While new census data reveal that unemployment numbers are even direr

Question

While new census data reveal that unemployment numbers are even direr than was previously suspected, it is not clear that the forecast for American entrepreneurship is equally alarming. An article in a major national newspaper suggests that the contraction in hiring at existing companies might result in the founding of more new companies. College graduates, unable to find traditional jobs, instead opt to start their own businesses. Whereas a recession may seem an unpropitious time for such a historically risky endeavor, with no better options, would-be entrepreneurs have little to lose. Unfortunately, this situation does not necessarily impact the economy positively. Though the average number of new businesses started per year has been higher during the recession than it was before, the proportion of high-value businesses founded each year has declined, while the proportion of low-value businesses has increased. So even if a business manages to stay solvent, it may not bring significant returns. Also, because of an inevitable dearth of outside "angel" investors and venture capitalists willing to bankroll startups, many new entrepreneurs are putting their own money on the line. In certain ways, the choice between accepting a traditional job and starting a business is not unlike the choice between renting and buying property. The latter requires a significant initial outlay and carries heavier risks, but the rewards can be equally substantial.   1 
 C 
1. The primary purpose of the passage is to

(A) propose changes in the way the public generally interprets census data
(B) maintain that college students should form their own companies, especially during economic recessions
(C) present a nuanced view of a contemporary economic issue
(D) evaluate the viability of low- versus high-value businesses under various environmental conditions
(E) draw an analogy between career decisions and real-estate decisions, specifically the choice to rent or buy property

2 
 B 
2. According to the passage, the reason that many college graduates are choosing to launch their own companies in the present economic climate is that

(A) they are hampered by the difficulty of finding outside investors 
(B) they cannot easily find positions typically open to workers of their experience 
(C) the prevalence of low-value companies has increased 
(D) they are forced to decide between renting and buying property 
(E) forecasts of the unemployment rate are likely to become less dire in coming years

3 
 E

3. It can be inferred from the passage that over the course of the recent recession, the number of American high-value businesses founded per year

(A) has fallen sharply 
(B) has fallen moderately 
(C) has risen sharply 
(D) has risen moderately 
(E) may have either fallen or risen

JS1290 · Accepted Answer

OE for Q3:

This question asks what “can be inferred” about the number of American high-value businesses; that is, what else must be true based upon the evidence given in the passage? The answer choices all have to do with how this number has changed (or may have changed) during the course of the recent recession. In particular, when you encounter mathematical language, take extra care to make the argument airtight mathematically. Search for the key phrase “high-value businesses”: the passage states that “the proportion of high-value businesses founded each year has declined.” Watch out! A proportion is not the same as a number. The proportion has fallen, but the overall number of new business starts has been higher over recent years. If the overall number is up, but the proportion is down, it is unknown whether the absolute number of high-value businesses is up or down; this is exactly what choice (E) indicates.

BillyZ · Answer

OFFICIAL EXPLANATION

This question focuses on the main idea of the passage. The reading constantly flips back and forth, taking one side at first, then another on the forecast for American entrepreneurship. The author is careful to present his or her arguments fairly and with some reservations (e.g., it is not clear that..., suggests that..., may seem..., does not necessarily..., it may not bring..., can be...). Ultimately, the view is balanced.

(A) Census data provide the source of the author's first observation, but the author is not specifically proposing a new interpretation of those data, let alone for such an interpretation to be generally adopted by the public. Yes, the census data reveal that unemployment numbers are even direr than was previously suspected, and yes, the author states that the forecast for American entrepreneurship may not be equally alarming. However, it is a stretch to say that the author is proposing that the data are themselves to be interpreted differently. (By the way, the word data is technically plural; the GMAT doesn't seem to test this fact, but you should not be thrown by a passage that reads new census data reveal rather than reveals, as would be typical in speech.)

(B) The author never argues that any group of college students should (or should not) form their own companies. If anything, the author offers both sides of the issue, leaving it up to individuals to decide.

(C) CORRECT. The contemporary economic issue is the forecast for American entrepreneurship, which is the focus of the passage. The author presents a nuanced view of this issue.

(D) The author offers one fact about the varying rates at which businesses of two types (low-value and high-value) are founded. However, the author never evaluates the viability (or likelihood of success) of these types.

(E) The analogy drawn in the last two sentences is not the main point of the passage; it is a final observation, one that sheds light on the issue, but the making of this particular analogy is not the primary purpose for which the passage was written.

