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Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
35%
(medium)
Question Stats:
69% (01:46) correct
31%
(02:02)
wrong
based on 1089
sessions
History
Date
Time
Result
Not Attempted Yet
Utility companies in the United States are generally privately-owned, for-profit business ventures. One notable exception is the Tennessee Valley Authority, which was formed under the New Deal in the 1930s and continues, under federal control, to provide electricity to parts of the Southeast. Given the current pro-business climate in the region, however, it is safe to say that TVA is long overdue to be privatized.
The argument that the ownership of the Tennessee Valley Authority should be privatized rests on which of the following assumptions?
A) A pro-business climate demands the private ownership of utilities.
B) New Deal programs are outdated and should be discontinued.
C) Electricity in the Southeast will be more efficiently distributed if utilities are privately owned.
D) The price of electricity is currently higher than it would be if TVA were privatized.
E) Most residents of the Southeast prefer that TVA enter private ownership
The argument that the ownership of the Tennessee Valley Authority should be privatized rests on which of the following assumptions?
A) A pro-business climate demands the private ownership of utilities.
B) New Deal programs are outdated and should be discontinued.
C) Electricity in the Southeast will be more efficiently distributed if utilities are privately owned.
D) The price of electricity is currently higher than it would be if TVA were privatized.
E) Most residents of the Southeast prefer that TVA enter private ownership
I picked A and here is my 2 cents.
First, this one asks about “supporter assumption”.
The form of this question is like:
X is not Y
Because of A, X should be Y
The assumption is: A requires X to be Y.
For example:
In the past, almost CEOs in company X did not hold an MBA
Because of the new hiring rules, all CEOs in company X should hold an MBA.
==> Assumption: new hiring rules require all CEOs applicants to hold an MBA.
If we negate this assumption: new hiring rules require all CEOs applicants NOT to hold an MBA ==> Conclusion “all CEOs should hold MBA” fails.
Back to this question.
ANALYZE THE STIMULUS:
TVA is not privately-owned, for profit business company
Because of current pro-business climate in the region, TVA should be privatized.
Assumption should be: the current pro-business climate requires TVA to be privately-owned, for profit business company
ANALYZE EACH ANSWER:
A) A pro-business climate demands the private ownership of utilities.
Correct. As stated above.
B) New Deal programs are outdated and should be discontinued.
Wrong. Even the New deal programs would be discontinued, TVA is still under Federal control.
C) Electricity in the Southeast will be more efficiently distributed if utilities are privately owned.
Wrong. TEMPTING, but wrong. Please note that the argument does not say TVA is distributing electricity NOT efficiently.
D) The price of electricity is currently higher than it would be if TVA were privatized.
Wrong. D actually assumes electricity prices would be lower if TVA were privatized. However its logic is wrong because:
(1) TVA is the government-owned company now, so Government should back up its financial problems, TVA does not have to raise prices to get more profit. However, if it were privatized and would be for-profit company, why TVA lower prices? It does not make sense (at least in practice). In addition, if prices would be lower, assume you were an investor, your motivation is profit, should you buy TVA?
==> Therefore, D is not "Must Be True" assumption.
(2) Assumption is the foundation of the conclusion, do not assume too far. The answer “could be true” is always correct. Please make sure the assumption is MUST be true. No Assumption ==> No conclusion.
E) Most residents of the Southeast prefer that TVA enter private ownership
Wrong. The fact “residents prefer….” is not relevant and does not help maintain the conclusion.
Waiting for OA.
First, this one asks about “supporter assumption”.
The form of this question is like:
X is not Y
Because of A, X should be Y
The assumption is: A requires X to be Y.
For example:
In the past, almost CEOs in company X did not hold an MBA
Because of the new hiring rules, all CEOs in company X should hold an MBA.
==> Assumption: new hiring rules require all CEOs applicants to hold an MBA.
If we negate this assumption: new hiring rules require all CEOs applicants NOT to hold an MBA ==> Conclusion “all CEOs should hold MBA” fails.
Back to this question.
ANALYZE THE STIMULUS:
TVA is not privately-owned, for profit business company
Because of current pro-business climate in the region, TVA should be privatized.
Assumption should be: the current pro-business climate requires TVA to be privately-owned, for profit business company
ANALYZE EACH ANSWER:
A) A pro-business climate demands the private ownership of utilities.
Correct. As stated above.
B) New Deal programs are outdated and should be discontinued.
Wrong. Even the New deal programs would be discontinued, TVA is still under Federal control.
C) Electricity in the Southeast will be more efficiently distributed if utilities are privately owned.
Wrong. TEMPTING, but wrong. Please note that the argument does not say TVA is distributing electricity NOT efficiently.
D) The price of electricity is currently higher than it would be if TVA were privatized.
Wrong. D actually assumes electricity prices would be lower if TVA were privatized. However its logic is wrong because:
(1) TVA is the government-owned company now, so Government should back up its financial problems, TVA does not have to raise prices to get more profit. However, if it were privatized and would be for-profit company, why TVA lower prices? It does not make sense (at least in practice). In addition, if prices would be lower, assume you were an investor, your motivation is profit, should you buy TVA?
==> Therefore, D is not "Must Be True" assumption.
(2) Assumption is the foundation of the conclusion, do not assume too far. The answer “could be true” is always correct. Please make sure the assumption is MUST be true. No Assumption ==> No conclusion.
E) Most residents of the Southeast prefer that TVA enter private ownership
Wrong. The fact “residents prefer….” is not relevant and does not help maintain the conclusion.
Waiting for OA.
