PrepTest 109

Incorrect. There's no discussion of how family owned/operated businesses stack up on customer satisfaction. This answer also discusses profitability, but the argument cares about relative profitability.

Incorrect. A trap answer that sounds like the first two assumptions we anticipated! However, the stimulus discusses "exceptionally low wages," "much lower" operating expenses and "higher" profits. This answer talks about the "lowest" of the first two and the "highest" of the last. That shift in language is enough to invalidate this answer.

Correct. Argument or Facts:
Argument

Valid or Flawed:
Flawed

Question Type:
Errors in Reasoning

Stimulus Summary:
Family—owned and operated business — Employees can be paid almost nothing
Intermediate conclusion — General operating expenses are lower
Intermediate conclusion 2 — Profits are higher
Main point — A family business is the best way for a family to be rich

Answer Anticipation:
This argument has several steps to it, but luckily the structure is linear—it moves from a premise, to an intermediate conclusion, to another intermediate conclusion, to its main point. We should check out each step along the way to see if there's an assumption that could show up as the correct answer. Let's take the steps one at a time.

If employee costs are low, does that guarantee that general operating expenses are lower than other businesses? Not necessarily. Labor costs would be, but maybe there are other costs associated with a family business (e.g., housing, food, education) that are higher, driving operating expenses up. There's one assumption.

If operating expenses are lower, will profits be higher? Again, not necessarily. It could be that expenses are low, but so is revenue, and thus profits aren't all that great. Assumption number two.

If profits are higher in a family owned and operated business, does that mean it's the best way for a family to get rich? Nope! It may be a good way, but no other methods of accumulating familial wealth are discussed, so this comparative conclusion ("surest") is unsupported. Another gap in the argument.

That means there are three answers we have to be on the lookout for! Only one will be provided but since this is a question #17 there's a good chance that a trap answer that sounds like one of these will be presented so let's be careful with the details in any answer that we think may be correct.

Answer Explanation:
This answer is a more extreme version of the third assumption we anticipated. It brings up the possibility that not only is a family owned/operated business not the surest way to make the family rich but it might not even succeed in that goal at all based on one of the features established in the premises. If paying the family such low wages negatively affects the family's prosperity that calls the whole argument into question so it's a possibility that the argument overlooks.

Key Takeaway:
First when an argument has several steps (i.e. an intermediate conclusion or two) check for assumptions/flaws at each step along the way. Second when you identify multiple flaws in a question that's later in the section (i.e. a hard question) watch out for trap answers that sound like something you anticipated but shift language in some key way. That's a common trap in the harder questions in the section.

Incorrect. The argument doesn't care about why the family members are willing to accept such low wages, just that they are.

Incorrect. The argument assumes that businesses with lower operating expenses tend to make higher profits, but it never relies on that being the only way to succeed.