The correct answer is C.

NaeemHasan · Answer

Why the answer to the last question is E? Can anyone explain?

atulindia · Answer

Question is asking numbers, which we can not exactly tell increased or decreased from the passage. passage only states the proportion decreased from previous year. May be number of both high valued and low valued increased but the proportion wise it is low.

carcass · Answer

While new census data reveals that unemployment numbers are more dire than was previously suspected, it is not clear that the forecast for American entrepreneurship is equally alarming. An article in a major national newspaper suggests that the contraction in hiring at existing companies might result in more new companies being founded. College graduates, unable to find traditional jobs, instead opt to start their own businesses. Where a recession may seem an unpropitious time for such a historically risky endeavor, with no better options, would-be entrepreneurs have little to lose. Unfortunately, this situation does not necessarily impact the economy positively. Though the average number of new businesses started per year has been higher during the recession than it was before, the proportion of high-value businesses founded each year has declined. So even if a business manages to stay solvent, it may not bring significant returns. Also, because of an inevitable dearth of angel investors and venture capitalists, many new entrepreneurs are putting their own money on the line. In certain ways, the choice between accepting a traditional job and starting a business is not unlike the choice between renting and buying property. The latter requires a significant initial outlay and carries heavier risks, but the rewards can be equally substantial.   1 
 C 
 1. The primary purpose of the passage is to

(A) propose changes in the way the public generally interprets census data 
(B) maintain that college students should form their own companies, especially during economic recessions 
(C) present a nuanced view of a contemporary economic issue 
(D) evaluate the viability of low- versus high-value businesses under various environmental conditions 
(E) draw an analogy between career decisions and real estate decisions,specifically the choice to rent or buy property.

2 
 B 
 2. According to the passage, the reason that many college graduates are choosing to launch their own companies in the present economic climate is that

(A) they are hampered by the difficulty of finding outside investors 
(B) they cannot easily find positions typically open to workers of their experience 
(C) the prevalence of low-value companies has increased 
(D) they are forced to decide between renting and buying property 
(E) forecasts of the unemployment rate are likely to become less dire in coming years

3 
 E 
 3. It can be inferred from the passage that over the course of the recent recession, the number of American high-value businesses founded per year

(A) has fallen sharply 
(B) has fallen moderately 
(C) has risen sharply 
(D) has risen moderately 
(E) may have either fallen or risen

narayandutta · Answer

Ques 1.

I got A. Can anyone explain why C ?

Ques 2.

As mentioned in the passage 
 College graduates, unable to find traditional jobs, instead opt to start their own businesses. 
So B.

Ques 3.

It is mentioned in the passage
 the proportion of high-value businesses founded each year has declined. 
it means the ratio of high value business to total has declined.This does not tell anything about number of high value business.
So E.

akadiyan · Answer

Q1: C
The passage presents information, but does not propose any suggestion in the passage.

Q2: B
This is exactly as given in the passage. The college graduates opt to launch their own company as they are unable to find traditional jobs.

Q3: E
I chose B , but it was wrong. I missed the term 'Proportion' and assumed the high value business decline each year.

carcass · Answer

A is no where mentioned in the passage. Neither the other answer choices.

C is what clearly comes up reading the entire passage.

Ask for further assistance.

Regards

Masterscorp · Answer

The only tricky question is question number 3 imo.

3. It can be inferred from the passage that over the course of the recent recession, the number of American high-value businesses founded per year

(A) has fallen sharply
(B) has fallen moderately
(C) has risen sharply
(D) has risen moderately
(E) may have either fallen or risen

The relevant part of the passage to answer the question is this one:

Quote:

Though the average number of new businesses started per year has been higher during the recession than it was before, the proportion of high-value businesses founded each year has declined

This tells us that the number of new businesses has increased, but the proportion of high-value businesses has declined. As we aren't given any numbers there are two possibilites:

1) The number of new businesses is that high that the absolute number of high value businesses as increased as well.
2) The increasing number of businesses is not high enough to compensate for the lower proportion of high value businesses so the absolute number of high value businesses has declined.

You may want to argue that the exact value of the proportion of high value businesses is relevant as well, but it doesn't change anything about the two scenarios I described.
In conclusion, we have two possibilities and this is reflected in answer E).

I hope that helps

goofytiwari69 · Answer

the passage tells us that while the average number of new businesses per year has increased the proportion of high value business has decreased..
first of all the question asks about the number of businesses and secondly (proportion=number/total)because total is increasing and proportion is decreasing this means that the number may increase or decrease ,it may even be same i say.

