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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paragw · Answer

Hypothesis: Company X's success during the boom was due to selling excess inventory.

To test this, compare Company X with similar companies that did not have excess inventory. If only Company X outperformed, the inventory is a likely cause.

A. Length of boom vs. low growth → Irrelevant.

B. Compare with similar manufacturers without excess inventory →  Directly tests the hypothesis.

C. Internal division sales → Doesn't isolate inventory effect.

D. Boom sales vs. low-growth sales → Doesn't test the cause.

E. Predict future boom → Irrelevant.

Answer:  B

vasu1104 · Answer

there was recent and remarkable boom in solar energy sector.
then there was period of low growth.
company X had success in sales.
the reason= excess of inventory in one of its warehouse.

so the company is going under the assumption that since they had high inventory, they could serve the demand and hence higher sales.

A but the length on either side can have opposite effect then what company had thought about. so not enough. out. 
B if X had high inventory but competitors did not then their hypothesis hold true. but if all company had boom despite others not having high inventory, then something else was driving the sales. so this gives both yes and no ans. sufficient enough. keep.
C we dont need to know average increase in the sale of each divisions. reject.
D this has no impact of inventory. out.
E this is irrelevant to the topic here.

choice B

Vivek1707 · Answer

When dealing with Evaluate questions the  best approach  is to  take the answers to extremes  and  check  whether the  conclusion gets impacted. One extreme  should  weaken the conclusion  and the  other extreme  should  strengthen

A. Incorrect: The duration of the boom and the subsequent slowdown has no bearing on whether excess inventory caused Company X's success during the boom.

B. Correct:  To evaluate the hypothesis, compare Company X with similar manufacturers that did not have excess inventory. 
If Company X outperformed them during the boom, ---> the inventory may have contributed to its success.  Conclusion strengthened  
If they performed similarly, ----> the inventory is unlikely to be the cause.  Conclusion weakened

C. Incorrect: Sales across Company X's divisions do not isolate the effect of the excess inventory. Internal comparisons cannot determine whether the inventory caused the company's success.

D. Incorrect: Comparing sales during the boom with sales during the low-growth period reflects different market conditions. Any difference could simply be due to the industry's boom rather than the excess inventory.

E. Incorrect: Predicting future economic booms does not help determine what caused Company X's success during the previous boom.

UpHa · Answer

IMO, Option B.

It directly tests the hypothesis by comparing boom across similar sized manufacturers of solar powered generators who did not had inventory.

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).

DeadScout · Answer

"that did not have inventory on hand" this part confuses me, since we are looking to confirm the theory that "excess inventory" is the cause of success. Comparing the data with those who "don't have inventory on hand" would not confirm that theory. What would confirm it it to compare the boom period sales data with similar manufacturer who did not have exceess inventory.

How do you assess this logic, guys?

How do you assess this logic, guys?

guddo · Answer

The concern is understandable, but the test does not need to  confirm  the theory directly. It needs to  evaluate  it.

Company X says its extra success came from having excess inventory available to sell. So we compare it with similar companies that did not have such inventory available.

If Company X did much better than those companies, the inventory explanation becomes stronger. If those companies also boomed similarly, then excess inventory was probably not the main cause.

So “did not have inventory on hand” is meant to create the comparison group: similar companies without the alleged cause.

DeadScout · Answer

Thank you. But when I read carefully, "excess inventory" means the extra amount of inventory over the normal level. Which means that the hypothesis is properly assessed when: 
- Either similar manufacturers didn't have "excess inventory" (they had a normal level of inventory but not the excess), then we compare their results with our manufacturer to confirm/negate the hypothesis
- Or similar manufacturer did have "excess inventory" and then we look into their results to confirm/negate the hypothesis

Now when I take the case of similar manufacturers who had no inventory on hand, the result will always be favorable to our manufacturer, there's then no need to make the assessment/evaluation.

I'm simply saying that we have to differentiate "did not have excess inventory on hand" from "did not have inventory on hand".

Bunuel

guddo · Answer

The mistake is assuming that companies with no inventory on hand must automatically perform worse.

Not necessarily. They could still produce and sell new generators during the boom. So their results can still be compared with Company X’s results.

In this context, “did not have inventory on hand” is meant to contrast with Company X’s  excess inventory available to sell . The test is:

If Company X did much better than similar companies without such available inventory, the hypothesis becomes stronger.

If similar companies also boomed, then the success was probably due to the  industry boom , not Company X’s excess inventory.

So yes, “did not have excess inventory” would be cleaner wording, but (B) still tests the right causal issue.

LessGoRahul · Answer

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).

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

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