Among the myths taken as fact by the environmental managers of most corporations is the belief that environmental regulations affect...
GMAT Reading Comprehension : (RC) Questions
Among the myths taken as fact by the environmental managers of most corporations is the belief that environmental regulations affect all competitors in a given industry uniformly. In reality, regulatory costs—and therefore compliance—fall unevenly, economically disadvantaging some companies and benefiting others. For example, a plant situated near a number of larger non-compliant competitors is less likely to attract the attention of local regulators than is an isolated plant, and less attention means lower costs.
Additionally, large plants can spread compliance costs such as waste treatment across a larger revenue base; on the other hand, some smaller plants may not even be subject to certain provisions such as permit or reporting requirements by virtue of their size. Finally, older production technologies often continue to generate toxic wastes that were not regulated when the technology was first adopted. New regulations have imposed extensive compliance costs on companies still using older industrial coal-fired burners that generate high sulfur dioxide and nitrogen oxide outputs, for example, whereas new facilities generally avoid processes that would create such waste products. By realizing that they have discretion and that not all industries are affected equally by environmental regulation, environmental managers can help their companies to achieve a competitive edge by anticipating regulatory pressure and exploring all possibilities for addressing how changing regulations will affect their companies specifically.
It can be inferred from the passage that a large plant might have to spend more than a similar but smaller plant on environmental compliance because the larger plant is
1. Passage Analysis:
Progressive Passage Analysis
| Text from Passage | Analysis |
|---|---|
| Among the myths taken as fact by the environmental managers of most corporations is the belief that environmental regulations affect all competitors in a given industry uniformly. | What it says: Corporate environmental managers wrongly believe that environmental rules impact all companies in an industry the same way. What it does: Introduces the main argument by identifying a misconception Source/Type: Author's opinion/claim about what managers believe Connection to Previous Sentences: First sentence - establishes the foundation Visualization: Corporate managers thinking: "If Company A pays $100K for compliance, then Company B, C, D all pay $100K too" (This turns out to be wrong) What We Know So Far: There's a myth about uniform regulatory impact What We Don't Know Yet: How regulations actually work differently, specific examples Reading Strategy Insight: The author signals this is a "myth" - so expect the rest of the passage to prove why this belief is wrong |
| In reality, regulatory costs—and therefore compliance—fall unevenly, economically disadvantaging some companies and benefiting others. | What it says: Actually, environmental rules cost different companies different amounts, helping some and hurting others. What it does: Directly contrasts with the myth from sentence 1 Source/Type: Author's counter-claim about reality Connection to Previous Sentences: This is the simple, direct opposite of sentence 1's myth - where sentence 1 said "uniform effect," sentence 2 says "uneven effect" Visualization: Myth: Company A, B, C, D all pay $100K Reality: Company A pays $50K, Company B pays $150K, Company C pays $25K, Company D pays $200K Reading Strategy Insight: Feel confident here - this is a classic "myth vs reality" structure. The author just gave us the main point in simple terms. |
| For example, a plant situated near a number of larger non-compliant competitors is less likely to attract the attention of local regulators than is an isolated plant, and less attention means lower costs. | What it says: A factory surrounded by other rule-breaking factories gets ignored by regulators more than a factory that's alone, so it pays less. What it does: Provides first concrete example of the "uneven costs" claim Source/Type: Author's example supporting the reality claim Connection to Previous Sentences: This builds on sentence 2's claim about uneven costs by giving us a specific scenario where one company pays less than another Visualization: Scenario A: Factory isolated in countryside → Regulators notice easily → High costs ($200K) Scenario B: Factory hidden among 5 other non-compliant factories → Regulators overlook → Low costs ($50K) What We Know So Far: Environmental rules affect companies unequally; location relative to other violators matters Reading Strategy Insight: This example makes sentence 2's abstract claim concrete and easier to understand |
