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1.
(A) Such studies have overemphasized the impact of preexisting firms on the establishment of new firms. it doesnt mention the impact of preexisting firms as the inconsistency factor

(B) Such studies have not focused strongly enough on the role of competition among newly established firms operating at the city and state levels. no thats what they have done

(C) Such studies fail to differentiate among specialist firms with regard to the degree to which they deviate from familiar forms of organization. doesnt mention about deviation of firms from familiar forms of organization

(D) Such studies have not taken into account the fact that many industries are internationally integrated. CORRECT- YES paragraph 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. No they have focused on these type of firms

4.
(A) question the validity of an economic model - doesnt question but just says there is some consistency with it

(B) point out some inconsistencies within an economic model- just the second paragraph

(C) outline an economic model and suggest revisions to it - the second part is wrong revisions? doesnt mentions that

(D) describe an economic model and provide specific examples to illustrate its use - second part wrong, doesnt provide specific examples to illustrate its use

(E) explain why an economic model remains valid despite inconsistent research results -CORRECT explains what this model is used to explain the foundings of specialist firms, and despite soem inconsistecies with it is still a good model for national use.
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Dear Experts,

Regarding the last (main purpose) question, why is option C not correct?

The passage does suggest revision, "many industries are becoming international, and since media and information easily cross national borders, so 'should' legitimation and its effects on overseas founding"

Isn't the use of word 'should' suggesting a revision?

Kindly help resolve

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Dear Experts,

Regarding the last (main purpose) question, why is option C not correct?

The passage does suggest revision, "many industries are becoming international, and since media and information easily cross national borders, so 'should' legitimation and its effects on overseas founding"

Isn't the use of word 'should' suggesting a revision?

Kindly help resolve

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Hi sagarsangani123,

Option C is incorrect, as author is not suggesting revision to the model, he is suggesting that studies of the model should be revised, and that can be inferred from the lines before the above mentioned sentence: "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. Many industries are or are becoming international, and since media and information easily cross national borders, so should legitimation and its effects on overseas foundings. ". Author actually stands by the general dependency model.


Hope This Helps.
Thanks.
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I have heard from few video tutorials that if the given passage is tough to understand , the questions would be comparatively easier to answer. I feel this question is an excellent example for this . Even though the context and the terms used seems intimidating, the questions are rather direct.
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Question #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 preexisting firms on the establishment of new firms.
(B) Such studies have not focused strongly enough on the role of competition among newly established firms operating at the city and state levels.
(C) Such studies fail to differentiate among specialist firms with regard to the degree to which they deviate from familiar forms of organization.
(D) Such studies have not taken into account the fact that many industries are internationally integrated.
(E) Such studies have neglected to investigate firms that attempt to serve only a narrow target market.

We need to find an option that tells us the reason for the inconsistency between the general density dependence model and the evidence provided by certain studies of foundings. In para 2, line 3-6, it is said that - “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”. This leaves us with option D as the right answer.

Question #2. In the second paragraph, the author is primarily concerned with

(A) noting various exceptions to a certain general finding
(B) examining the impact of one type of industry on another
(C) proposing a possible explanation for an inconsistency
(D) providing specific examples of a particular phenomenon
(E) defending the validity of a particular study's conclusions


The second paragraph mainly talks about the possible explanation for why there is an inconsistency between several studies that have found a significant correspondence between the density dependence model and actual patterns of foundings, and other studies that have found patterns not consistent with the model. This is closest to option C. Hence C is the right answer.

Question #3.The passage suggests that when a population of specialist firms reaches a high density level, which of the following is likely to occur?

(A) Foundings will decline despite legitimation that has occurred in these industries.
(B) Increasing competition will encourage many firms to broaden their target market.
(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.
(E) Firms will begin to cross national borders in an attempt to gain a competitive advantage.

Para 1, line 12-
“At high density levels, however, competitive effects outweigh legitimation effects, discouraging foundings.”

This is stated in option A. Hence A is correct.

Question #4.The primary purpose of the passage is to

(A) question the validity of an economic model
(B) point out some inconsistencies within an economic model
(C) outline an economic model and suggest revisions to it
(D) describe an economic model and provide specific examples to illustrate its use
(E) explain why an economic model remains valid despite inconsistent research results.

The passage starts by talking about the general density dependence model. It says that according to this model, specialist foundings hinge on the interplay between legitimation and competitive forces. It talks about what happens at low density population levels and high density population levels. The second paragraph talks about the inconsistency between several studies that have found a significant correspondence between the density dependence model and actual patterns of foundings, and other studies that have found patterns not consistent with the model. It also states that a possible explanation for the inconsistency is that legitimation and competitive forces transcend national boundaries, while studies typically restrict their analysis to the national level. He affirms how this can understate the true legitimation and competitive forces as well as the number of foundings in an industry that is internationally integrated. He justifies the validity of the general density dependence model.

