The general density dependence model can be applied to explain the fou

Question

The general density dependence model can be applied to explain the founding of specialist firms (those attempting to serve a narrow target market). According to this model, specialist foundings hinge on the interplay between legitimation and competitive forces, both of which are functions of the density (total number) of firms in a particular specialist population. Legitimation occurs as a new type of firm moves from being viewed as unfamiliar to being viewed as a natural way to organize. At low density levels, each founding increases legitimation, reducing barriers to entry and easing subsequent foundings. Competition occurs because the resources that firms seek--customers, suppliers, and employees--are limited, but as long as density is low relative to plentiful resources, the addition of another firm has a negligible impact on the intensity of competition. At high density levels, however, competitive effects outweigh legitimation effects, discouraging foundings. The more numerous the competitors, the fiercer the competition will be and the smaller will be the incentive for new firms to enter the field.

While several studies have found a significant correspondence between the density dependence model and actual patterns of foundings, other studies have found patterns not consistent with the model. A possible explanation for this inconsistency is that legitimation and competitive forces transcend national boundaries, while studies typically restrict their analysis to the national level. Thus a national-level analysis can understate the true legitimation and competitive forces as well as the number of foundings in an industry that is internationally integrated. Many industries are or are becoming international, and since media and information easily cross national borders, so should legitimation and its effects on overseas foundings. For example, if a type of firm becomes established in the United States, that information transcends borders, reduces uncertainties, and helps foundings of that type of firm in other countries. Even within national contexts, studies have found more support for the density dependence model when they employ broader geographic units of analysis--for example, finding that the model's operation is seen more clearly at the state and national levels than at city levels.   1 
 1. According to the passage, which of the following may account for the inconsistency between the general density dependence model and the evidence provided by certain studies of foundings?

(A) Such studies have overemphasized the impact of preexisting firms on the establishment of new firms.
(B) Such studies have not focused strongly enough on the role of competition among newly established firms operating at the city and state levels.
(C) Such studies fail to differentiate among specialist firms with regard to the degree to which they deviate from familiar forms of organization.
(D) Such studies have not taken into account the fact that many industries are internationally integrated.
(E) Such studies have neglected to investigate firms that attempt to serve only a narrow target market.

2 
 2. In the second paragraph, the author is primarily concerned with

(A) noting various exceptions to a certain general finding
(B) examining the impact of one type of industry on another
(C) proposing a possible explanation for an inconsistency
(D) providing specific examples of a particular phenomenon
(E) defending the validity of a particular study's conclusions

3 
 3.The passage suggests that when a population of specialist firms reaches a high density level, which of the following is likely to occur?

(A) Foundings will decline despite legitimation that has occurred in these industries.
(B) Increasing competition will encourage many firms to broaden their target market.
(C) Competition for resources will become stabilized and thus foundings will be encouraged.
(D) Many customers will abandon their loyalty to older firms as more innovative firms enter the market.
(E) Firms will begin to cross national borders in an attempt to gain a competitive advantage.

4 
 4.The primary purpose of the passage is to

(A) question the validity of an economic model
(B) point out some inconsistencies within an economic model
(C) outline an economic model and suggest revisions to it
(D) describe an economic model and provide specific examples to illustrate its use
(E) explain why an economic model remains valid despite inconsistent research results

PiyushK · Accepted Answer

Hi JarvisR,

Answer of last question lies in the last paragraph of the passage.

"A possible explanation for this inconsistency is that legitimation and competitive forces transcend national boundaries, while studies typically restrict their analysis to the national level. "

"Many industries are or are becoming international, and since media and information easily cross national borders, so should legitimation and its effects on overseas foundings. For example, if a type of firm becomes established in the United States, that information transcends borders, reduces uncertainties, and helps foundings of that type of firm in other countries. Even within national contexts, studies have found more support for the density dependence model when they employ broader geographic units of analysis--for example, finding that the model's operation is seen more clearly at the state and national levels than at city levels."