| Additionally, large plants can spread compliance costs such as waste treatment across a larger revenue base; on the other hand, some smaller plants may not even be subject to certain provisions such as permit or reporting requirements by virtue of their size. | What it says: Big companies can absorb environmental costs easier because they make more money, while small companies sometimes don't have to follow certain rules at all. What it does: Provides second example of uneven regulatory impact Source/Type: Author's example supporting the reality claim Connection to Previous Sentences: This builds on sentence 2's "uneven costs" theme with a different factor (company size) after sentence 3 showed location factors Visualization: Large Plant: $1M compliance cost ÷ $50M revenue = 2% impact Medium Plant: $1M compliance cost ÷ $10M revenue = 10% impact Small Plant: $0 compliance cost (exempt) ÷ $2M revenue = 0% impact Reading Strategy Insight: Pattern recognition: Author is systematically showing different ways costs vary - location (sentence 3), now size (sentence 4) |
| Finally, older production technologies often continue to generate toxic wastes that were not regulated when the technology was first adopted. | What it says: Companies using old technology create pollution that wasn't illegal when they first started using that technology. What it does: Sets up third example by introducing the "age of technology" factor Source/Type: Author's factual observation Connection to Previous Sentences: This continues the pattern from sentences 3-4 of showing different factors that create uneven regulatory impact. Now we're moving from location and size to technology age. Visualization: 1980s: Company installs coal-fired burner → Legal and compliant 2020s: Same burner still running → Now creates "toxic waste" under new rules Reading Strategy Insight: "Finally" signals this is the last example in the series. The pattern continues: different factor, same result (uneven impact) |
| New regulations have imposed extensive compliance costs on companies still using older industrial coal-fired burners that generate high sulfur dioxide and nitrogen oxide outputs, for example, whereas new facilities generally avoid processes that would create such waste products. | What it says: Companies with old coal burners now pay huge costs for sulfur and nitrogen pollution, while new companies just use different technology that doesn't create those problems. What it does: Completes the third example with specific details Source/Type: Author's specific example Connection to Previous Sentences: This builds directly on sentence 5 by giving the concrete example (coal burners) and showing the cost difference between old and new companies Visualization: Old Company (1980s coal burner): $2M per year in compliance costs + pollution controls New Company (2020s clean technology): $0 pollution compliance costs Reading Strategy Insight: This completes the three-factor pattern: location, size, and technology age all create uneven regulatory costs |
| By realizing that they have discretion and that not all industries are affected equally by environmental regulation, environmental managers can help their companies to achieve a competitive edge by anticipating regulatory pressure and exploring all possibilities for addressing how changing regulations will affect their companies specifically. | What it says: If managers understand that environmental rules affect companies differently, they can use this knowledge to give their company an advantage by preparing for changes and finding company-specific solutions. What it does: Provides the practical conclusion and recommendation Source/Type: Author's advice/recommendation Connection to Previous Sentences: This restates the entire argument in practical terms - takes the "myth vs reality" from sentences 1-2 and the examples from sentences 3-6, then tells managers what to do with this information Visualization: Smart Manager thinks: "My company has Factor X, so regulations will cost us $Y, but our competitor has Factor Z, so they'll pay $W. How can I use this difference?" What We Now Know Completely: • The myth: uniform regulatory impact • The reality: uneven impact based on location, size, and technology age • The recommendation: use this knowledge strategically Reading Strategy Insight: Feel relieved - this is pure summary and application. No new complexity, just "here's what to do with what we learned." The passage has come full circle from problem (myth) to solution (strategic thinking). |
2. Passage Summary:
Author's Purpose:
To correct a common misconception that environmental managers hold about how regulations work and show them how to use the real facts to help their companies compete better.
Summary of Passage Structure:
The author builds their argument by first exposing a myth, then proving it wrong with concrete examples:
- First, the author identifies a widespread myth that environmental managers believe - that environmental rules affect all companies in an industry the same way.
- Next, the author directly contradicts this myth by stating that regulations actually create uneven costs that help some companies and hurt others.
