Transportation developments have greatly influenced the pace and cours

Question

Transportation developments have greatly influenced the pace and course of business growth in America. The early turnpike and the canal systems each broadened the market area by lowering costs and speeding distribution. But the influence of railroads dwarfed all of these previous developments. Railroads pioneered many aspects of business administration and enhanced some land values enormously. They also had an important impact on the growth of certain cities. Atlanta, for example, was transformed from a spot in the wilderness to a thriving metropolis as a result of the construction of the Western and Atlantic Railroad.

Railroads also provided a large outlet for savings.Their capital requirements were so great that they provided the first big opening for the investment banker – who by the end of the 19th century was in control of many railroads. Railroads, too, because of the stress of competition, both in construction and operation, were the first big firms to experiment with new forms of business organization such as pools and consolidation. It followed – because railroads were so vital to the nation and because their performance was tied in with the business cycle – that the highways which came later were the first form of business to have their operations regulated in large degree by the government.

Finally, railroads were responsible for a great many jobs, at one time more than 2,000,000 workers. Railroads were easily the nation’s largest employers during the post-Civil War, pre-World War I period. In addition they were responsible, indirectly, for tens of thousand of other jobs in the coal, iron, steel, and engineering industries – in such big enterprises, for example, as the Pullman Palace Car Company and the Westinghouse Air Brake Company. \ The Pullman Company, in 1909, was the eighth largest firm in the nation in terms of assets, and practically all of its output went to American railroads. Railroads, actually, were to the period 1850-1915 what the auto industry is to today in terms of being the pacesetter or bellwether of the economy. The biggest difference is that no one railroad ever dominated the rail industry as Ford and GM once dominated the auto industry.   1 
 1. Which of the following can be logically inferred from the passage?

A) Early turnpike and canal systems were not largely regulated by the U.S. government
B) Current automakers directly employ more workers than did the railroad industry
C) The Pullman Car Company had more assets than the Westinghouse Brake Company
D) Railroads dramatically increased the land values in Atlanta
E) Highways are more regulated today than railroads.

2 
 2. It can be inferred from the passage that the railroad system:

A. Had a greater influence on American markets than the American highway system
B. Required more capital than any other business before
C. Increased all land values across the U.S.
D. Involved strong competition among the companies that formed it
E. Created more employment than any industry before.

3 
 3. During the post-Civil War, pre-World War I period, if the railroad business was declining it could be expected that:

A. Investment banking would decline
B. Land values would decline
C. Production at the Pullman Company would decline
D. U.S. savings would decline
E. Car production would increase

Moderators: Kindly collate this post with  https://gmatclub.com/forum/transportation-developments-have-greatly-influenced-the-pace-and-cours-218527.html  It has only one question.

HG0815 · Accepted Answer

This is my reasoning. I hope this can helpful to all.

1. Which of the following can be logically inferred from the passage?

A) Early turnpike and canal systems were not largely regulated by the U.S. government
 -> Correct.
 Last sentence of 2nd paragraph : 
 that the highways which came later were the first form of business to have their operations regulated
 in large degree by the government
 We can infer that before the highways, there was no regulation about turnpike and canal system 
 
B) Current automakers directly employ more workers than did the railroad industry
 -> Not mentioned. We cannot assume about this. There is no information about this.
C) The Pullman Car Company had more assets than the Westinghouse Brake Company
 -> Not mentioned. We cannot assume about this. There is no information about this.
D) Railroads dramatically increased the land values in Atlanta
 -> I confused between A and D, but I do not select D
 There is a possibility that a spot in wilderness is more valuable, for example,
 if there is huge gold mine, it can be more values than a thriving metropolis.
 We can find correct information about A, but hard to find correct information about D. 
E) Highways are more regulated today than railroads.
 -> Not mentioned. We cannot assume about this. There is no information about this.

2. It can be inferred from the passage that the railroad system:

A. Had a greater influence on American markets than the American highway system
 -> Not mentioned. We cannot assume about this. There is no information about this.
B. Required more capital than any other business before
 -> Not mentioned. We cannot assume about this. There is no information about this.
C. Increased all land values across the U.S.
 -> Not mentioned. We cannot assume about this. There is no information about this.
D. Involved strong competition among the companies that formed it
 -> Correct.
 4th line of second paragraph :
 Railroads,too,because of the stress of competition, both in construction and operation
E. Created more employment than any industry before.
 -> Not mentioned. We cannot assume about this. There is no information about this.

3. During the post-Civil War, pre-World War I period, if the railroad business was declining it could be expected that:

A. Investment banking would decline
B. Land values would decline
C. Production at the Pullman Company would decline
D. U.S. savings would decline
E. Car production would increase

C is correct. 
 We have to see the word position about 'the post-Civil War, pre-World War 1'
 3rd paragraph has that contents about this
 'In addition they(Railroads) were responsible,indirectly, ~ for example, 
 as the Pullman Palace Car Company,in the Westinghouse Air Brake Company.'
 From this sentence, we can infer that without Railroads, Pullman Palace Company's
 car manufacturing would decline.

mallya12 · Answer

GMATNinja ,  workout ,  GMATNinjaTwo ,  u1983 ,  SajjadAhmad ,  Gnpth

In Q1 I understand A is right, but why is option D wrong. Is it because of the word dramatically??
Please explain.

Thank You

Mohammad Ali Khan · Answer

My logic says, since it is a inference question and the information directly stated should not be considered as a inferred information. If you see A you are extracting it using other information that talks about highway n government.

hope it helps.

hope it helps.

warrior1991 · Answer

Read these lines in first paragraph.

It is told that Railroad had important impact on the growth of certain cities. Atlanta is one such example .
Nowhere Atlanta is mapped to (increased land values) i.e option D.

