Statement of a United States copper mining company: Import quotas shou

Question

Statement of a United States copper mining company: Import quotas should be imposed on the less expensive copper mined outside the country to maintain the price of copper in this country; otherwise, our companies will not be able to stay in business.

Response of a United States copper wire manufacturer: United States wire and cable manufacturers purchase about 70 percent of the copper mined in the United States. If the copper prices we pay are not at the international level, our sales will drop, and then the demand for United States copper will go down.

If the factual information presented by both companies is accurate, the best assessment of the logical relationship between the two arguments is that the wire manufacturer’s argument

(A) is self-serving and irrelevant to the proposal of the mining company

(B) is circular, presupposing what it seeks to prove about the proposal of the mining company

(C) shows that the proposal of the mining company would have a negative effect on the mining company’s own business

(D) fails to give a reason why the proposal of the mining company should not be put into effect to alleviate the concern of the mining company for staying in business

(E) establishes that even the mining company’s business will prosper if the mining company’s proposal is rejected

KarishmaB · Accepted Answer

Copper mining company: Copper mined outside US is cheaper. Have an import quota on it (e.g. only 100k tonnes can be imported every year etc). Else, we will need to reduce our prices (else copper users will buy from outside US for all their needs). We need to maintain our higher prices to stay in business.

Copper using company: We buy 70% of our copper from US. If we don't pay cheaper prices, we will not be competitive and our sales will go down. So demand for US copper will go down. (In effect saying that then we will not be able to buy much from you anyway since our demand would be low)

The Copper using company's argument is...

(A) is self-serving and irrelevant to the proposal of the mining company
It is not irrelevant to the mining company's proposal. It makes a point why mining company's proposal will hurt the mining company itself.

(B) is circular, presupposing what it seeks to prove about the proposal of the mining company
It is not circular. It does not presuppose what it sets out to prove. It tells why lower prices of copper are needed for both - mining companies and wire manufacturers

(C) shows that the proposal of the mining company would have a negative effect on the mining company’s own business
True. It shows how lower prices would reduce the demand for US copper and hence hurt the mining companies themselves. This is the answer

(D) fails to give a reason why the proposal of the mining company should not be put into effect to alleviate the concern of the mining company for staying in business
It does not fail to give a reason why mining company's proposal should not be put in effect. It gives a reason why it should not be put in effect.

(E) establishes that even the mining company’s business will prosper if the mining company’s proposal is rejected
It talks about how mining company's business will be harmed if the proposal is accepted. It does not say that their business will prosper if the proposal is rejected. The business may still not "prosper" if the proposal is rejected.

Answer (C)

sananoor · Answer

Must Be C
As per Mining company, import quotas on less expensive copper mined outside will increase market price of copper within US but what if maximum of copper is purchased within US. The price will go up and finished good made from copper will be expensive. so in the end, companies might start buying copper at international level. So the proposal of copper mining will give negative impact.

TaN1213 · Answer

Breaking the premise down :

P1 states that import quotas should be put on less expensive copper(mined outside the country) while the company should not have any restriction on the expensive copper (mined inside the country). Copper Mfg won't be able to stay in business if there are restrictions imposed on expensive copper.

P2 responds that Wire Mfg company buys a good chunk of Expensive copper(mined inside the country). So, if there are no quotas on on expensive copper than sales of wire will decrease and hence, the demand of copper, hurting the business of Copper Mfg.

C --> shows that the proposal of the mining company would have a negative effect on the mining company’s own business

PS: Although the logic is legitimate, I am not sure about the correctness of imposing Import Quotas on something mined  inside  the country.
Of course, there is no explicit mention of imposing those on copper mined inside the country but, since the Wire Mfg. talks only about the copper  mined inside the United States , the imposition of Import Quotas on that seems to be flawed in its very meaning. 
 GMATNinja  , Request your insights if I am missing something. Thank you.

rajamech · Answer

Mining company is favoring import quota for cheap imports 
and Wire manufacturer is going for cheap prices of copper they get from international market...

as wire manufacturer says that they consume 70% of copper from US origin.. 
they use 30% from outside and if prices of 30% of copper will increase , the demand for 
70% copper will also decrease ...due to lack of overall demand

SO proposal of Mining company will have negative impact on itself...

SO C is the ans

sqube · Answer

(A) is self-serving and irrelevant to the proposal of the mining company: WRONG
REASONING: the response of copper wire manufacturers is self-serving but not 'irrelevant to the proposal of the mining company'. 
His statement asks Mining companies to look at the other aspect which they have missed for their own survival.

(B) is circular, presupposing what it seeks to prove about the proposal of the mining company:WRONG
REASONING: the response of copper wire manufacturers is NOT circular.
His statement asks Mining companies to look at the other aspect.

(C) shows that the proposal of the mining company would have a negative effect on the mining company’s own business: CORRECT
REASONING: The wire manufacturers elaborates that if prices of copper are maintained at current levels, the production cost will be more leading to low sales and subsequently low demand for copper. This low demand would impact Mining companies adversely.

(D) fails to give a reason why the proposal of the mining company should not be put into effect to alleviate the concern of the mining company for staying in business. WRONG
REASONING: Wire manufacturers has NOT failed to give proper reasoning.They have very well explained why the proposal of the mining company may not be beneficial for their own good.

(E) establishes that even the mining company’s business will prosper if the mining company’s proposal is rejected: WRONG.
REASONING: Wire manufacturers never mentions that business will prosper if the mining company’s proposal is rejected.

Paras96 · Answer

(C) shows that the proposal of the mining company would have a negative effect on the mining company's own business.

The mining company argues that import quotas should be imposed to maintain copper prices in the country, claiming that this is necessary for their business to stay in business. The wire manufacturer counters this by pointing out that if the copper prices remain high due to import quotas, it would negatively affect their sales and demand, which would, in turn, impact the demand for United States copper. This highlights that the mining company's proposal could have negative consequences for their own business and undermines the idea that imposing import quotas would be universally beneficial for all sectors of the industry.

Auror_07 · Answer

In layman language, mining company says copper prices have to be increased for copper companies to survive, and the copper wire manufacturer says if we increase the price, sales will drop as consumers won't be willing to pay a higher price than what is the standard price internationally, hence demand will go down.

If demand goes down, why would the mining company continue to import mines from outside the country, even if they do why would the manufacturers buy the copper ores from the mining company? So in effect, the mining company's proposal is suicidal.

SatvikVedala · Answer

So the argument here says
The percentage of domestic copper utilized by cable manufacturers: 70%
The percentage of imported copper utilized by cable manufacturers: 30%
let x be the price paid to domestic producer & y be the price paid to imported copper vendor

if, 0.7*x + 0.3*y <= international level for copper purchase => sales will drop & demand for United States copper will go down.

so if as per the proposal copper mining company, the imported copper price were increased, then it would harm domestic mining companies

InnerDawn · Answer

Hi  bb ,  karishma ,

Method of reasoning is one of my weaker topics. Can you please suggest some articles / question bank? Thanks.

KarishmaB · Answer

Here is a discussion on how to handle Method questions: https://youtu.be/uA5aXAZI1Z8 and here are some discussions on CR Method Examples: https://youtu.be/wHlmmLzIx3Q https://youtu.be/aSxoF2pcUXg https://youtu.be/eclgaWnIWag https://youtu.be/1K-6xTc8SZc https://youtu.be/0DsRnDAb8uQ

Statement of a United States copper mining company: Import quotas shou

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Statement of a United States copper mining company: Import quotas shou

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