Q2 - Shareholder: The company's current

[mshinners]

Question Type:
Inference (Most Strongly Supported)

Stimulus Breakdown:
The company is successful. Moving into food is risky. Food is volatile and risky, even more so than pharma.

Answer Anticipation:
There is some overlap here in discussing risk. There are also comparisons between different areas. I don't have a specific prediction, but I'm expecting those ideas to come up in the answers.

Correct Answer:
(E)

Answer Choice Analysis:
(A) Out of scope. While moving money out of the current areas presents a risk, that doesn't entail a need for more funding. Maybe the funding is exactly right, and that's why moving money out is risky.

(B) If anything, contradicted. While this answer isn't definitively contradicted, if anything, we know moving money into a new area (such as pharma) could lead to siphoning funding from current operations.

(C) Degree. While the shareholder agrees it's risky, that doesn't guarantee it'll lose money. Maybe the risk would pay off!

(D) Degree/reversal. "Only if" is too strong here. It seems pharma might lead to profits, but that doesn't mean it's the only thing that would work (food services, it seems, is also a possible growth business).

(E) Bingo. The stimulus compares the relative risk of pharma and food services, saying food services has a "higher inherent risk". If there's a higher risk, there's a higher chance of losing money.

Takeaway/Pattern: Comparisons often lead to correct answers in Inference questions.

#officialexplanation

[hippo3717]

Please someone check my work:

Basically the core of this argument is that
We are good by not jumping into the food services. Why? Because such adventure will require money from other operations and it is volatile than pharm industry.

A) We don't know what present operation is...
B) We don't know whether pharm industry requires money
C) Tempting because the whole argument doesn't like food services. Yet, it said going into food services is bad because of its inherent high risks, not because it will fail for sure.
D) Unsupported.
E) The last sentence supports this answer: since food services is more volatile than pharm industry, of course the company will have a greater chance of losing money in the former.

[ManhattanPrepLSAT1]

Pretty good hippo3717!

Though a couple points to work through. We don't actually have an argument core, since there is no argument in the stimulus - just a series of statements.

You've correctly identified the support for answer choice (E).

Incorrect Answers
(A) is unsupported. We don't know that the current operations require increased funds, but that siphoning off the funds for the food industry operations might be dangerous.
(B) is contradicted. Any siphoning of funds would take funds away from the business' other operations.
(C) is unsupported, because while there is inherent risk in the food services industry, we are uncertain about what will in fact happen.
(D) is unsupported as we are not told what will happen, just that risk is involved with the expansion into the food services operations.

Nice work hippo3717!

[tzyc]

Hi,
I have a question...Where is the contradiction when you say Any siphon of funds would take funds away from the business' other operations? (in your explanation abobut (B)) The stiumulus only says the move into FS may siphon off funds...
I think about (B) the stimulus neither say yes nor no about whether it would not siphon off money so we cannot infer that...is this thought incorrect?
Thank you

[sumukh09]

Hi,
I have a question...Where is the contradiction when you say Any siphon of funds would take funds away from the business' other operations? (in your explanation abobut (B)) The stiumulus only says the move into FS may siphon off funds...
I think about (B) the stimulus neither say yes nor no about whether it would not siphon off money so we cannot infer that...is this thought incorrect?
Thank you

Hi TZ

The contradiction Matt is referring to is a contradiction between answer choice B and the stimulus where the stimulus says: "The move into the food industry may siphon off funds..." and B is saying a move into pharmaceuticals would NOT siphon off funds. But if the move into food would siphon off funds then why wouldn't a move into pharmaceuticals? Investment requires money, so investing in pharmaceuticals would definitely siphon off funds and hence the contradiction.

The reason we can't infer B is because it's contradicted, however just because it says "may" doesn't mean B would be incorrect if there was no contradiction within B -- this is a most strongly support question and we'd be able to support B if there was support for the idea that investment into pharma would not siphon off money from other operations.

[tzyc]

Hi sumukh09, thanks for the reply!
Just wanted to double check...
So the conclusion is current operations are time-proven successes, which means keeping the current status is good enough (so no need to move into food services) abd siphon off funds means possibility of losing money, correct?
Does higher inherent risk mean more possibility of losing money?

[sumukh09]

Hi sumukh09, thanks for the reply!
Just wanted to double check...
So the conclusion is current operations are time-proven successes, which means keeping the current status is good enough (so no need to move into food services) abd siphon off funds means possibility of losing money, correct?

This is a most strongly support Q so it is just a set of facts instead of a stimulus containing an argument core. Notice how the first sentence isn't supported by anything in the stimulus.

Does higher inherent risk mean more possibility of losing money?

exactly!

[oyxy1111]

Why does higher inherent risk mean more possibility of losing money?

Risk is abroad and generic so it could mean anything - not just losing money. In my opinion that deduction is overreaching.

[ganbayou]

Hi,

Just want to make sure...so the company's current operations are not food services, is this right?
Thanks,

[tommywallach]

Yes, because it says they're "moving into" food services.

-t

[nikamon]

Hello Can someone explain what type of question this is?
I.e support the conclusion etc

[contropositive]

Hello Can someone explain what type of question this is?
I.e support the conclusion etc

it is a inference question. the words STATEMENT and MOST STRONGLY SUPPORTED hint inference question. When you see the word ARGUMENT you should know its not an inference question but their giving you an argument and asking a particular task based on the question stem. But here, it is STATEMENT and we need to find something that is a MUST BE TRUE based on what we read from the statements given.