firms operating at the city and state levels.
Wrong: as mentioned in para 2, last line, it does focus by stating sentence as,” Even within national contexts, studies have found more support for the density dependence model when they employ broader geographic units of analysis--for example, finding that the model's operation is seen more clearly at the state and national levels than at city levels”
(C) Such studies fail to differentiate among specialist firms with regard to the degree to which they deviate from familiar forms of organization.
Wrong: Passage does differentiate specialist firm in terms of, Circumstances which drives founding of specialist firms at low density and high density, their hinge on the interplay between legitimation and competitive forces
(D) Such studies have not taken into account the fact that many industries are internationally integrated.
Correct: as mentioned in passage, in para 2, “Thus a national-level analysis can understate the true legitimation and competitive forces as well as the number of foundings in an industry that is internationally integrated.”
(E) Such studies have neglected to investigate firms that attempt to serve only a narrow target market
Wrong: as per para 1, 1st line, studies have not neglected, “The general density dependence model can be applied to explain the founding of specialist firms (those attempting to serve a narrow target market)”
2. In the second paragraph, the author is primarily concerned with
(A) noting various exceptions to a certain general finding – Wrong: No expectation were discussed
(B) examining the impact of one type of industry on another – Wrong: No examining the impact is mentioned
(C) proposing a possible explanation for an inconsistency
Correct: as mentioned in the para 2, “A possible explanation for this inconsistency is that legitimation and competitive forces transcend national boundaries, while studies typically restrict their analysis to the national level.”
(D) providing specific examples of a particular phenomenon – Wrong: Trap! But it’s not a phenomenon, it’s a study, as mentioned in the para 2, 1st line, “While several studies have found a significant correspondence between the density dependence model and actual patterns of foundings, other studies have found patterns not consistent with the model”
(E) defending the validity of a particular study's conclusions – Wrong: Not mentioned in the passage
3. The passage suggests that when a population of specialist firms reaches a high density level, which of the following is likely to occur?
at low density--> legitimation Effect >> Competition Force
at high density--> Competition Force >> Legitimation Effect
(A) Foundings will decline despite legitimation that has occurred in these industries.
Correct: Founding will decline, as legitimation decreases
(B) Increasing competition will encourage many firms to broaden their target market
(E) Firms will begin to cross national borders in an attempt to gain a competitive advantage
Wrong: Market is already a high density, broaden impact or finding new market attempt would be low
(C) Competition for resources will become stabilized and thus foundings will be encouraged
(D) Many customers will abandon their loyalty to older firms as more innovative firms enter the market
Wrong: as mentioned in passage, it occurs at lower density, “Competition occurs because the resources that firms seek--customers, suppliers, and employees--are limited, but as long as density is low relative to plentiful resources, the addition of another firm has a negligible impact on the intensity of competition”
4.The primary purpose of the passage is to
A. question the validity of an economic model
Wrong in fact, it does explain
B. point out some inconsistencies within an economic model
Wrong Trap! but passage does also explains the reason
C. outline an economic model and suggest revisions to it
Wrong – Out of scope
D. describe an economic model and provide specific examples to illustrate its use
Wrong: Trap, passage does describe economic model, and provide specific examples, bit does not give any information on the usage of economic model.
E. explain why an economic model remains valid despite inconsistent research results
Correct: as mentioned in the passage,” A possible explanation for this inconsistency is that legitimation and competitive forces transcend national boundaries, while studies typically restrict their analysis to the national level”