Logical reasoning PrepTest 137 · Section 4 · Question 4

Incorrect. Since this answer explains what is "typically" the case, it doesn't apply in all situations. And since we know that the stimulus is about only one particular type of case—when a company has a monopoly—this answer might not apply in that situation. Additionally, the benefit of investing money this way being greater than alternative investments doesn't support that they outweigh the higher prices paid.

Incorrect. This answer limits the situations where a monopoly is beneficial to consumers, which runs counter to the argument.

Correct. Argument or Facts:
Argument

Valid or Flawed:
Flawed

Question Type:
Strengthen

Stimulus Summary:
No competition means higher prices with no ads, which means more profits, which means more research/infrastructure that wouldn't otherwise exist, the benefits of which can be passed on to consumers. So monopolies are good!

Answer Anticipation:
This argument starts with a judgment made by an economist—that monopolies often benefit consumers. To back it up, she goes through a long list of the effects of the monopoly:
(1) Higher prices
(2) More profits
(3) Less advertising
(4) More research/infrastructure

Looking at that list, the last two are arguably beneficial to consumers, the second is a benefit to corporations (though it's tied to the last two benefits), and the first is a downside for consumers.

In reaching the conclusion that monopolies can be overall beneficial, therefore, the economist must believe that the downside of higher prices is balanced out by the other benefits that consumers see. Any answer that addresses this balancing of the pros and the cons should be considered.

Answer Explanation:
This answer compares the stated con—higher prices—with the stated pros—extra research and infrastructure investment—and finds that the pros win, thus supporting the conclusion.

Key Takeaway:
When an argument balances the pros and cons of something, make sure that it's a complete accounting and a full comparison. Here, the failure of the argument to actually balance the increased prices against the benefits was a huge shortcoming of the argument, and one that was directly addressed by the correct answer.

Incorrect. If anything, presenting the advantage to consumers as something that would happen anyway undercuts the argument (though it doesn't do that, as the argument establishes monopolies do this more than non-monopolies).

Incorrect. This answer establishes that the noted downside is inevitable, which definitely doesn't strengthen the argument.