LSAT 59 - Section 2 - Question 02

The Question Stem reads: On the basis of their statements, Price and Albrecht are committed to disagreeing about whether __. This is an Explicit PAI Disagree Question.

Our job here is to evaluate where Price and Albrecht's statements directly contradict each other. Because the question stem does not say "suggests" or "supports," we should be able to find their disagreement directly in the text. Price claims that a corporation has primary responsibility to its shareholders. Why? He offers the Premise that they are the most important constituency because they take the greatest risk. OK. So Price's reasoning is that because the shareholders take on the largest amount of risk, the corporation should keep the shareholder's best interest in mind first when making decisions. He then supports that Premise by saying that if the company were to fail, the shareholders would lose their investment (as seasoned 7Sagers, you'll likely identify that this argument could be better. We need to include a link between risk and responsibility). OK, so now that we know what Price has to say, we need to turn to Albrecht. So a quick recap 1.) A company’s primary responsibility is to shareholders, 2.) because shareholders take on greatest risk, 3.) since if a corporation goes bankrupt, shareholders lose the investment. Albrecht might disagree with any of these claims. Let's see what he has to say.

Albrecht says that shareholders typically have diversified investment portfolios, meaning shareholders are generally invested in multiple companies. This claim suggests that shareholders generally won't lose all their money if one company goes bankrupt. Therefore, they actually are not assuming that much risk. However, our question is explicit, so our job is to see if Albrecht's claim directly contradicts anything Price had to say; currently, it does not. Price then goes on to say that employees' livelihoods are tied to the company and that the well-being of the company has a direct effect on their lives. Albrecht concludes that a corporation's primary responsibility should be to the employees. Bingo. That directly contradicts Price's claim that the primary responsibility is to shareholders. Price and Albrecht disagree on who the corporation's primary responsibility should be, too, because they disagree on who has more at stake. Now it's time to go hunting.

We see that disagreement in Correct Answer Choice (D). Price would agree that shareholders have more at stake than anyone else. That is why Price thinks the company is primarily responsible to the shareholders. Albrecht would disagree. He believes that the employees have more at stake because the company represents their livelihood.

Answer Choice (A) is tricky because both Price and Albrecht are concerned with primary responsibility. However, it is entirely possible for corporations to have more than one responsibility. Albrecht might agree that corporations have a responsibility to their shareholders, butIt's just not their primary responsibility.

Answer Choice (B) is very similar to (A). Price might agree that corporations are responsible for the welfare of their employees, but the corporation's primary responsibility is to their shareholders.

Answer Choice (C) is wrong because we have no idea where Price or Albrecht land on this.

Answer Choice (E) is wrong because both Albrecht and Price would likely agree with this statement. Earlier, we mentioned how Albrecht claimed that shareholders typically have diversified portfolios, which suggested that a corporation failing wouldn't be a big deal. However, he uses the word "typically," which indicates that might not always be the case. He might also believe that some investors would be destroyed by a single company failing. Since it’s likely that both Price and Albrecht agree, we can eliminate this answer choice.