If government regulations prohibit cable companies from establishing m

Question

If government regulations prohibit cable companies from establishing monopolies, more companies will enter the market to provide cable television services. If consumers have more cable companies to choose from, consumers will be able to choose the provider that is the least expensive. When consumers have choices in choosing a vendor, vendors must compete on price and on customer service, leading to reduced prices and better customer service.

Which of the following must be true if the statements are true? 
A. The government should prohibit cable companies from establishing monopolies. 
B. Competition in a industry sometimes leads to lower pricing.
C. Not all industries would see improvement in customer service if there were more vendors in the industry. 
D. Customers will always choose the least expensive provider of a service. 
E. The cable company, which presently holds a monopoly, will improve its customer service if other companies are allowed to provide cable services in the same market.

DinoPen · Answer

If government regulations prohibit cable companies from establishing monopolies, more companies will enter the market to provide cable television services. If consumers have more cable companies to choose from, consumers will be able to choose the provider that is the least expensive. When consumers have choices in choosing a vendor, vendors must compete on price and on customer service, leading to reduced prices and better customer service.

No monopolies -> More companies
More Companies = Cheaper products
Companies compete on Price + Customer service leading to decreased price and increased service.

Which of the following must be true if the statements are true?

A. The government should prohibit cable companies from establishing monopolies.
 There is no indication that the government SHOULD prohibit a company from becoming a monopoly. This is merely a conditional 'what if' situation.

B. Competition in a industry sometimes leads to lower pricing.
 Yes. Based on the second and third arguments, we can infer that competition will lead to lower pricing. 
 
C. Not all industries would see improvement in customer service if there were more vendors in the industry.
 We can't infer this since there is not 'black sheep' industry to base this justification.

D. Customers will always choose the least expensive provider of a service.
 We can't infer this since there is no indication that a customer will ALWAYS choose the cheapest option.

E. The cable company, which presently holds a monopoly, will improve its customer service if other companies are allowed to provide cable services in the same market.
 This is directly contradictory of what the argument states. The assumption here is that since the cable company has a monopoly, there would not be any other company coming into the market.

Sumi1010 · Answer

This is a MUST BE True question, so the inference should not have any detail that is not mentioned in the argument.

A. The government  should  prohibit cable companies from establishing monopolies.
 The argument says "If government regulations prohibit ...". There is no suggestion here. 
B. Competition in a industry sometimes leads to lower pricing.
 The argument says "vendors must  compete  on price and on customer service,  leading  to reduced prices.." Looks correct. 
C.  Not all  industries would see improvement in customer service if there were more vendors in the industry.
 The argument just talks about cable companies and does not name any industry for exclusion.  
D. Customers will  always  choose the least expensive provider of a service.
 Too strong tone. " consumers will be able to choose" does not imply that consumers will always do so. Despite they have the ability to choose least expensive, they can choose other provider for some particular reason e.g. brand, social status etc.  
E. The cable company, which presently holds a monopoly, will improve its customer service if other companies are allowed to provide cable services in the same market.
 The argument just says "If government regulations  prohibit  cable companies from establishing monopolies" . It has no mention of those already holding monopolies.

B  is correct.

chillbrorelax · Answer

Notice that the stimulus presents  multiple conditional statements . In such cases, inference would mean  to connect the conditions  to find must be true case. I will use some notations to make these conditions appear more clearly.

not M = regulations prohibit establishing monopolies
MCC = more cable companies enter market to provide their services
MCH = consumers have more cable companies to choose from
ALE = consumers able to choose the least expensive
VC = Vendors compete on price and services
RP + BS = Reduced prices, better services

not M -> MCC
MCH -> ALE
MCH -> VC -> RP+BS

We shall expect an answer derived from one of these conditions. 
A. The government should prohibit cable companies from establishing monopolies.
 This is a classic trap that presents  a condition as an assertion.  Notice that the author did not make any claims. The stimulus contains only a set of statements.  Eliminate.

B. Competition in an industry sometimes leads to lower pricing.
 We can easily see that this is related to third condition we have seen above.  Let's keep this .

C. Not all  industries  would see  improvement in customer service  if there were  more vendors in the industry . 
 This a  broad conclusion . "Industries" is too big a domain to mention "cable companies". But since "improvement in customer service" and "more venders" are present in the stimulus,  let's keep this  as well.

D. Customers will  always  choose the least expensive provider of a service.
 Another trap answer:  extreme answer choice.  This variable is bound in a condition, so we cannot state that customers will "always" choose the least expensive.  Eliminate.

E. The cable company, which  presently  holds a monopoly, will improve its customer service if other companies are allowed to provide cable services in the same market.
  Present situation is not described  in the stimulus at all.  Eliminate.

Now we shall compare the two options B, and C.
Notice that C states a broad conclusion. Moreover, as we try to confirm with the conditional statements given, we find that  MCC is not directly connected to BS . Instead, it is MCH that is connected with BS. Hence, this information could be true.

Whereas, B states a conclusion that can be readily be confirmed.  VC -> RP .  In this statement, "an industry" is again used to describe "cable companies", but the statement mentions "sometimes" to balance this out.  Conclusion does NOT needs to mention both RP and BS. Hence,  eliminate C .  IMO, B is the answer.

Crytiocanalyst · Answer

A. The government should prohibit cable companies from establishing monopolies.
This is not explicitly stated in the passage , only the demerits is portrayed in the passage there might be cases where monopolies might be useful-Hence out

B. Competition in a industry sometimes leads to lower pricing.
This is an exact reasoning that can be infered from the passage -Hence in

C. Not all industries would see improvement in customer service if there were more vendors in the industry.
This is thoroughly out of contest and cannot be infered from the given passage -hence out

D. Customers will always choose the least expensive provider of a service.
Similar reasoning as C -Hence out

E. The cable company, which presently holds a monopoly, will improve its customer service if other companies are allowed to provide cable services in the same market
May be the cable opreaters might completly shut down their operations and might not provide cable operations -Hence out 
Therefore IMO B

sssanskaar · Answer

I can see one issue in the reasoning of others who have mentioned that option E is incorrect only because it is stating the scenario in the current time while the argument is stating a hypothetical scenario. I don't think that is correct because option E has explicitly mentioned that the current scenario is following/having all the details mentioned in the hypothetical scenario of the argument.

Having said that, option E is definitely wrong because the argument states the vendors will COMPETE for prices and customer service, not that a particular vendor will DEFINITELY REDUCE prices or IMPROVE customer service.
One good example of this case is in: https://gmatclub.com/forum/if-governmen ... l#p2829757

VerbalBot · Answer

Automated notice from GMAT Club VerbalBot:

A member just gave Kudos to this thread, showing it’s still useful. I’ve bumped it to the top so more people can benefit. Feel free to add your own questions or solutions.

This post was generated automatically.

If government regulations prohibit cable companies from establishing m

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards

GMAT Critical Reasoning (CR) Questions

If government regulations prohibit cable companies from establishing m

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards