Many economists have held that competition among multiple domestic

Question

Many economists  have held that competition among multiple domestic rivals within a given industry tends to weaken a nation's competitive advantage internationally within that industry: such rivalry leads to duplication of effort and prevents companies from lowering costs through large-scale production. Therefore, according to conventional wisdom, a government should embrace one or two national champions-companies with the scale and strength to tackle foreign competitors-and guarantee them the necessary resources for international operation.

In fact, though, most such heavily subsidized and protected champions are uncompetitive internationally, for they fail to benefit from domestic rivalry, which spurs companies to lower costs, improve quality and service, and create new products and processes. Unlike rivalries with foreign competitors, which tend to be abstract and distant, domestic rivalries involve direct competition for talented employees, for technical excellence, and for quantifiable success. Domestic competition automatically cancels the types of advantage that come from simply being in a particular nation-labor and supply costs, or access to and preference in the home market-and forces companies to develop other advantages.  True, vigorous domestic competition ultimately pressures domestic companies to look toward global markets; however, domestic rivalry is precisely the condition that helps make international success possible.    1 
 1. The last sentence of the passage can be most accurately characterized as pointing out the

A. dangers of rejecting conventional wisdom on a subject
B. costs that accompany a certain course of action
C. problems that will arise unless certain reforms are undertaken
D. benefit inherent in an apparently disadvantageous situation
E. usefulness of one strategy for attaining two different goals

2 
 2. The author of the passage suggests that the economists mentioned in the highlighted text err by doing which of the following?

A. Failing to consider the ways in which domestiv rivalry can increase a company's ability to compete internationally
B. Underestimating the detrimental effects of domestic rivals' duplication of efforts
C. Overlooking the fact that some governments may be unable to provide significant assistance to companies
D. Overestimating the need for companies to lower costs in order to compete effectively in international markets
E. Incorrectly identifying the types of competitive advantage that accrue to a business from being in a particular nation

3 
 3. The primary purpose of the passage is to

A. explain the conditions that lead to increased domestic competition within an industry
B. contrast the adverse effects of international competition with those of domestic competition
C. recommend that governments institute policies designed to support and protect a nation's companies
D. point out the advantages and disadvantages of domestic competition within an industry
E. counter a particular view concerning the effect of domestic competition on a country's international competitiveness

MS61 · Answer

1. The last sentence of the passage can be most accurately characterized as pointing out the

A. dangers of rejecting conventional wisdom on a subject.  Incorrect. Danger of rejecting the conventional wisdom is not discussed.  
B. costs that accompany a certain course of action.  Incorrect. There is no discussion on cost to any action.  
C. problems that will arise unless certain reforms are undertaken.  Incorrect. No discussion on reforms and respective problem 
D. benefit inherent in an apparently disadvantageous situation.  Correct. Benefit of domestic competition. Disadvantageous situation : vigorous domestic competition ultimately pressures domestic companies 
E. usefulness of one strategy for attaining two different goals.  Incorrect. No different goals discussed.

adconsectetur · Answer

in Q1, option D has this word apparently. It helps in avoiding the objection of criticism against author.

Many economists have held that competition among multiple domestic

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Many economists have held that competition among multiple domestic

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