PT 25, sec 2 #18

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PT 25, sec 2 #18

Postby robotdreams » Wed Jun 02, 2010 9:45 am

I originally chose answer B. cause it could be that there are other alternatives than bankruptcy. I understand how E. can be right, but I'm having a hard time understanding why B. is wrong.
Any explanations?

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Re: PT 25, sec 2 #18

Postby nycparalegal » Wed Jun 02, 2010 10:47 am

Well, the first thing you need to understand is that the error of reasoning in the stimulus is the false dilemma fallacy.

This error involves a conclusion in which only two alternatives are considered, when in fact there are other options.

So the stimulus states that profits are at a all time low because of decreased demand. This is a cause and effect relationship and since it is in the stimulus and not in the conclusion the reasoning is not suspect or wrong.

Next we get a conditional statement that states if profits stay at an all time low then the company would have to declare for bankruptcy. Again because this is a premise and not in the conclusion it is not suspect or wrong.

He next statement is that it is importent to prevent any further decrease in profits.

His conclusion is that they either have to reduce the planned expansion or eliminate some less profitable existing operations.

Well, as you can see based on his premises, the conclusion doesn't have to follow only those two recommendations. Those are not his only two choices. He could raise prices. He could cut back on employee hours.

The reason B doesn't work is because we know that if profits stay low then he would HAVE to declare bankruptcy.

So answer choice B is not an error made by the author.

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