We cannot infer option D. Hence incorrect.

warrior1991 · Answer

VeritasKarishma   GMATNinja   AjiteshArun   generis

I marked B for question 2 after reading below lines.

I though that first big opening for the investment banker means such a huge capital was never required before by any other industry.

Please help.

KarishmaB · Answer

You cannot establish that they required more capital than any other business before. Perhaps setting up a bank requires more capital but there were rich houses who had already invested such money in setting up banks. Perhaps these rich houses did not want to invest in railways. 
All we know is that railways provided the first big opening for investment bankers. Perhaps this method of obtaining capital wasn't popular before and came about later while railways were coming up on the scene and they provided the first big opportunity to investment bankers.

Usually, until the passage explicitly mentions a superlative relation (biggest, largest, most...), we cannot establish it because a lot of other scenarios are possible.

Here, the passage mentions "... because of the stress of competition..." and hence we can easily conclude (D).

PriyankaPalit7 · Answer

3. During the post-Civil War, pre-World War I period, if the railroad business was declining it could be expected that:

A. Investment banking would decline
B. Land values would decline
C. Production at the Pullman Company would decline
D. U.S. savings would decline
E. Car production would increase

I understand that the passage mentions the following
“The Pullman Company, in 1909, was the eighth largest firm in the nation in terms of assets, and practically all of its output went to American railroads.” .
This means that all of the Pullman Company's output goes to American Railroads. But this does not necessarily mean that American Railroads constituted only of Pullman Company's output. Many more companies (Eg. Westinghouse Air Brake Company) could direct their output towards American Railroads.
So, how can we infer that if the railroad business was declining, production of Pullman Company's production was most probably declining too?
It is quite possible that Pullman company's production remained constant while the output of other contributing companies decreased?

This is a COULD BE TRUE ( could be expected) question. I believe that any option Could be True unless it is proved False by the contents of the passage. Following this logic, any of the options could be true because none are proved false by the passage.

GMATNinja   VeritasKarishma  I request your reply here. Thanks in advance !

KarishmaB · Answer

This is not a "could be true" question. It is "can be expected" question. To be more precise, which option can be expected to be true (as per the passage). The passage would give us some information which would direct us to believe that the answer would be true.

The post civil war pre world war period is discussed in third paragraph. At the same place, they mention that Railroads were the only client of Pullman. Logically, if your only client experiences a dip in business, it is expected that you will feel the brunt too. So it can be expected that Pullman would see a decline in production. It is not necessary but it is expected.

None of the other options are strong enough.

A. Investment banking would decline
It plays a role at the set up phase of railroads. We don't know how it will get affected later. Also, investment banking may have had many clients.

B. Land values would decline
We know that land values of some places went up due to railroad construction. Will the slowdown in business bring general land values down, cannot say.

D. U.S. savings would decline
No logic to say that.

E. Car production would increase
No logic to say that.

kanikab · Answer

VeritasKarishma

Can you please help with why option E is incorrect in the first Q.

Thanks.

KarishmaB · Answer

The passage talks about the past - not what is true today. We don't know what the situation is today. Are highways more regulated? What do we mean by regulated? The passage tells us that when highways started, their operations were regulated by the government. Are their operations still regulated by the govt? What about the operations of the railways? We have no idea. 
We cannot say whether (E) is true.

Hahahehe · Answer

How is the logic for rejecting A any different than logic for accepting C ? One could argue:
For A: investment banks got this kind of big opportunity for the first time. If the business in what they invested was going down, the banking would decline too, as they were heavily invested in it. No doubt they could be invested in other ventures as well.
For C: Pullman's produce was consumed by the railways. But if railways business was declining, they could sell their produce to someone else. 
Basically, as easily we can assume that investment banks could be invested elsewhere, so we assume that Pullman could sell their produce elsewhere.

What is making assuming one thing more likely than the other?

richirish · Answer

They also had an important impact on the growth of certain cities. Atlanta, for example, was transformed from a spot in the wilderness to a thriving metropolis as a result of the construction of the Western and Atlantic Railroad.
D looks much stronger to me, don't buy the OE from Veritas Prep

ahujaparth10 · Answer

Wouldn't people lose their jobs which could result in a decline in savings?

Harsh9676 · Answer

Hi  ahujaparth10

The scope of the question is just the passage and we cannot imply any outside knowledge to answer these.

Accordingly, the passage never said that the employees save a lot of their income. It could be that the entire salary is spent away.

Hope this helps.

Thanks
Harsh

kittle · Answer

How come the correct answer is D in question 2nd? 
Where does the passage mentions that other companies formed the railroads?
 KarishmaB

KarishmaB · Answer

Second paragraph gives:

Railroads, too, because of the stress of competition, both in construction and operation, were the first big firms to experiment with new forms of business organization such as pools and consolidation.

So railroads had competition in construction.

kittle · Answer

No, but the entire sentence reads as the below-
It can be inferred from the passage that the railroad system: Involved strong competition among the companies that formed it
formed "it"? Does "it" refer to "railroad system" ? Also, where does it say that "companies" competed to "form" railroad system?
It is still not clear  KarishmaB

Please elaborate. Thank you for your answer.

KarishmaB · Answer

Railroads, too, because of the stress of competition, both in construction  and operation, were the first big firms to experiment with new forms of business organization such as pools and consolidation.

The highlighted in the given sentence tells us that there was a lot of competition during construction of railroads. So we can infer that the companies making the railroads had a lot of competition among them. That is what option (D) says too.
It doesn't matter what the rest of the sentence says. We have got enough information from the highlighted part about competition during its construction.

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Transportation developments have greatly influenced the pace and cours

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Transportation developments have greatly influenced the pace and cours

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