Option A- The author does not question the validity of the density dependence model rather he justifies it. Incorrect
Option B- The tone or the stand of the author is not neutral. The author is clearly justifying the validity of the density dependence model. Hence incorrect
Option C- The author does not suggest any revisions to the model. Eliminate C
Option D- The author does not merely state the use of the model. The purpose is not to illustrate its use. It is to justify the validity of the density dependence model. Eliminate D
Option E- This is our answer. The author explains why the density dependence model remains valid despite inconsistent research results. Hence E is correct.

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Hi GMATNinja AjiteshArun,

I am confused with one sentence in the passage.
Could you please shed some light on it? Many thanks!

"According to this model, specialist foundings hinge on the interplay between legitimation and competitive forces, both of which are functions of the density (total number) of firms in a particular specialist population."

What does the word "functions" mean here?

According to Cambridge and Webster dictionaries, function, besides its core meaning "purpose," could also mean "result" or "value" ( as in the mathematical correspondence, f(X), that we have to deal with in the Quant section). But I do not think that "functions" mean "result" in this sentence, as it seems that legitimation and competitive forces affect the density number, not the other way around. I am not either sure whether "functions" refer to a mathematical correspondence here--that seems odd in the verbal section.

Or, have I understood this passage incorrectly? Is the density number that affects the legitimation and competitive forces?

At low density levels, each founding increases legitimation, reducing barriers to entry and easing subsequent foundings. 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. At high density levels, however, competitive effects outweigh legitimation effects, discouraging foundings. The more numerous the competitors, the fiercer the competition will be and the smaller will be the incentive for new firms to enter the field.

My understanding of the cited-above section is that since legitimation reduces barrier to entry and eases subsequent foundings, legitimation has a positive impact on the density number (the more legitimate the industry becomes, the more entrepreneurs will be encouraged to enter into the industry and the higher the density level would be). By contrast, competition has a negative impact on the density number. While it could be offset by legitimation effects at low density levels, it is too great to bear at high density levels and discourages founding. (However, the passage does not mention whether the density level will then fall or will remain at a high level as is, but lack new players.)

Sorry if this question is more like one on terminology, but I am really confused with the meaning of "functions," afraid that I will mistake it if it appears in another RC passage. Meanwhile, I also hope to confirm whether I have understood this passage correctly.

Thanks in advance for your explanation. :)
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Sorry if this question is more like one on terminology, but I am really confused with the meaning of "functions," afraid that I will mistake it if it appears in another RC passage. Meanwhile, I also hope to confirm whether I have understood this passage correctly.
Hi GraceSCKao,

It's a good thing you looked the word up in a dictionary. It's what I do when I come across something new, something I'm not familiar with. Here's a link to the definition of function (Noun (3): "A thing dependent on another factor or factors."). So if X is a function of Y, it could mean that X depends on Y (for example, an increase in Y leads to an increase in X).

You may want to go through that part of the passage again. Follow-up questions, as always, are welcome.

GraceSCKao
Or, have I understood this passage incorrectly? Is the density number that affects the legitimation and competitive forces?
Yes. That part of the passage means that "the density (total number) of firms" affects both "legitimation" and "competitive forces". In other words, depending on what D is, both L and C will behave differently (as they depend on D).
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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”
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GraceSCKao
Sorry if this question is more like one on terminology, but I am really confused with the meaning of "functions," afraid that I will mistake it if it appears in another RC passage. Meanwhile, I also hope to confirm whether I have understood this passage correctly.
Hi GraceSCKao,

It's a good thing you looked the word up in a dictionary. It's what I do when I come across something new, something I'm not familiar with. Here's a link to the definition of function (Noun (3): "A thing dependent on another factor or factors."). So if X is a function of Y, it could mean that X depends on Y (for example, an increase in Y leads to an increase in X).

You may want to go through that part of the passage again. Follow-up questions, as always, are welcome.

GraceSCKao
Or, have I understood this passage incorrectly? Is the density number that affects the legitimation and competitive forces?
Yes. That part of the passage means that "the density (total number) of firms" affects both "legitimation" and "competitive forces". In other words, depending on what D is, both L and C will behave differently (as they depend on D).

Hi AjiteshArun

Thank you so much for your elaboration. :)
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everyone says that the author praises the model for E to be correct in last question but i wanna know where?
i see that author simply points to the inconsistencies
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Q4) Options C and E
The passage’s primary focus is not on proposing revisions to the density dependence model but on explaining why inconsistencies in research results do not undermine the validity of the model. The author argues that inconsistencies arise because the model is not applied broadly enough, especially regarding international and geographic contexts. This suggests that the model remains fundamentally valid, but better contextual understanding is needed for accurate results.
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The primary purpose of the passage explain why an economic model remains valid despite inconsistent research results.

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.

The highlighted point is the key for this answer.

para 1: Explain GDD model

Para 2: Inconsistency and why it occurs. It is because the studies are not using the model in right way. They are making error of not taking the international integration status of founding. This wrong approach creates inconsistency not because the model is wrong.
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