- Then, the author proves this point with three different examples showing how company location, size, and technology age all create different regulatory costs for different companies.
- Finally, the author tells managers what to do with this knowledge - use it strategically to gain a competitive advantage by preparing for regulatory changes that will affect their specific company.
Main Point:
Environmental regulations don't affect all companies equally, and smart managers can give their companies a competitive edge by understanding exactly how regulations will impact their specific situation differently than their competitors.
3. Question Analysis:
The question asks us to identify why a large plant might have to spend MORE than a similar but smaller plant on environmental compliance. This is an inference question that requires us to extract information from the passage about size-related compliance differences.
Connecting to Our Passage Analysis:
Our passage analysis identified that sentence 4 specifically addresses how plant size affects regulatory compliance costs. The analysis showed that the passage presents a nuanced view of how size impacts costs - large plants have some advantages (spreading costs across larger revenue base) but also some disadvantages. We need to focus on what would make larger plants pay MORE than smaller plants.
Prethinking:
From our passage analysis of sentence 4, we know that "some smaller plants may not even be subject to certain provisions such as permit or reporting requirements by virtue of their size." This directly suggests that larger plants WOULD be subject to these provisions that smaller plants can avoid. If smaller plants are exempt from permit and reporting requirements, then larger plants must face these requirements - creating additional costs that smaller plants don't have. This fits perfectly with the question's focus on why larger plants might spend more.
• The passage mentions regulatory attention in relation to location (plants near vs. isolated from other non-compliant competitors), not size
• Sentence 3 discusses attention from regulators based on proximity to other violators, but makes no connection between plant size and regulatory attention
• This confuses two different factors that affect compliance costs
Common Student Mistakes:
1. Don't large companies naturally attract more attention?
→ While this might seem logical, the passage doesn't make this connection - it only links regulatory attention to location factors
1. Isn't this just common sense about bigger companies being more visible?
→ GMAT questions test what's in the passage, not general assumptions about business
• The passage directly states that "some smaller plants may not even be subject to certain provisions such as permit or reporting requirements by virtue of their size"
• If smaller plants are exempt from these requirements, then larger plants must be subject to them
• Being subject to permit and reporting requirements that smaller plants avoid would create additional compliance costs
• This directly answers why a large plant might spend more than a smaller plant
Key Evidence: "some smaller plants may not even be subject to certain provisions such as permit or reporting requirements by virtue of their size"
• The passage makes no mention of raw materials, suppliers, or costs being passed along supply chains
• This introduces concepts completely outside the scope of the passage
• The passage focuses on direct regulatory compliance costs, not indirect costs from suppliers
Common Student Mistakes:
1. Don't larger companies have more complex supply chains that could affect costs?
→ The passage doesn't discuss supply chains or raw material costs at all
1. Isn't this a logical extension of how environmental costs work?
→ GMAT inference questions require support from the passage, not logical extensions beyond it
• The passage discusses older technologies in relation to when they were adopted, not in relation to plant size
• Sentence 5-6 mention older technologies but make no connection to whether large or small plants are more likely to use them
• The passage suggests the age issue is about when technology was first adopted, not about plant size preferences
Common Student Mistakes:
1. Don't larger, older companies tend to have older equipment?
→ The passage doesn't make this connection between company size and technology age
1. Isn't it reasonable that bigger plants have older infrastructure?
→ We must base inferences on passage content, not assumptions about industrial patterns
• The passage never compares the environmental impact or harmfulness of waste generated by different sized plants
• The passage discusses types of waste (sulfur dioxide, nitrogen oxide) in relation to technology age, not plant size
• This choice assumes facts not presented in the passage about the relationship between plant size and waste harmfulness
Common Student Mistakes:
1. Don't larger plants naturally produce more harmful waste?
→ The passage doesn't make any claims about the relative harmfulness of waste from different sized plants
1. Isn't volume of waste related to harmfulness?
→ The passage discusses waste types based on technology, not on plant size or volume