PrepTest 126

Topic: Social Science

Paragraph 1

• Paragraph note
  • "Speculative bubble" defined (price increase caused by confidence, not potential earnings); Mackay and Garber's debate on whether it applies to the 1600s Dutch tulip market
• Views, minor Meta-Structures, and the author's attitude
  • Definition of a "speculative bubble": A sharp price increase that's caused by people's untested confidence in others' willingness to pay a high price, not by the potential earnings the item could derive (first sentence)
  • Cause-and-effect relationship, according to the author:
    • In a speculative bubble, people's confidence that others will be willing to pay a higher price for an item causes the item's price to go up; the loss of that confidence causes the price to decrease dramatically (first and second sentences)
  • Example of a speculative bubble, according to Mackay:
    • The 1600s Dutch tulip market (third sentence)
  • Garber's view:
    • There is no evidence that tulips were a speculative bubble (last sentence)
  • author's attitude: "mere speculation" (first sentence); "dramatic decline" (second sentence)

Paragraph 2

• Paragraph note
  • Background/Mackay's view on Dutch tulip market (rare varieties sold for a lot until 1637, when prices suddenly collapsed)
• Views, minor Meta-Structures, and the author's attitude
  • Example of a rare Dutch tulip variety that commanded a high price, according to the author:
    • Semper Augustus bulb that sold for today's equivalent of $11,000 in 1999 (second sentence)
  • Comparison, according to the author:
    • While rare varieties of bulbs sold for a lot of money, common bulb varieties sold for very little (second and third sentences)
  • Mackay's view:
    • The rapid rise in the price of rare bulbs attracted speculators to the Dutch tulip market, and prices increased even more until 1637, when the bubble burst (fourth and fifth sentences)

Paragraph 3

• Paragraph note
  • Garber's argument (original bulb's price is justified due to earnings from all the bulbs created by the original)
• Views, minor Meta-Structures, and the author's attitude
  • Garber's view:
    • The details from Mackay's argument are true (first sentence)
    • But the price commanded by the original bulb can be explained by standard pricing patterns (second and third sentence)
    • The newly developed and fashionable original bulbs sell for a lot of money because you can sell a lot of their descendants to earn a return on your initial investment, even the bulbs' price drops as more of those descendants become available (fourth through seventh sentences)
    • Therefore, the Dutch tulip market is not an example of a speculative bubble (last sentence)

Main Point: While Mackay argues that the seventeenth-century Dutch tulip market is an example of a speculative bubble, Garber believes that it isn't a bubble and can be explained by standard pricing patterns.

Describing a Debate: This passage uses a Describing a Debate Meta-Structure.* In such a passage, the author describes two sides of a debate without taking a side or attempting to reconcile the two sides. (If the author takes a side or attempts to resolve the debate, the passage is better understood as a "Resolving a Debate" passage.) That describes this passage. The author presents two opinions on the Dutch tulip market in the seventeenth century: Mackay's classic view and Garber's challenge to Mackay's view.

In a Describing a Debate passage, the main point is a description of both sides of the debate (or simply an assertion that there is a debate). To express the main point, we can look for whether the author provides a conclusion that summarizes both sides of the debate. The author provides such a summary in the last two sentences of the first paragraph, so we can use those sentences for any question on which we need to consider the main point. Alternatively, we can summarize both sides ourselves. We condensed that summary into one sentence and filled in some details about Garber's view in our anticipated main point.

*You could also call this a Phenomenon/Explanation passage (or, relatedly, a Question/Answer passage) because the author lists two explanations (or answers) to a phenomenon that occurred in the Dutch tulip market in the seventeenth century. Or, since the author simply describes two viewpoints without offering their own opinions, we could call this a Reporting a Viewpoint passage.

Since the author didn't advance an argument in the passage, we'll get fewer Major Point and Tone questions than usual. Expect several Minor Point and Application questions about the Dutch tulip market and Mackay and Garber's view, as well as the typical Argument Structure question.