Author is raising question on the studies that, in current scenario in which many companies operating internationally, information or impact of their international operations were not included in these studies. Author is taking side of dependence model.

4. The primary purpose of the passage is to
E. explain why an economic model remains valid despite inconsistent research results.

Further we can outline entire passage per paragraph:
1. (GDDM) General density dependence model's importance to specialized firms and how legitimation and competitive forces react to density.
2. Defending GDDM and justifying that it works fine.

4. The primary purpose of the passage is to
A. question the validity of an economic model --- no author is not questioning, instead s/he is defending.
B. point out some inconsistencies within an economic model --- narrow scope -- s/he is also defending.
C. outline an economic model and suggest revisions to it --- not suggesting revision.
D. describe an economic model and provide specific examples to illustrate its use -- no examples illustrated 
E. explain why an economic model remains valid despite inconsistent research results --- so we left with E.

I hope it helps.

rjacobsMGMAT · Answer

DCAE.

Q5: (E) is incorrect because the author does not defend the validity of a  particular study's conclusions,  he defends the validity of  the whole theory.  In fact, the only study he cites is one that runs counter to his viewpoint.

Q7: (B) is tempting here, but look at this sentence:

The subtext of this sentence is that the author believes that the theory itself is consistent, but the application of the theory (limited to national analysis) is faulty, making (E) a better answer.

eybrj2 · Answer

OA is DCAE

I have a question regarding Q7.
How can E be an answer?

I googled this Q and found some people said that you should look at the beginning and the ending when you solve "primary purpose" questions.

I can see why E is an answer if I look at the last sentence of the passage, but what I don't understand is that where is the transition point.

The first paragraph just explains what the GDD model is, so the second paragraph has the main point of the passage.

The second paragraph starts with "While several studies have found a significant correspondence between the density dependence model and actual patterns of foundings, other studies have found patterns not consistent with the model."
And then, the passage explains a possible reason for the inconsistency.

I can understand up to this point.
However, I don't understand the following part. How can the following part be connected with the preceding part, which is the explanation for the possible reason for the inconsistency.

sandal85 · Answer

Hi eybrj2, Let me try to explain how I selected the E for the last question.

A) question the validity of an economic model - This has been mainly raised in the second paragraph also author belives that model is correct. so ruled out.

(B) point out some inconsistencies within an economic model - Inconsistencies are not with model but with the results of research which has been done to prove this model. Also author not only point out these inconsistencies but also expalined them.
So ruled out.

(C) outline an economic model and suggest revisions to it - Author never wants to revise the model. so ruled out.

(D) describe an economic model and provide specific examples to illustrate its use - Clearly ruled out.

(E) explain why an economic model remains valid despite inconsistent research results 
- This is the answer. Author clearly defended his model and wants to say that there are some inconsistencies but there are flaw in the research not in model.

Hope it will help !!

JarvisR · Answer

Hi Piyush, I took around 9:20 mins. P1 stumped me and I was not very clear about the topic until i reached last of 1 para.And by 2nd Para, I was comfortable with wht i was reading

All correct except last question Q4. Could you please help me to understand how to infer E. Regards.

kakal0t29 · Answer

Timing: 9 minutes for this passage
Results: 3 rights ( #4,5,6) one wrong (#7)
Approach: spending 3 minutes for taking note and paraphasing ( 1st paragraph)
- General density dependence model ( DDM) => key interplay bw legitimation and competitive forces
 + legitimation occurs ( new type of firms from viewing unfamiliar to natural way)
 + Competition occurs b/c limited seeking (customers, suppliers,..) of firms
=> both depend on density level
if low density
if high density (competitive effects > legitimation effects)=> more numerous competitors
Paragraph 2: studies -> correspondence bw DDM and actual patterns of foundings -> found not consistent
exp: b/c legitimation and competitive force actually laying on international boundaries while studies limit their analysis at the national level ->understate 
That's all enough for brief things in this passage
Back to Question 4:
According to the passage, which of the following may account for the  inconsistency between the general density dependence model  and the evidence provided by certain studies of foundings?
(A) Such studies have  overemphasized the impact of preexisting firms  on the establishment of new firms. ( not mention over emphasized the impact)
(B) Such studies have not focused strongly enough on the role of competition among newly established firms operating at the city and state levels. ( studies limit their analysis at the national level, not because of insufficient new competitors)
(C) Such studies  fail to differentiate among specialist firms  with regard to the degree to which they deviate from familiar forms of organization.( not mention)
 (D) Such studies have not taken into account the fact that many industries are internationally integrated. ( Correct) 
(E) Such studies have  neglected to investigate firms  that attempt to serve only a narrow target market.( not mention)

