PT105.S2.Q17

PrepTest 105 - Section 2 - Question 17

Show summary

Whenever a company loses a major product-liability lawsuit, the value of the company's stocks falls significantly within hours after the announcement. █████ ███ ████ ████ ████████ ██ █ █████ █████████████████ ████████ ███ ███ ██████ ████ █████████████ ██ █████ ██████ ██████████ ██ ███ ██ ████ ████ ██ ███████████ ████████ ███████ █████ ██ ████ ███████ ███ █████████ ███████ ██████

Method of Reasoning

The author concludes that Cotoy must have lost a lawsuit. His reasoning is that Cotoy’s stock has fallen, and losing a lawsuit would cause their stock to fall.

Identify and Describe Flaw

This is the cookie-cutter flaw of confusing sufficiency and necessity. We are told that losing a lawsuit is sufficient to cause a company’s stock to drop. The author then erroneously infers that a company’s stock drop can only be caused by losing a lawsuit. (In other words, that losing a lawsuit is necessary for a company’s stock to drop.) But there could be any number of other reasons—e.g. the release of a competing product—why a company’s stock might drop.

Note that the context is that Cotoy was involved in a lawsuit, but the premise is that losing lawsuits causes a decrease in stock prices. Just because Cotoy was sued doesn’t mean it will lose the lawsuit.

Show answer
17.

Which one of the following ████████ ██████ █████████ ████ ████ ███████ █████████ ████ ██ ███ ████████ ██████

a

Whenever a business ██████ ███ █████████ ███████████████ ███ █████████ █████ ██ ████ ██████████ ████████ █████ ██ ████ ███ ██ ███ ██████████ ██████████ ███ █████████ ████ █████ █████ █████████ ███████████████

b

Whenever the large ████████ ████████ ██████ ███ █████████ █████████ ██ ███████ █████████ ████████ ██ █████████ █████████ ██████████ ███ ███████ █████████ █████████ █████████ █████████ ████ ██ █████████ ██████████ ████ ███ █████ ████████ ████████ █ █████ █████ █████████

c

Whenever a country █████ █ ████ ██ ██████████ ██ █████████████ ███████ ███████ ███ ███ █████████ ████████ ██████ ██ ████████ ██████████ ██ ████ ███████ ███ ███ █████████ █ ███████ ██████ ████ ██████████ ██ █████████████ ███████

d

Whenever an entering ███████ ██ ███████ ███████ ████ ███ ███████████ ███████████ ██ ██ ███ ████████ ████████ ██████████ █████ █ ███████ ███ ███ ████████ ██ ████████ ████ ████ ███ ███ ███████████ ███████████ ███████ ███ ████ ████████ ███████ ████ ███ ████████

e

Whenever a company ██████████ ███ ████████ ████████████ ███ █████████ █████ █████████ ███████ █████ ████ ███ ██████████ ██████████ ██ ██ ██████ ████ ███ ███████ ███ ███ █████████ ███ ████████ ████████████

Confirm action

Are you sure?