Self-paced
A developing country can substantially increase its economic growth if its businesspeople are willing to invest in modern industries that have not yet been pursued there. But being the first to invest in an industry is very risky. Moreover, businesspeople have little incentive to take this risk since if the business succeeds, many other people will invest in the same industry, and the competition will cut into their profits.
23.
The statements above, if true, most strongly support which one of the following claims?
a
Once a developing country has at least one business in a modern industry, further investment in that industry will not contribute to the country's economic growth.
This answer is not supported. The stimulus never suggests that only the first investment in an industry increases growth.
b
In developing countries, there is greater competition within modern industries than within traditional industries.
This answer is unsupported. We don’t know anything about traditional industries from the stimulus to make this comparison. The stimulus is limited to discussing modern industries.
c
A developing country can increase its prospects for economic growth by providing added incentive for investment in modern industries that have not yet been pursued there.
This answer is strongly supported. We know that investment in these industries increases growth. Since what’s preventing that investment is high risk and low incentives, providing incentives could increase the prospects for economic growth.
d
A developing country will not experience economic growth unless its businesspeople invest in modern industries.
This answer is unsupported. This answer choice reverses the relationship in the stimulus. The stimulus provides that investing in new industries is sufficient to increase growth, not necessary.
e
Investments in a modern industry in a developing country carry little risk as long as the country has at least one other business in that industry.
This answer is unsupported. The stimulus tells us that there is risk for the first to invest, but we don’t know if there is little risk for subsequent investors. It could be the case that investment is still risky for them.