During a period of low growth after a recent and remarkable boom in

Question

During a period of low growth after a recent and remarkable boom in the solar energy sector, Company X, a major manufacturer of solar-powered generators, attributed its success during the boom to the sale of excess inventory it had discovered in one of its warehouses.

Which of the following tests would most help to evaluate the company’s hypothesis as to the cause of its success?

A. Comparing the length of the low-growth period to the length of the preceding boom

B. Comparing the boom experienced by Company X to those experienced by similarly-sized manufacturers of solar powered generators that did not have inventory on hand

C. Calculating average sales increases within the individual divisions of Company X

D. Comparing the total number of generators sold by Company X during the boom to the total number sold by Company X during the period of low growth

E. Using economic theory to predict the next economic boom for Company X

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Shwarma · Answer

Option B

Conclusion: We were successful in the boom period since we found excessive inventory ( else we wouldn't have been)
How do we test this?

Options:
B- compare your sale vs the competitor who didn't have inventory -> works this is benchmarking
C- tempting - but this is an internal comparison- this is a SOLAR company having a boom as a whole, so knowing internal sales data will not help us test the company-wide hypothesis.
The rest are not relevant.

Bunuel · Answer

Princeton Review Official Explanation:

Here’s How to Crack It:

The question asks for the test that would most help to  evaluate  the company’s hypothesis, so this is an evaluate question. According to the question stem, the hypothesis concerns the cause of Company X’s success. As you begin to work the argument, look for claims that provide a reason company X succeeded.

The passage’s final sentence states that Company X  attributed its success during the boom to the sale of excess inventory , but how does Company X come to believe that? The only other piece of information we get from the passage is that there was a  boom in the solar energy sector , followed by a  period of low growth .

Without additional information, it’s unclear how changes in the solar energy sector relate to the company’s claim about its own success. However, if you noticed the word  cause  in the question stem, then you probably recognized that Company X makes a causal argument.

Take advantage of the causal reasoning pattern by recalling its standard assumptions: there’s no other cause, and it’s not a coincidence. The former assumption seems more relevant here, because Company X assumes the sale of excess inventory alone was responsible for its success.

Evaluate the answer choices one at a time, looking for the test that would allow you to determine whether there isn’t another reason for Company X’s success.

A. Comparing the length of the low-growth period to the length of the preceding boom

Executing this comparison would tell us how long each of the periods lasted, but connecting that information to the sale of excess inventory would require inferences beyond the scope of the information provided. Eliminate (A).

B. Comparing the boom experienced by Company X to those experienced by similarly-sized manufacturers of solar powered generators that did not have inventory on hand

This answer choice is tempting. We’re looking for a way to determine whether something other than the sale of excess inventory might have caused Company X’s success. If competitors without excess inventory to sell experienced booms comparable to that of Company X, then the company’s claim might be incorrect. On the other hand, if competitors didn’t experience as big a boom, it appears more likely that the sale of excess inventory was responsible for Company X’s success. Keep (B).

C. Calculating average sales increases within the individual divisions of Company X

Individual divisions of Company X are out of scope. We already know that the company sold excess inventory; which divisions saw sales increases is irrelevant. Eliminate (C).

D. Comparing the total number of generators sold by Company X during the boom to the total number sold by Company X during the period of low growth

At first glance, this answer choice looks appealing. The comparison described here would allow us to determine how many generators were sold during each period. If more generators were sold during the boom than during the low-growth period, it might seem as though Company X’s success during the boom resulted from the sale of excess inventory. However, the passage states that the period of low growth  followed  the boom. If more generators were sold during the boom, then at best, we could infer that a  decline  in sales led to  decreased  success. To determine whether the sale of excess inventory  caused  Company X’s success during the boom, we’d need sales numbers from the period  before  the boom, not the period  after  it. Eliminate (D).

E. Using economic theory to predict when the next economic boom for Company X will occur

Of the five answer choices, this one is most obviously out of scope. An estimate of the time that will elapse before the next boom needn’t have any relevance to the cause of the last boom. Eliminate (E).

The correct answer is (B).

During a period of low growth after a recent and remarkable boom in

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