Although the development of new infrastructure (such public facilities

Question

Although the development of new infrastructure (such public facilities as power plants, schools, and bridges) is usually determined by  governmental planning , sometimes this development can be planned more flexibly and realistically by private investors who anticipate profit from the collection of user fees. Such profits can contribute to the financing of more infrastructure if demand proves great enough, whereas the reluctance of developers to invest in such projects can signal that additional infrastructure is not needed. During the economic boom of the 1980's, for example, the state of Virginia authorized private developers to build a $300 million  toll road . These developers obtained the needed tight-of-way from property owners, but by 1993they still had not raised the necessary financing. The unwillingness of investors to finance this project does not negate the viability of privately financed roads; rather, it illustrates a virtue of private financing. If a road appears unlikely to attract enough future traffic to pay for the road, then it should not be built
  
 1 
 1. The primary purpose of the passage is to

A. build a case for increasing the development of new infrastructure
B. suggest the types of infrastructure most appropriate for private financing
C. explain the challenges of privately financed infrastructure developments using an example
D. advocate an alternative to government financing of infrastructure
E. describe how privately developed infrastructure may or may not find necessary financing

2 
 2. The passage implies that the "governmental planning" ( Highlighted ) may lead to which of the following problems?

A. Improper use of profits derived from user fees
B. Unduly slow development of necessary new infrastructure
C. Unrealistic decisions about developing new infrastructure
D. Incorrect predictions about profits to be gained from user fees
E. Obstruction of private financing for the development of new infrastructure

3 
 3. According to the passage, which of the following is true of the $300 million toll road?

A. After it was built, it attracted too little traffic to pay for its construction.
B. It was financed partly by the state of Virginia and partly by private developers.
C. Its development was authorized during an economic boom.
D. The private developers faced difficulty in getting approvals from local residents as late as 1993.
E. It is a poor example to illustrate a virtue of private financing.

4 
 4. Which of the following is most likely to occur if a privately financed bridge that proved to be profitable failed after a number of years to meet the demands of traffic?

A. Private developers who financed the bridge would rely on governmental authorities to develop new infrastructure.
B. User fees would be decreased to attract more traffic to the bridge.
C. Profits generated by user fees would be used to help finance the construction of new infrastructure to alleviate the traffic problem.
D. The success of the project would be jeopardized by public dissatisfaction with the infrastructure developed.
E. Governmental authorities would be reluctant to rely on private contractors to develop a new bridge.

RamseyGooner · Accepted Answer

I think the problem in question 4 is that it can be interpreted in two ways :
Which of the following is most likely to occur if a privately financed bridge that proved to be profitable  failed after a number of years to meet the demands of traffic ?

1) Failed to meet  "public's"  demand of traffic : bridge can accommodate x, but 2x people want to cross. Clearly, bridge is operating at its peak volume and hence, earning as much revenue as possible. We need a new bridge to accommodate the other x no. of people.
Clearly, C is what suffices.

2) Failed to meet  "its own demand(i.e., number required to run on a profit)"  of traffic : Clearly bridge is running at a loss. In this case, what i am looking at is option E.

Now in general, when it is said that "x is unable to meet demand of customer" - It usually means that demand>supply, which resonates with point 1 above, because of which i believe answer should be C.

Either way, I don't think such an open-ended question is representable of GMAT.

Requesting experts to chime in and let me know if my reasoning is flawed.

cyryl5 · Answer

I think 4 should be C based off of this line in the passage:

"profits can contribute to the financing of more infrastructure if demand proves great enough"

globaldesi · Answer

Official answers:
1. OA: D
The passage advocates infrastructure financed by private investors and discusses ways in which this could operate.

2. OA: C

The scope lies in the sentence “...development can be planned more flexibly and realistically by private investors...” which suggests that governmental planning may not be realistic and flexible at times.

3. OA: C
The proof for option C lies here “During the economic boom of the 1980's, for example...”

4. OA: E
The passage as a whole advocates the use of private developers and investors to develop new infrastructure. The premise the author uses is that a project that is bound to be unviable would not be constructed because private investors would not be interested in such an endeavor. And this he proposes is a great virtue of private development. If therefore it were found that a privately developed project is unviable, governmental authorities would stop letting private developers take up infrastructural development.

kntombat · Answer

bm2201 , would love to know your thought process as to why the answer to question 4 should be E ?

bM22 · Answer

Hi  kntombat ,

Here is how I approached this Question.

4. Which of the following is most likely to occur if a privately financed bridge that proved to be profitable failed after a number of years to meet the demands of traffic?

From the passage we can infer:
Development of new infrastructure  can be planned more realistically if done by private investors  who anticipate profit from the collection of user fees  rather than by governmental planning , because if the demand is high, the profits can contribute to further infrastructure development whereas reluctance of developers to invest in such projects can signal that additional infrastructure is not needed as demand might not be good enough. Now this is the reason why the government authorized private developers to build certain infrastructures.

