PT102.S3.Q13

SECTION 1 · rc

PASSAGE 1
Question 1 Question 2 Question 3 Question 4 Question 5 Question 6 Question 7

PASSAGE 2
Question 8 Question 9 Question 10 Question 11 Question 12 Question 13

PASSAGE 3
Question 14 Question 15 Question 16 Question 17 Question 18 Question 19 Question 20 Question 21

PASSAGE 4
Question 22 Question 23 Question 24 Question 25 Question 26

SECTION 2 · lr

Question 1 Question 2 Question 3 Question 4 Question 5 Question 6 Question 7 Question 8 Question 9 Question 10 Question 11 Question 12 Question 13 Question 14 Question 15 Question 16 Question 17 Question 18 Question 19 Question 20 Question 21 Question 22 Question 23 Question 24 Question 25

SECTION 3 · lr

Question 1 Question 2 Question 3 Question 4 Question 5 Question 6 Question 7 Question 8 Question 9 Question 10 Question 11 Question 12 Question 13 Question 14 Question 15 Question 16 Question 17 Question 18 Question 19 Question 20 Question 21 Question 22 Question 23 Question 24

SECTION 4 · lr

Question 1 Question 2 Question 3 Question 4 Question 5 Question 6 Question 7 Question 8 Question 9 Question 10 Question 11 Question 12 Question 13 Question 14 Question 15 Question 16 Question 17 Question 18 Question 19 Question 20 Question 21 Question 22 Question 23 Question 24 Question 25 Question 26

PrepTest 102 - Section 3 - Question 13

Question

Explanation

Analytics

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A company with long-outstanding bills owed by its customers can assign those bills to a collection agency that pays the company a fraction of their amount and then tries to collect payment from the customers. █████ █████ ████████ ███ █████████ ████ ██ ███████ ██ ███ █████ ██████ ██ ███ ███████████ ██████ █ ███████ ██████████ ██ ████████ ██████ ████ ████████████████ █████ █████ ██ ████ ███████ ██ ██████ ███ ███████ ██ ███ ████

Summary

The argument concludes that companies with long-outstanding debts would better reduce their losses by going after their debtors than by selling the debts to collection agencies. In support, the argument claims that collection agencies only pay 15 percent of the amount debtors owe.

Notable Assumptions

The argument assumes that the companies in question would recover more than 15 percent of the outstanding debts if they went after the debtors themselves. It also assumes that it wouldn’t cost companies so much to recover the debts that they would net less than 15 percent of the amount owing.

Without these assumptions, there’s no way that companies could reduce their losses by collecting debts themselves compared to selling the debts.

Analysis by AlexandraNash

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13.

The argument depends on the ██████████ ████

a company that ███████ ███ ███████ ██ ███ ███ █████████ ████████ ████ ████ ██ ███████ ██ ███ █████ ██████ ██ ███ ████████████████ █████ ████ ██ ██ ████

This is necessary a company to reduce its losses more by pursuing debtors itself, rather than by selling the debts for 15 percent of their amount. In other words, this is necessary for pursuing debtors to be the financially wiser option.

the cost to █ ███████ ██ ████████ ███ ███████ ██ ███ ███ ███ ███████ ██ ████████████████ █████ ████ ███ ██████ ██ ███████ ██ ███ █████ ██████ ██ █████ █████

Without knowing what percentage of the debt a company would actually collect, this isn’t necessary. For example, if a company collects 50 percent of its debts but spends 20 percent of the amount owed, that’s still way better than selling the debt for 15 percent.

collection agencies that ███ ████████ █████ ███ ██████████ ██ █████████ ███ ████████████ ██ ███████████ ██ ████████ ████ ██ ███████ ██ ███ █████ ██████ ██ █████ █████

The amount that a collection agency is able to recover is irrelevant to how much a company would be able to recover when pursuing debts itself. We can’t assume that companies would recover the same amount as do collection agencies.

at least 15 ███████ ██ ███ █████████ ████ ███ █████ ██ █████████ ██████████ ███ █████ █████ ███████ ██ ███ █████ █████ ███ ████████ ██ █ ██████████ ██████

15 percent of customers paying their bills isn’t relevant to us, because we don’t know what proportion of the total debt is owed by those customers.

unless most of ███ █████████ ██ █ ███████ ███ █████ ██████ ████ ███████ ██ ███ ████ ███ ████ ███ ██ ██████████

This is irrelevant—the argument isn’t concerned with profitability and customers paying their bills, but only with the best way to approach long-outstanding debts.

Difficulty

Question

76% of people who answer get this correct

This is a moderately difficult question.

CURVE

Score of students with a 50% chance of getting this right

25% 127

145

75% 163

Analysis

Question Stem Tags

Necessary assumption

Stimulus Tags

Math

Net effect

Answer Popularity

Popularity Avg. score

76%

165

21%

162

156

158

154

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