Logical Reasoning

PT142 · S4 · Q23 The constitution of Country F

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The constitution of Country F requires that whenever the government sells a state-owned entity, it must sell that entity for the highest price it can command on the open market.

Rules

sell for highest price govt sells a it can get on open market state-owned → and entity citizens have majority ownership of new company for 1+ year

Goal

We need a situation where we'd be violating at least one of the requirements, so let's think about what it would sound like if they were at odds with each other:

What if there were only 2 buyers: one would offer highest open market price, but wouldn't allow for citizens to have ownership for at least a year. The other would allow for citizen ownership but wouldn't offer highest open market price.

23.

The government of Country F must violate at least one of the constitutional requirements described above if it is faced with which one of the following situations?

  1. The government will sell StateAir,

    Compatible

    This was sold for the highest bid, so we followed requirement 1. Noncitizens purchased a minority share, so it sounds like citizens retained their majority share (since they previously owned it entirely). So this seems to have met both requirements.

    3% picked this

  2. The government has agreed to

    Compatible

    Citizens have majority ownership. We don't learn anything about whether the price is highest or not. So this abides by requirement 2 and doesn't give enough info about requirement 1 to know if it's being violated.

    3% picked this

  3. The government will sell PetroNat,

    Unclear if Violates

    If this ended up being our best answer, we could take it but it's not clear that this sale violates either of the requirements. It sounds like if we went with World Oil, then we wouldn't be able to ensure that citizens have majority ownership, because the ownership structure is so convoluted that you can't ascertain such info. But, we don't have to go with World Oil. They didn't make the highest offer. They made one of the highest offers. So it's possible that we just sell to one of the other companies that made one of the highest offers, and hopefully with them we can ensure that citizens own a majority stake.

    35% picked this

  4. The government will sell National

    Compatible

    We actually don't know which one they're selling to, but if they sell it to the highest bid, they'll still have majority share for citizens, so they don't need to violate any requirements.

    5% picked this

  5. Correct

    The government will sell StateRail,

    Why this is right

    This puts the two requirements into mutually exclusive tension. In order to ensure majority ownership for citizens, they'll have to give up highest price. So there's no way to get both of the requirements. The second sentence by itself sort of does it. In order to ensure that citizens have majority ownership, we have to restrict who can purchase StateRail. That means we're not selling it "on the open market". It's a restricted market. The idea that "restrictions will reduce the price" we get for selling it is saying that "the selling price among these restricted buyers will be lower than what we could have gotten in an unrestricted (open) market". By having to add restrictions for majority ownership, we will make less money than we would make if we sold the railway without those restrictions. Adding those restrictions reduces our maximum selling price from what it could otherwise be. But since they're required to ensure majority ownership, we know that accomplishing one goal would thwart the other.

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

    54% picked this

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