Question 5
In the second paragraph, the author is   primarily concerned   with

(A) noting various exceptions to a certain general finding ( there are no exception here )
(B) examining the impact of one type of industry on another ( nowhere can indicate the impact of one industry on another )
 (C) proposing a possible explanation for an inconsistency ( looking 1st sentence of 2nd paragraph, they talk about correlation bw this model and patterns -> inconsistency and a detail explanation after that) -> correct answer 
(D) providing specific examples of a particular phenomenon ( there is an example here, but it does not the primary concern )
(E) defending the validity of a particular study's conclusions ( tone of this paragraph not like defending)

Question 6
The passage suggests that when   a population of specialist firms reaches a high density level  , which of the following is likely to occur?
Hint: high density level -> more competitors ( b/c competitive effects > legitimation effects), less new comers ( founding will be decline)
=> A correct 
 (A) Foundings will decline despite legitimation that has occurred in these industries. 
(B) Increasing competition will encourage many firms to broaden their target market.
(C) Competition for resources will become stabilized and thus foundings will be encouraged.
(D) Many customers will abandon their loyalty to older firms as more innovative firms enter the market.
(E) Firms will begin to cross national borders in an attempt to gain a competitive advantage.

Question 7 ( I did select C for my answer, and had no idea why OA is E)
The primary purpose of the passage is to

(A) question the validity of an economic model
(B) point out some inconsistencies within an economic model
(C) outline an economic model and suggest revisions to it
(D) describe an economic model and provide specific examples to illustrate its use
(E) explain why an economic model remains valid despite inconsistent research results

livelyangel · Answer

Outline:
// GDD model
 Low density level
 High density level
// inconsistence
 explaination

Question #4. According to the passage, which of the following may account for the inconsistency between the general density dependence model and the evidence provided by certain studies of foundings?

A possible explanation for this inconsistency is that legitimation and competitive forces transcend national boundaries, -- keywords: transcend national boundaries

(A) Such studies have overemphasized the impact of preexisting firms on the establishment of new firms.
(B) Such studies have not focused strongly enough on the role of competition among newly established firms operating at the city and state levels.
(C) Such studies fail to differentiate among specialist firms with regard to the degree to which they deviate from familiar forms of organization.
(D) Such studies have not taken into account the fact that many industries are internationally integrated. --okie
(E) Such studies have neglected to investigate firms that attempt to serve only a narrow target market.

Question #5.In the second paragraph, the author is primarily concerned with

. A possible explanation for this inconsistency  keywords: possible explanation

(A) noting various exceptions to a certain general finding
(B) examining the impact of one type of industry on another
(C) proposing a possible explanation for an inconsistency  okie
(D) providing specific examples of a particular phenomenon
(E) defending the validity of a particular study's conclusions

Question #6.The passage suggests that when a population of specialist firms reaches a high density level, which of the following is likely to occur?

At high density levels, however, competitive effects outweigh legitimation effects, discouraging foundings --- keyword: discouraging founding

(A) Foundings will decline despite legitimation that has occurred in these industries. -> right
(B) Increasing competition will encourage many firms to broaden their target market.
(C) Competition for resources will become stabilized and thus foundings will be encouraged.
(D) Many customers will abandon their loyalty to older firms as more innovative firms enter the market.
(E) Firms will begin to cross national borders in an attempt to gain a competitive advantage.

