Fish currently costs about the same at seafood stores throughout Eastville and its surrounding suburbs. Seafood stores buy fish from...
GMAT Critical Reasoning : (CR) Questions
Fish currently costs about the same at seafood stores throughout Eastville and its surrounding suburbs. Seafood stores buy fish from the same wholesalers and at the same prices, and other business expenses have also been about the same. But new tax breaks will substantially lower the cost of doing business within the city. Therefore, in the future, profit margins will be higher at seafood stores within the city than at suburban seafood stores.
For the purposes of evaluating the argument, it would be most useful to know whether
Passage Analysis:
| Text from Passage | Analysis |
| Fish currently costs about the same at seafood stores throughout Eastville and its surrounding suburbs. |
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| Seafood stores buy fish from the same wholesalers and at the same prices, and other business expenses have also been about the same. |
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| But new tax breaks will substantially lower the cost of doing business within the city. |
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| Therefore, in the future, profit margins will be higher at seafood stores within the city than at suburban seafood stores. |
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Argument Flow:
The argument starts by showing us that fish prices are currently equal everywhere, then explains this equality exists because all stores have the same costs. Next, it introduces a game-changer - tax breaks that will lower costs only for city stores. Finally, it concludes that this cost advantage will translate into higher profit margins for city stores.
Main Conclusion:
City seafood stores will have higher profit margins than suburban seafood stores in the future.
Logical Structure:
The logic flows from equal current costs → future cost advantage for city stores → higher profit margins for city stores. The argument assumes that if city stores get lower costs while everything else stays the same, they'll automatically have better profit margins.
Prethinking:
Question type:
Evaluate - We need to find information that would help us determine whether the argument's conclusion is sound or flawed
Precision of Claims
The conclusion makes a specific comparative claim about future profit margins (city stores WILL have HIGHER margins than suburban stores) based on cost reduction from tax breaks
Strategy
For evaluate questions, we need to think of assumptions the argument makes and create scenarios that would either strengthen or weaken the conclusion when taken to extremes. The argument assumes that lower costs automatically lead to higher profit margins, but this ignores how businesses might respond to cost changes - particularly around pricing strategies and competitive dynamics
Whether more fish wholesalers are located within the city doesn't affect our argument. The passage already tells us that all seafood stores buy from the same wholesalers at the same prices, so the physical location of these wholesalers is irrelevant to the profit margin comparison. This information wouldn't help us evaluate whether city stores will actually have higher margins.
Whether suburban store owners relocate their businesses is about market dynamics and competition, but it doesn't address the core logic of the argument. Even if some suburban owners move to the city, we're still comparing profit margins between city locations (with tax breaks) and suburban locations (without tax breaks). This doesn't help us determine if the cost advantage will translate to higher margins.
If wholesale fish prices fall in the future, this would affect both city and suburban stores equally since they buy from the same wholesalers at the same prices. This doesn't change the relative advantage that city stores have from tax breaks, so it wouldn't help us evaluate whether city stores will have higher margins compared to suburban stores.
Whether fish has always cost the same historically doesn't matter for evaluating a conclusion about future profit margins. The argument is about what will happen going forward after tax breaks are implemented, not about past pricing patterns. Historical pricing consistency doesn't help us assess the argument's logic.
This is exactly what we need to know! The argument assumes that when city stores get lower costs from tax breaks, they'll automatically have higher profit margins. But what if city stores use their cost savings to lower prices and attract more customers? If city stores set lower prices than suburban stores, then despite having lower costs, their profit margins might not be higher. Conversely, if city stores keep prices the same as suburban stores, then their cost advantage would indeed translate to higher margins. This information would definitively help us evaluate whether the argument's conclusion is sound.