In the United States over the last quarter century, many services have been deregulated—controls regulating the prices charged to consumers...
GMAT Critical Reasoning : (CR) Questions
In the United States over the last quarter century, many services have been deregulated—controls regulating the prices charged to consumers have been removed. Deregulation has allowed providers to decide on their own pricing, but it has also allowed competition in provision of the services. Proponents of deregulation claimed that provided there was indeed competition, consumer prices would fall. They have been proved right, since in most cases prices did indeed fall once a service was deregulated.
Which of the following, if true, most strongly supports the argument?
Passage Analysis:
| Text from Passage | Analysis |
| In the United States over the last quarter century, many services have been deregulated—controls regulating the prices charged to consumers have been removed. |
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| Deregulation has allowed providers to decide on their own pricing, but it has also allowed competition in provision of the services. |
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| Proponents of deregulation claimed that provided there was indeed competition, consumer prices would fall. |
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| They have been proved right, since in most cases prices did indeed fall once a service was deregulated. |
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Argument Flow:
The argument starts by explaining what deregulation is, then shows how it creates both pricing freedom and competition. It presents the supporters' prediction that competition would lower prices, and concludes by stating this prediction proved correct.
Main Conclusion:
Deregulation supporters were right that competition would lower consumer prices, since prices actually fell in most deregulated services.
Logical Structure:
The evidence (prices fell in most deregulated services) directly supports the conclusion (supporters were proven right). The argument assumes that falling prices after deregulation confirms the supporters' theory about competition driving down prices.
Prethinking:
Question type:
Strengthen - We need to find information that increases our belief in the conclusion that deregulation proponents were proved right because prices fell in most cases after deregulation.
Precision of Claims
The key claims involve: (1) Quality - that competition actually existed in deregulated services, (2) Quantity - that 'most cases' represents a significant majority, and (3) Causation - that deregulation (specifically the competition it created) caused the price drops rather than other factors.
Strategy
Since the argument concludes that deregulation proponents were right about competition leading to lower prices, we need to strengthen the causal link between deregulation → competition → lower prices. We should look for evidence that: (1) competition actually occurred in deregulated industries, (2) the price drops were indeed caused by this competition rather than other factors, or (3) the conditions the proponents specified (meaningful competition) were actually met.
This choice tells us that prices were already falling before deregulation occurred. Wait - this actually weakens the argument rather than strengthens it! If prices were falling significantly in the years before deregulation, then we can't confidently say that deregulation (and the competition it created) caused the price drops that happened after deregulation. The price decreases might have been part of an existing trend rather than a result of competitive forces unleashed by deregulation. This undermines the causal connection the argument is trying to establish.
This gives us background information about why regulations existed in the first place - to prevent monopolistic pricing. While this is interesting context, it doesn't strengthen the argument about whether deregulation proponents were proven right. We already know from the passage that deregulation removed price controls and created competition. Learning about the original intent of regulations doesn't add evidence that competition actually occurred or that it caused the observed price decreases.
This tells us that service quality declined after deregulation according to consumer surveys. This information is completely irrelevant to the argument we're trying to strengthen. The argument is specifically about whether prices fell due to competition, not about service quality. Even if quality declined, this doesn't affect whether the proponents were right about their price predictions. This is a classic 'scope shift' trap - related to deregulation but not to the specific claim being made.
This is exactly what we need to strengthen the argument! It tells us that in the rare cases where prices actually increased after deregulation, there was little competition. This perfectly validates the proponents' theory by showing the flip side of their prediction. The proponents said 'provided there was indeed competition, consumer prices would fall.' Choice D shows that when there wasn't meaningful competition, prices went up instead of down. This eliminates alternative explanations and confirms that competition (or lack thereof) was indeed the driving factor behind price changes.
This tells us that companies became more profitable after deregulation. But increased profitability doesn't necessarily strengthen the argument about prices falling due to competition. Companies could become more profitable for many reasons - cost reductions, efficiency improvements, or even higher prices in some segments. This doesn't specifically support the causal link between competition and lower consumer prices that the argument is trying to establish.