Question #7.The primary purpose of the passage is to
(A) question the validity of an economic model
(B) point out some inconsistencies within an economic model
(C) outline an economic model and suggest revisions to it
(D) describe an economic model and provide specific examples to illustrate its use
(E) explain why an economic model remains valid despite inconsistent research results --- okie

Skywalker18 · Answer

Took 7 mins 40 seconds , including 2 mins 20 seconds to read the passage . 1. The Passage talks about inconsistency between the General Density Dependance model and the evidence provided by certain studies in Paragraph 2 "A possible explanation for this inconsistency is that legitimation and competitive forces transcend national boundaries, while studies typically restrict their analysis to the national level. " . The inconsistency is attributed to the fact that the studies did not take into account the international forces that affect Legtimation and competitive forces. Hence Option (D). 2. In the Second Paragraph, the author seeks to explain the inconsistency between the General Density Dependance model and the findings of certain studies . Hence Option (C) 3. "At high density levels, however, competitive effects outweigh legitimation effects, discouraging foundings." Here the author clearly mentions that when there is a high density level of firms, further foundings will be discouraged. Hence Option (A) 4. Was not very sure about main purpose answer

. Was in a fix between B and E . (A) question the validity of an economic model- Incorrect – The author does not question of the validity of the economic model anywhere in the passage. In fact, the first line suggests that it can be applied to explain foundings. The author is also looking to explain discrepant findings in Paragraph 2. (B) point out some inconsistencies within an economic model -Incorrect – Though the author does point of inconsistencies between certain studies and the economic model, that is not the primary purpose of the passage as the author is consistently trying to justify the model's use. (C) outline an economic model and suggest revisions to it- Incorrect – The author is not suggesting any revisions in his passage. (D) describe an economic model and provide specific examples to illustrate its use- Incorrect – The author does not provide multiple examples illustrating the use of the the General Density Dependance model. (E) explain why an economic model remains valid despite inconsistent research results - Correct – The author explains that the Economic Model can be used by justifying inconsistent results of study findings.

abhimahna · Answer

Time taken 6 mins.

Easy Passage.

Marked last one incorrect initially then realized E is the correct answer as per the lines 
 "Even within national contexts, studies have found more support for the density dependence model when they employ broader geographic units of analysis--for example, finding that the model's operation is seen more clearly at the state and national levels than at city levels."

TaN1213 · Answer

Adding my 2 cents:

passage excerpt : " Many industries are or are becoming international, and since media and information easily cross national borders, so should legitimation and its effects on overseas foundings. "

The author suggests that since media& information are easily expanding to reach international boundaries, the foundings and legitimation can also be expected to expand to reach international boundaries; this would mean the same economic model can be applied to the industries that are becoming international. Saying that author contends to explain why an economic model remains valid despite inconsistent research results. 
"E"

dcummins · Answer

Passage : Discusses application of general density dependence model
 P1:  To describe the application of the GD model
 P2:  To discuss how some studies didn't find the same correlation, but nonetheless do not invalidate the general principles

Q1 - Detail  
The difference in question is the inconsistency between studies that consider international firms and the studies that, typically, consider only national
A - incorrect because the difference lay in the national v international
B - incorrect comparison - GD model considers national, other studies international 
C - this doesn't make sense as its not supported. Incorrect.
D - Correct. This is the difference described in P2
E - incorrect because the premise of specialist firms is that they serve only a narrow market.