General Discussion
Utility companies in the United States are generally privately-owned, for-profit business ventures. One notable exception is the Tennessee Valley Authority, which was formed under the New Deal in the 1930s and continues, under federal control, to provide electricity to parts of the Southeast. Given the current pro-business climate in the region, however, it is safe to say that TVA is long overdue to be privatized.
The argument that the ownership of the Tennessee Valley Authority should be privatized rests on which of the following assumptions?
A) A pro-business climate demands the private ownership of utilities. - Classical Shell game option. Pro-business climate DEMANDS privatization but not MANDATES it. Incorrect
B) New Deal programs are outdated and should be discontinued. - Ok, outdated programs should be discontinued, so we should close the "Tennessee Valley Authority" rather than privatize. Incorrect
C) Electricity in the Southeast will be more efficiently distributed if utilities are privately owned. - In order to increase Efficiency, we should privatize TAV, but before that check option C. Very close option but incorrect.
D) The price of electricity is currently higher than it would be if TVA were privatized.
-Lets say the current electricity price is 2$/unit
electricity price after privatization is 1$/unit
Before privatization TAV (NOT for-profit business venture) is charging higher price. WHY?
Not because TAV wants to make huge money as it's a NOT for-profit business venture but because of certain inefficiencies that we don't know.
WHY & HOW costs will be lower after privatization?
May be coz of Competition, Efficiency & many other factors etc
If privatization can reduce costs & improve efficiency , we should make TAV private
- Correct
E) Most residents of the Southeast prefer that TVA enter private ownership - Author is not concerned about the preferences of residents. Incorrect
SO OA should be D
Very good question after a long time. I would definitely place it in 700+ level.
The argument that the ownership of the Tennessee Valley Authority should be privatized rests on which of the following assumptions?
A) A pro-business climate demands the private ownership of utilities. - Classical Shell game option. Pro-business climate DEMANDS privatization but not MANDATES it. Incorrect
B) New Deal programs are outdated and should be discontinued. - Ok, outdated programs should be discontinued, so we should close the "Tennessee Valley Authority" rather than privatize. Incorrect
C) Electricity in the Southeast will be more efficiently distributed if utilities are privately owned. - In order to increase Efficiency, we should privatize TAV, but before that check option C. Very close option but incorrect.
D) The price of electricity is currently higher than it would be if TVA were privatized.
-Lets say the current electricity price is 2$/unit
electricity price after privatization is 1$/unit
Before privatization TAV (NOT for-profit business venture) is charging higher price. WHY?
Not because TAV wants to make huge money as it's a NOT for-profit business venture but because of certain inefficiencies that we don't know.
WHY & HOW costs will be lower after privatization?
May be coz of Competition, Efficiency & many other factors etc
If privatization can reduce costs & improve efficiency , we should make TAV private
- Correct
E) Most residents of the Southeast prefer that TVA enter private ownership - Author is not concerned about the preferences of residents. Incorrect
SO OA should be D
Very good question after a long time. I would definitely place it in 700+ level.
+ 1 for D ,A is authoritative.
A) A pro-business climate demands the private ownership of utilities.
A) A pro-business climate demands the private ownership of utilities.
+ 1 for A.
Please provide the OA.
Please provide the OA.
Schools: Cambridge'16
Posts: 405
BukrsGmat
Argument structure is:
Because current pro-business climate ------------> It is late company to be currently privatized
Pro-business climate wants company to be privatized. That is the assumption. Answer A fits best
A for me.
It best fits the argument above.
It best fits the argument above.
+ 1 for A
Mods - Can one of yous explain/confirm the answer, please?
Mods - Can one of yous explain/confirm the answer, please?
no such thing as safe to or rest or not, cepux, say/can say any nmw is ok
A) A pro-business climate demands the private ownership of utilities.
This directly ties privatization to the pro-business climate, but "demands" is too strong and not necessarily implied by the argument. The argument does not state that privatization is a requirement for a pro-business climate.
Incorrect.
B) New Deal programs are outdated and should be discontinued.
This might be a tangential opinion, but it is not central to the argument, which focuses on the TVA and its privatization rather than criticizing New Deal programs in general.
Incorrect.
C) Electricity in the Southeast will be more efficiently distributed if utilities are privately owned.
This supports the conclusion that privatization is overdue. If the argument assumes privatization is better, then it must assume that private ownership would lead to better outcomes (e.g., more efficient distribution of electricity).
Correct.
D) The price of electricity is currently higher than it would be if TVA were privatized.
While this might be a potential consequence of privatization, the argument does not focus on electricity prices, nor does it explicitly hinge on this assumption.
Incorrect.
E) Most residents of the Southeast prefer that TVA enter private ownership.
The argument does not discuss public opinion or hinge its conclusion on what residents prefer.
Incorrect.
Correct Answer: C)
This directly ties privatization to the pro-business climate, but "demands" is too strong and not necessarily implied by the argument. The argument does not state that privatization is a requirement for a pro-business climate.
Incorrect.
B) New Deal programs are outdated and should be discontinued.
This might be a tangential opinion, but it is not central to the argument, which focuses on the TVA and its privatization rather than criticizing New Deal programs in general.
Incorrect.
C) Electricity in the Southeast will be more efficiently distributed if utilities are privately owned.
This supports the conclusion that privatization is overdue. If the argument assumes privatization is better, then it must assume that private ownership would lead to better outcomes (e.g., more efficient distribution of electricity).
Correct.
D) The price of electricity is currently higher than it would be if TVA were privatized.
While this might be a potential consequence of privatization, the argument does not focus on electricity prices, nor does it explicitly hinge on this assumption.
Incorrect.
E) Most residents of the Southeast prefer that TVA enter private ownership.
The argument does not discuss public opinion or hinge its conclusion on what residents prefer.
Incorrect.
Correct Answer: C)
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