PrepTest 102

[lcid:3506] Prep Test 102 LSAT — Logical Reasoning — S3 Logical reasoning

Question prompt

A company with long–outstanding Remaining source text redacted.
Why the credited answer is right

Credited answer: A

The notes below walk through why it fits the stem and how to eliminate the rest.

Argument or Facts

Argument

Valid or Flawed

Flawed

Question Type

Strengthen with Necessary Premise Questions

Stimulus Summary

Companies can sell debt to debt collectors, but they get only $.15 on the dollar, so they’d recover more money by collecting the debts on their own.

Answer Anticipation

The conclusion here is comparative - it looks at the amount of money that a company would get through two courses of action. The first course of action? Selling outstanding bills to debt collectors. This nets them $.15 for every dollar - an $.85 (or 85%) loss per dollar. The course of action recommended by the argument? Collect that debt on their own. If they collect it, then they’d get 100%. But that’s ignoring two things. First, it’s unlikely that they’d be able to collect every debt. Maybe people died, or they’re bankrupt, or they just don’t have the money. Maybe they couldn’t be found, or they used fraudulent information! And second, it ignores the cost of collecting that debt. Presumably, it’s outstanding because people aren’t willing to pay it. So it’s likely that it would require time to find the people, and then to use whatever means is required to get them to pay the debt. That might involve investigators and costly lawsuits. For example, it might cost $50 to collect a $51 debt, and the company would be better off just selling it for $.15 on the dollar ($7.50). The argument assumes that the percent of money actually collected and the cost of doing so wouldn’t outweigh the losses that they see in just selling the debt to debt collectors, so let’s find an answer reflecting that assumption.

Answer choices

  1. A
    a company that pursues Remaining source text redacted.
    Why choice A matches the stem
    This answer brings up one of the factors that could prevent the option recommended by the conclusion from paying off. If a company doesn’t typically collect more than 15% of the total outstanding money owed, then they’d be better off selling it for 15%! This answer is therefore a necessary premise.
  2. B
    the cost to a Remaining source text redacted.
    Why choice B is not credited
    The cost to the company can exceed 15% and they could still make money - the cost can’t exceed 85% for them to make money.
  3. C
    collection agencies that are Remaining source text redacted.
    Why choice C is not credited
    The argument recommends that the companies pursue the debts, so the success rate of debt collectors is out of scope - what matters is the success rate that the companies would have.
  4. D
    at least 15 percent Remaining source text redacted.
    Why choice D is not credited
    While this might be a reason for the companies not to sell the debt, it doesn’t need to be true for the conclusion to hold. Even if none of the customers would pay anyway, the company might still be able to net more than 15% of the total by pursuing it themselves.
  5. E
    unless most of the Remaining source text redacted.
    Why choice E is not credited
    Profitability is out of scope of the conclusion since it’s limited to discussing a company interested in “reducing losses” from the outstanding bills.

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