Q2 - Main Idea/ purpose  
A - Incorrect because there is really one type of inconsistency - national vs international firms
B - false. not supported.
C - True. Given by sentence 2 of P2
D - No. 1 Example is given in regards to an inconsistency
E - No. Author goes on in P2 to discuss how the GD model is still relevant, but his main intention in p2 is to describe the inconsistency

Q3 - Inference 
 Info to solve this question is given in P1, particularly the last few sentences.
A - is correct because we are told that as density increases, so too does competition and competition deters new foundings as "the smaller will be the incentive for new firms to enter the field"
B - not supported at all. Incorrect
C - Opposite. Foundings decrease as competition increases as the incentive to enter has declined. Incorrect
D - not supported at all. Incorrect
E - not supported at all. Incorrect

Q4 - Main Idea 
 A - False. Refer to passage map above.
B - Although one inconsistency is described, it is not the main purpose of the passage. False
C - No revisions are suggested. Incorrect
D - Examples are provided in regards to the inconsistency, nothing else. Incorrect
E - True. The main idea is really given in the last sentence - in which the author states his argument. "Even within...studies have found more support for the density dependence model"

hero_with_1000_faces · Answer

generis   AjiteshArun

I have doubt in question 4, Answer choice E
(E) explain why an economic model remains valid despite inconsistent   research results

I was sure the answer was E, until I saw the highlighted part above.

Nowhere in the passage research results have been talked about. It talks about the DD model and it being inconsistent with actual patterns. I am too rigid in m thinking ?

While several studies have found a significant correspondence between the density dependence model and actual patterns of foundings, other studies have found patterns not consistent with the model.

AjiteshArun · Answer

Hi hero_with_1000_faces , Yes. We need to be just a little more flexible.

The good news is that you're looking in the right place: So, we're looking at "studies have found" in the passage, and "research results" in the correct option. The words don't match, but the meanings do. What is a study but some king of investigation or research? And what do studies find ("results")? You'll find this in RC (and, more generally, verbal) all the time. If you're ever not sure, remember that elimination is your friend ! Remove the options you are sure are incorrect, and that may help you get comfortable with marking an option that includes a term that may not be a perfect match for what is included in the passage.

CrackverbalGMAT · Answer

Question #1. According to the passage, which of the following may account for the inconsistency between the general density dependence model and the evidence provided by certain studies of foundings?

(A) Such studies have overemphasized the impact of preexisting firms on the establishment of new firms.
(B) Such studies have not focused strongly enough on the role of competition among newly established firms operating at the city and state levels.
(C) Such studies fail to differentiate among specialist firms with regard to the degree to which they deviate from familiar forms of organization.
(D) Such studies have not taken into account the fact that many industries are internationally integrated.
(E) Such studies have neglected to investigate firms that attempt to serve only a narrow target market.

We need to find an option that tells us the reason for the inconsistency between the general density dependence model and the evidence provided by certain studies of foundings. In  para 2, line 3-6 , it is said that - “A possible explanation for this inconsistency is that legitimation and competitive forces transcend national boundaries, while studies typically  restrict their analysis to the national level ”. This leaves us with option  D as the right answer.

Question #2. In the second paragraph, the author is primarily concerned with

(A) noting various exceptions to a certain general finding
(B) examining the impact of one type of industry on another
(C) proposing a possible explanation for an inconsistency
(D) providing specific examples of a particular phenomenon
(E) defending the validity of a particular study's conclusions

The second paragraph mainly  talks about the possible explanation for why there is an inconsistency between several studies that have found a significant correspondence between the density dependence model and actual patterns of foundings, and other studies that have found patterns not consistent with the model . This is closest to option C.  Hence C is the right answer.

Question #3.The passage suggests that when a population of specialist firms reaches a high density level, which of the following is likely to occur?

(A) Foundings will decline despite legitimation that has occurred in these industries.
(B) Increasing competition will encourage many firms to broaden their target market.
(C) Competition for resources will become stabilized and thus foundings will be encouraged.
(D) Many customers will abandon their loyalty to older firms as more innovative firms enter the market.
(E) Firms will begin to cross national borders in an attempt to gain a competitive advantage.

Para 1, line 12-
“At high density levels, however, competitive effects outweigh legitimation effects, discouraging foundings.”

This is stated in option A.  Hence A is correct.

Question #4.The primary purpose of the passage is to

(A) question the validity of an economic model
(B) point out some inconsistencies within an economic model
(C) outline an economic model and suggest revisions to it
(D) describe an economic model and provide specific examples to illustrate its use
(E) explain why an economic model remains valid despite inconsistent research results.