Golusoni · Answer

Hi,

Can you explain me the second question?

Thanks,
Soni

Prateek176 · Answer

Golusoni

2. According to the passage, the reason that many college graduates are choosing to launch their own companies in the present economic climate is that

(A) they are hampered by the difficulty of finding outside investors

They are in no way hampered by difficulty of finding outside investors. The passage only states that foreign investors aren't willing to invest in startups. That doesn't mean that many college graduates would choose to launch their own companies. Completely nonsensical

(B) they cannot easily find positions typically open to workers of their experience

HOLD. The passage does state that many youngsters start something on their own because of unemployment
 
(C) the prevalence of low-value companies has increased

So what??? How could that be a reason?? That can at best be a deterrent for college graduates to not start a new company because the prevalence of low-value companies has increased

(D) they are forced to decide between renting and buying property

This can't be a reason. This is just an analogy.

(E) forecasts of the unemployment rate are likely to become less dire in coming years

Nowhere mentioned

Hope it helps

Hit kudos if you like

navaneethan123 · Answer

can somebody explain the answer for the question 3.

SairamRamo · Answer

Read and solved the RC under 3 minutes 35sec

I believe 1st and 2nd questions are pretty straight forward

3rd question, however, is bit tricky if we didn't pay close attention to details in the passage, Look in to Line 11-13 of the passage

" Though the average number of new businesses started per year has been higher during the recession than it was before, the  proportion  of high-value businesses founded each year has declined."

a decrease in proportion need to translate to the decline in the actual number. So for 3rd question its Option E IMO

rocky620 · Answer

Dear Experts,

For q-3: We can refer to the text :  Though the average number of new businesses started per year has been higher during the recession than it was before, the proportion of high-value businesses founded each year has declined,

In the highlighted part it is mentioned that the the proportion of high-value businesses  founded each year  has declined. Meaning that the proportion is lower than that of previous years. But it still is rising. So we can infer that the numbers are rising moderately as in Option D.
Why the OA is Option E?

Kindly help.
Thanks.

CrackverbalGMAT · Answer

Hi

In your statement, the problem is in the underlined portion:

In the highlighted part it is mentioned that the the proportion of high-value businesses  founded each year  has declined. Meaning that the proportion is lower than that of previous years.  But it still is rising . So we can infer that the numbers are rising moderately as in Option D.

For example, let us assume number of new businesses founded = 100 (pre-recession)
This has increased during the recession. So, let this increased number be = 120

Now, we know proportion of high-value businesses has decreased during the recession. If, for instance, this proportion was 50% pre-recession, this translates to 50 high-value businesses. If this proportion has decreased to 45%, this means that now the number of high-value businesses is 54 (45% of 120), an increase. But if the decreased proportion is only 30%, then the number of high-value businesses is only 36 (30% of 120), a decrease. We do not know what the number or proportion was pre-recession or during the recession.

Therefore, we cannot be certain that the number will have increased, and option (D) is incorrect. It may have either decreased or increased, which is exactly what the correct option (E) states.

Hope this helps.

Srini

rocky620 · Answer

CrackVerbalGMAT 
Hi, since we are concerned with the proportion of business founded each year (and not already existing ones). Should we not focus on only 20.

Prior to recession total business - 50, (40 existing, 10 new), each for high and low. = 100
New business found post/during recession. let this number be 20. Since the proportion has fallen (let it be 30-70) so for high there will be 6 new businesses, and for low here will be 14 new business.

Total businesses = 120
High = 50+6 = 56
Low = 50+14 = 64.

Is it not correct?

KeyurJoshi · Answer

Here are my 2 cents for Q3 on the basis of following stmts Let me know if this helps or requires corrections

fireagablast · Answer

Answer to the last question is E because the answer specifically asks about what can be inferred about THE RAW NUMBER of high value buisnesses. The passage provides that THE PROPORTION of high value to low value buissness has fallen.

The passage provides that THE RATIO has decreased, but that doesn't neccecarily mean that RAW NUMBER has decreased. I could have decreased, but the raw number could also be larger given the fact that more buisnesses are being built.

1HV:2LV
5HV:100LV

While new census data reveal that unemployment numbers are even direr

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards

GMAT Reading Comprehension (RC) Questions

While new census data reveal that unemployment numbers are even direr

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards