LSAT 137 – Section 4 – Question 04

LSAT 137 - Section 4 - Question 04

October 2012

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Question
QuickView		 Type Tags Answer
Choices		 Curve Question
Difficulty		 Psg/Game/S
Difficulty		 Explanation
PT137 S4 Q04
+LR
Strengthen +Streng
Causal Reasoning +CausR
Net Effect +NetEff
Link Assumption +LinkA
A
11%
157
B
3%
153
C
82%
165
D
1%
155
E
4%
160
139
149
158
 +Medium 146.883 +SubsectionMedium

An economist has argued that consumers often benefit when government permits a corporation to obtain a monopoly. Without competition, a corporation can raise prices without spending nearly as much on advertising. The corporation can then invest the extra money in expensive research or industrial infrastructure that it could not otherwise afford, passing the fruits of these investments on to consumers.

Summarize Argument
The economist concludes that consumers often benefit when the government allows a corporation to have a monopoly. She supports this by saying that without competition, the corporation can raise prices and spend less on advertising. The savings can be invested in research or infrastructure, which can then benefit consumers.

Notable Assumptions
The economist assumes that corporations with a monopoly often will use their savings to invest in beneficial research or infrastructure, rather than spending it on things that don’t benefit consumers. She also assumes that other costs of monopolies, like higher prices or fewer options, won't outweigh the benefits of research and infrastructure.

A
The benefits to consumers are typically greater if a corporation invests in expensive research or industrial infrastructure than if that corporation spends the same amount of money in any other way.
This reestablishes the fact that research and infrastructure do benefit consumers, but it fails to address whether companies will actually invest their savings into these things. It also fails to address whether these benefits outweigh the costs of monopolies.
B
The government’s permitting a corporation to obtain a monopoly is advantageous for consumers only if that corporation passes the fruits of at least some of its investments on to consumers.
This shows that monopolies benefit consumers only if the corporation shares the results of its investments. However, it doesn't address whether these benefits outweigh the costs of monopolies or whether companies will actually invest in helpful research and infrastructure.
C
If a corporation obtains a monopoly, the disadvantage to consumers of any higher prices will be outweighed by the advantages from extra investments in expensive research or industrial infrastructure made by that corporation.
This suggests that some monopolies will indeed benefit consumers because the advantages of research and infrastructure will outweigh the cost of higher prices.
D
Even if a corporation is not permitted to obtain a monopoly, it typically invests some money in expensive research or industrial infrastructure.
Irrelevant. The economist's argument is about corporations that are allowed to have a monopoly. The fact that other corporations invest in research or infrastructure doesn't tell us whether monopolies will do the same.
E
If obtaining a monopoly enables a corporation to raise its prices and invest less money in advertising, that corporation will almost inevitably do so.
Even though the corporation will almost certainly raise prices and spend less on advertising, this doesn't tell us if it will then invest the savings into research and infrastructure or if the benefits of those investments will outweigh the costs of monopolies to consumers.

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LSAT PrepTest 137 Explanations

Section 1 - Reading Comprehension

Section 2 - Logical Reasoning

Section 3 - Logical Reasoning

Section 4 - Logical Reasoning

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