insurance companies of greatport

[ashish.jere]

For similar cars and drivers, automobile insurance for collision damage has always cost more in Greatport than in Fairmont. Police studies, however, show that cars owned by Greatport residents are, on average, slightly less likely to be involved in a collision than cars in Fairmont. Clearly, therefore, insurance companies are making a greater profit on collision-damage insurance in Greatport than in Fairmont.

Which of the following is an assumption on which the argument depends?

A. Repairing typical collision damage does not cost more in Greatport than in Fairmont.

B. There are no more motorists in Greatport than in Fairmont.

C. Greatport residents who have been in a collision are more likely to report it to their insurance company than Fairmont residents are.

D. Fairmont and Greatport are the cities with the highest collision-damage insurance rates.

E. The insurance companies were already aware of the difference in the likelihood of collisions before the publication of the police reports.

[cfaking]

IMO A

Negate the option
argument will fall apart...other options are not close enough.

[RonPurewal]

For similar cars and drivers, automobile insurance for collision damage has always cost more in Greatport than in Fairmont. Police studies, however, show that cars owned by Greatport residents are, on average, slightly less likely to be involved in a collision than cars in Fairmont. Clearly, therefore, insurance companies are making a greater profit on collision-damage insurance in Greatport than in Fairmont.

Which of the following is an assumption on which the argument depends?

A. Repairing typical collision damage does not cost more in Greatport than in Fairmont.

B. There are no more motorists in Greatport than in Fairmont.

C. Greatport residents who have been in a collision are more likely to report it to their insurance company than Fairmont residents are.

D. Fairmont and Greatport are the cities with the highest collision-damage insurance rates.

E. The insurance companies were already aware of the difference in the likelihood of collisions before the publication of the police reports.

the problem takes "less likely to be involved in a collision" and treats it as equivalent to "less money paid out in collision claims". (they must be making this connection in order to reach the given conclusion re: profit.)

the assumption in choice (a) is necessary for us to make this connection. i.e., if there's a possibility that greatport's accidents are more destructive (and therefore more expensive) than fairmont's, then the connection is severed and the argument no longer works.

[tomslawsky]

For similar cars and drivers, automobile insurance for collision damage has always cost more in Greatport than in Fairmont. Police studies, however, show that cars owned by Greatport residents are, on average, slightly less likely to be involved in a collision than cars in Fairmont. Clearly, therefore, insurance companies are making a greater profit on collision-damage insurance in Greatport than in Fairmont.

Which of the following is an assumption on which the argument depends?

A. Repairing typical collision damage does not cost more in Greatport than in Fairmont.

B. There are no more motorists in Greatport than in Fairmont.

C. Greatport residents who have been in a collision are more likely to report it to their insurance company than Fairmont residents are.

D. Fairmont and Greatport are the cities with the highest collision-damage insurance rates.

E. The insurance companies were already aware of the difference in the likelihood of collisions before the publication of the police reports.

I have a problem with this question. The correct way to use the word profit is in aggregate unless it is specified "per unit". I believe that it requires one to assume "profit" to be profit per car, not aggregate profit. I would have wrongly chosen B.

[NIKESH_PAHUJA]

@tom

No matter you consider profit per car or in aggregation, B doesnot serve the purpose.
Greatport = G
Farimont = F

Negate option B
lets assume there are more motorist in G than in F .

It means total revenue from G will be more than from F

( because more cost per car and more cars in G )

Now the cars in G are less likely to be involved in Collision than in F. Here we are talking about the probability ( chance means probability ) of getting involved in collision.

say there are 100 cars in F and 200 in G

if 10 cars out of 100 get involved in collision in F , Not more than 19 cars out of 200 can be involved in collision in G as per the argument.

Now suppose insurance costs rs 100 per car or driver in F and 110 in G

Total rev in F = 10000
Total rev in G = 22000

only 10 cars are to be paid for collision in F and only 19 in G

If we assume that the cost of damage is same say 100 rs. in both F and G, company earns rs. 10000- 1000=9000 in F

and 22000-1900 = 21100 in G

obviously G has more profit.

The on ly case where G will have less profit is , if company has to pay much more per damaged car in G than in F.

and this is what is assumed in A.

Thus no matter whether you calculate profit per car or in aggregate, until A is assumed argument falls apart. and B does not matter.

For similar cars and drivers, automobile insurance for collision damage has always cost more in Greatport than in Fairmont. Police studies, however, show that cars owned by Greatport residents are, on average, slightly less likely to be involved in a collision than cars in Fairmont. Clearly, therefore, insurance companies are making a greater profit on collision-damage insurance in Greatport than in Fairmont.

Which of the following is an assumption on which the argument depends?

A. Repairing typical collision damage does not cost more in Greatport than in Fairmont.

B. There are no more motorists in Greatport than in Fairmont.

C. Greatport residents who have been in a collision are more likely to report it to their insurance company than Fairmont residents are.

D. Fairmont and Greatport are the cities with the highest collision-damage insurance rates.

E. The insurance companies were already aware of the difference in the likelihood of collisions before the publication of the police reports.

I have a problem with this question. The correct way to use the word profit is in aggregate unless it is specified "per unit". I believe that it requires one to assume "profit" to be profit per car, not aggregate profit. I would have wrongly chosen B.

[RonPurewal]

nikesh, good analysis.

[hitesh.sakkerwal]

What is wrong with E. It can clearly be assumed that insurance companies knew about this difference in likelihood and that's why they came up with this collision damage insurance. They knew that the damage claims will be lesser in Greatport and so even if the insurance premium is same in both the cities their liabilities will be less and hence more profit.

please help if I have assumed too much? I could not understand what is wrong with E.

[agarwalmanoj2000]

Hi Hitesh,

Conclusion: insurance companies are making a greater profit on collision-damage insurance in Greatport than in Fairmont.

E. The insurance companies were already aware of the difference in the likelihood of collisions before the publication of the police reports.

Negate:The insurance companies were already NOT aware of the difference in the likelihood of collisions before the publication of the police reports.

It does not matter, even if the insurance companies does not know difference in the likelihood of collisions before the publication of the police reports, still they would make a greater profit on collision-damage insurance in Greatport than in Fairmont. Conclusion is intact, so rule out E.

[thanghnvn]

Ron, experts, pls, help

I heard that we should prethink, prephrase the assumption before going to answer choices to look for an assumption similar to what we prethink.

I do not know this process. Anyone know, pls, explain this process. Thank you

[tim]

Thanks Agarwal. Hitesh, let us know if you have any other questions. thanghnvn, where did you hear of this method you've mentioned? Perhaps wherever you heard of that method is the best source to find out how to implement it properly..

[aitsibirouk.rolam]

I think that D and E are right. The aspect of insurance is very actual for me because a few weeks ago I have received the driver's license.

[Sage Pearce-Higgins]

I'd be interested to hear your logic on this one - please could you explain your thoughts on D and E?