Logical Reasoning

PT134 · S2 · Q12 Perry: Worker-owned businesses

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Perry: Worker-owned businesses require workers to spend time on management decision-making and investment strategy, tasks that are not directly productive.

Evidence

Worker-owned businesses require workers to spend time on management decision-making and investment strategy, tasks that are not directly productive.

Worker-owned businesses have less extensive divisions of labor than do investor-owned businesses.

Such inefficiencies can lead to low profitability, and thus increase the risk for lenders.

Conclusion

Lenders seeking to reduce their risk should not make loans to worker-owned businesses.

Evaluate

This list of drawbacks associated with worker-owned businesses does present a gloomy outlook for such businesses. But it fails consider any possible advantages associated with worker-owned businesses.

12.

Which one of the following, if true, most seriously weakens Perry's argument?

  1. Businesses with the most extensive

    Too Weak

    This provides a drawback to companies with the most extensive divisions of labor. But it does so only sometimes and so does not undermine the argument.

    6% picked this

  2. Lenders who specialize in high-risk

    Strengthens

    This supports the conclusion that worker-owned businesses present a greater risk to lenders.

    7% picked this

  3. Investor-owned businesses are more likely

    Strengthens / Too Weak

    This supports the conclusion by pointing out that investor-owned businesses receive more loans which might indicate that such businesses present a lower risk to lenders. Additionally, this is about start-up loans which may not be indicative of loans to businesses more generally.

    2% picked this

  4. Worker-owned businesses have traditionally obtained

    Strengthens

    This indicates what worker-owned businesses may do in response to not receiving loans from traditional lenders and may support the view that worker-owned businesses present a greater risk to lenders that investor-owned businesses.

    5% picked this

  5. Correct

    In most worker-owned businesses, workers

    Why this is right

    This provides an advantage of worker-owned businesses that mitigates one of the factors the argument claims can increase the risk that businesses present to lenders.

    Skill tested: Weaken · how this choice captures the argument's function is the move to repeat next time.

    81% picked this

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