Question mentions that a privately financed bridge was previously profitable but failed after a number of years to meet the demands of traffic. Now we need to find an option that would likely follow this scenario.

Incorrect, as it can't be inferred. We can't say that Private developers who financed the bridge would rely on governmental authorities for new infrastructures as the situation was other way round.

Incorrect, as its clearly mentioned that the plan failed, so reducing the user fees might not help to attract the traffic.

Incorrect, as it's mentioned that is was just successful for a number of years and after that it failed to meet the demands of traffic, so we can't infer if the profit generated was sufficient to help finance the construction of new infrastructure. Thus C is not a possible outcome.

Incorrect, as its clearly mentioned that the project was successful for sometime. We can't infer the amount of time that the project was profitable for, so we can't say with surety that it would be jeopardized by public dissatisfaction. If public would have been dissatisfied, the project might have failed in the beginning itself.

This could be a probable answer. Government gave the contracts to private contractors since they believed that infrastructural planning could be done realistically by private investors as they would only invest in something that was in sufficient demand by the public. Now if some infrastructure built by private contractors is only profitable for some years and then fails as a project, why would the government then authorize the private investors/contractors as they are also not the better planners.

Thus E is the better answer here.

Hope This Helps.
Thanks.

Sajjad1994 · Answer

Official Explanation

4. Which of the following is most likely to occur if a privately financed bridge that proved to be profitable failed after a number of years to meet the demands of traffic?

Explanation

The passage as a whole advocates the use of private developers and investors to develop new infrastructure. The premise the author uses is that a project that is bound to be unviable would not be constructed because private investors would not be interested in such an endeavor. And this he proposes is a great virtue of private development. If therefore it were found that a privately developed project is unviable, governmental authorities would stop letting private developers take up infrastructural development.

Answer: E

ArmaanBajaj · Answer

can someone explain Q1 well

guddo · Answer

1. The primary purpose of the passage is to

The passage argues that private financing can provide a useful alternative to government planning because investors respond to expected demand.  The central point  is that  private financing can help determine whether infrastructure is economically justified before it is built .

(A) build a case for increasing the development of new infrastructure

Incorrect. The author does not argue that more infrastructure should necessarily be built. In fact, some projects should not be built if demand is insufficient.

(B) suggest the types of infrastructure most appropriate for private financing

Incorrect. The passage discusses roads as an example but does not compare different types of infrastructure or identify which are best suited to private financing.

(C) explain the challenges of privately financed infrastructure developments using an example

Incorrect. The Virginia example includes a financing failure, but the author presents that failure as a benefit of private financing, not mainly as a challenge.

(D) advocate an alternative to government financing of infrastructure

Correct.   The passage presents private financing as a flexible and realistic alternative to government planning and explains one of its advantages: unprofitable projects may be filtered out before construction.

(E) describe how privately developed infrastructure may or may not find necessary financing

Incorrect. Financing decisions are discussed, but only to support the broader argument in favor of private financing as an alternative approach.

Answer: (D)

egmat · Answer

Hi ArmaanBajaj,

The key to Q1 is to first catch the  attitude  of the passage, and then match the verb of the correct choice to it.

What the passage is actually doing

Read the very first sentence: infrastructure is  "usually determined by governmental planning,"  but  "sometimes this development can be planned more flexibly and realistically by private investors."  That word  "realistically"  is the author quietly taking a side - private financing is being pitched as the better route.

The rest of the passage backs that side up:

-  Middle:  explains the mechanism - profits signal real demand and fund more infrastructure; investor reluctance signals it isn't needed.
-  Virginia example:  even the  failure  to raise financing is called  "a virtue of private financing."

So the passage isn't neutral. It is  arguing for private financing as an alternative to government planning . That is exactly  D .

Why the tempting choices fall short

-  C (explain the challenges ... using an example):  too negative. The Virginia case is used to show a  virtue , not to catalog challenges. The author never frames private financing as problematic.
-  E (describe how ... may or may not find financing):  too neutral. "Describe" makes it sound like a balanced report, but the author is clearly  persuading , not just describing.
-  A  (increasing development generally) and  B  (which types suit private financing) - neither is the focus.

The difference between C/E and D is really one word:  describe/explain vs. advocate . C and E treat the passage as a neutral write-up; D captures that the author is pushing a position.

Quick habit to lock this in

Compare these two openers:

-  "Some cities fund parks publicly; others use private money."  - describing.
-  "Cities would be smarter to let private money fund parks."  - advocating.

The passage sounds like the  second  one - so pick the answer whose verb matches an argument, not a report. That's  D .

Answer: D

Although the development of new infrastructure (such public facilities

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GMAT Reading Comprehension (RC) Questions

Although the development of new infrastructure (such public facilities

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