Try out this medium-level “weaken” question from GMAT Hacks!
Industry analysts feel that Bluecorp paid far too much to acquire rival fi
rm Strickland. While doing so limited competition they face in the marketplace, this approach cannot be pro
table in the long
run. Once two rival fi rms merge in order to increase pro ts, the higher prices would only provide other competitors an opportunity to enter the field at a lower price, cutting into Bluecorp’s pro fits
and making the acquisition of Strickland an expensive mistake.
Which of the following, if true, most seriously weakens the
(A) In some countries it is legal for two companies to merge
even if the resulting entity would nearly monopolize the
(B) The combination of Bluecorp and Strickland creates an
entity whose size allows it to produce items at a far lower
cost than could any smaller enterprise.
(C) In addition to eliminating competition, Bluecorp’s
acquisition gives it a much more substantial presence
in urban areas.
(D) As a result of the acquisition, the new corporate entity
will create two smaller entities to operate as independent
suppliers to Bluecorp.
(E) When two large companies in the same
entrepreneurs tend to shy away from the fi eld due to the
single entity’s perceived dominance.
-Conclusion: Bluecorp acquiring Strickland = NOT profitable long-term
(author concedes it DID limit competition)
-Evidence: Higher prices gives competitors opportunity
-Assumption: That the merger = higher prices
The question asks which answer choice would “weaken” the argument, so my prediction is something that shows the merger resulting in LOWER prices for Bluecorp.
Let’s look at the choices:
(A) The legality of the merger is irrelevant to the argument
(B) This correctly weakens the argument! “Lower cost” correctly refutes the “higher prices” in the assumption.
(C) Bluecorp’s presence in urban areas is irrelevant to the argument.
(D) Independent suppliers are irrelevant to the argument.
(E) The focus here is on the entrepreneurs “shying away” – it doesn’t weaken the argument, which focuses on the merger = higher prices.
The correct answer is (B).