The passage starts by talking about the general density dependence model. It says that according to this model, specialist foundings hinge on the interplay between legitimation and competitive forces. It talks about what happens at low density population levels and high density population levels. The second paragraph talks about the inconsistency between several studies that have found a significant correspondence between the density dependence model and actual patterns of foundings, and other studies that have found patterns not consistent with the model. It also states that a possible explanation for the inconsistency is that legitimation and competitive forces transcend national boundaries, while studies typically restrict their analysis to the national level. He affirms how this can understate the true legitimation and competitive forces as well as the number of foundings in an industry that is internationally integrated. He justifies the validity of the general density dependence model.

Option A- The author  does not question  the validity of the density dependence model rather he justifies it.  Incorrect 
Option B- The tone or the stand of the author is not neutral. The author is clearly justifying the validity of the density dependence model.  Hence incorrect 
Option C- The author does not suggest any revisions to the model.  Eliminate C 
Option D- The author does not merely state the use of the model. The purpose is not to illustrate its use. It is to justify the validity of the density dependence model.  Eliminate D 
Option E- This is our answer. The author explains why the density dependence model remains valid despite inconsistent research results.  Hence E is correct.

Vishnupriya
CrackVerbal Prep Team

GraceSCKao · Answer

Hi GMATNinja AjiteshArun , I am confused with one sentence in the passage. Could you please shed some light on it? Many thanks! "According to this model, specialist foundings hinge on the interplay between legitimation and competitive forces, both of which are functions of the density (total number) of firms in a particular specialist population." What does the word " functions " mean here? According to Cambridge and Webster dictionaries, function, besides its core meaning "purpose," could also mean "result" or "value" ( as in the mathematical correspondence, f(X), that we have to deal with in the Quant section). But I do not think that "functions" mean "result" in this sentence, as it seems that legitimation and competitive forces affect the density number, not the other way around. I am not either sure whether "functions" refer to a mathematical correspondence here--that seems odd in the verbal section. Or, have I understood this passage incorrectly? Is the density number that affects the legitimation and competitive forces? At low density levels, each founding increases legitimation, reducing barriers to entry and easing subsequent foundings. Competition occurs because the resources that firms seek--customers, suppliers, and employees--are limited, but as long as density is low relative to plentiful resources, the addition of another firm has a negligible impact on the intensity of competition. At high density levels, however, competitive effects outweigh legitimation effects, discouraging foundings. The more numerous the competitors, the fiercer the competition will be and the smaller will be the incentive for new firms to enter the field. My understanding of the cited-above section is that since legitimation reduces barrier to entry and eases subsequent foundings, legitimation has a positive impact on the density number (the more legitimate the industry becomes, the more entrepreneurs will be encouraged to enter into the industry and the higher the density level would be). By contrast, competition has a negative impact on the density number. While it could be offset by legitimation effects at low density levels, it is too great to bear at high density levels and discourages founding. (However, the passage does not mention whether the density level will then fall or will remain at a high level as is, but lack new players.) Sorry if this question is more like one on terminology, but I am really confused with the meaning of "functions," afraid that I will mistake it if it appears in another RC passage. Meanwhile, I also hope to confirm whether I have understood this passage correctly. Thanks in advance for your explanation.

AjiteshArun · Answer

Hi  GraceSCKao ,

It's a good thing you looked the word up in a dictionary. It's what I do when I come across something new, something I'm not familiar with. Here's a  link  to the definition of  function  (Noun (3): "A thing dependent on another factor or factors."). So if X is a function of Y, it could mean that X  depends on  Y (for example, an increase in Y leads to an increase in X).

You may want to go through that part of the passage again. Follow-up questions, as always, are welcome.

Yes. That part of the passage means that "the density (total number) of firms" affects both "legitimation" and "competitive forces". In other words, depending on what D is, both L and C will behave differently (as they depend on D).

VerbalBot · Answer

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The general density dependence model can be applied to explain the fou

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