While new census data reveal that unemployment numbers are even

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 
 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 
 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 
 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.

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

KeyurJoshi · Answer

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

VerbalBot · Answer

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While new census data reveal that unemployment numbers are even

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While new census data reveal that unemployment numbers are even

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