Question
Deregulation of electricity markets in the United States has resulted in supply disruptions and in higher prices for consumers. Properly understood, however, this phenomenon does not cast doubt on the economic principle that free-market competition is generally more efficient than state planning. Certain particularities of electricity as a commodity - including the impossibility of storing electricity, the inelasticity of demand for electricity, and the high barriers to entry for new producers - are peculiar obstacles to the creation of competitive electricity markets. In the above argument, the two portions in boldface play which of the following roles?
Answer: Option B
:
B
This argument can be diagrammed as follows:
(P1) Deregulation of electricity markets...has resulted in supply disruptions and in higher prices for consumers.
(P2) Certain particularities of electricity as a commodity...are peculiar obstacles to the creation of competitive electricity markets.
(C) Properly understood...the phenomenon in (P1) does not cast doubt on the economic principle that free-market competition is generally more efficient than state planning.
The argument describes (in P1) what happened after electricity deregulation, explains (in P2) why this is an anomaly attributable to the particularities of electricity, and concludes that the phenomenon described in (P1) does not really challenge the general principle that free markets are more efficient than state planning.
Notice that the first boldface is simply (P1), and that the second boldface is the economic principle that, according to the conclusion, is not really challenged by (P1). In picking your answer choice, it is a good idea to focus first on how each answer choice characterizes the first boldface. Once you have eliminated the ones that incorrectly characterize the first boldface, you should choose among the remaining answer choices based on how they characterize the second boldface.
(A) The author presents the first boldface as a fact; he does not "reject" it. The second boldface is, therefore, not a theoretical justification for any such rejection.
(B) CORRECT. The first boldface is an apparent exception to the economic theory or principle stated in the second boldface. (The point of the argument is to show that this apparent exception does not invalidate the principle.)
(C) The author never offers a critique of "conventional economics"; if anything, he seems concerned to defend an economic principle. The second boldface is far too short and restricted to be a "summary of conventional economic thought.".
(D) The passage gives no indication that the problems with electricity deregulation are part of a "broader trend." Indeed the whole of sentence 3 is an explanation of why electricity is a special case. This answer choice fares even worse in its characterization of the second boldface, which is a principle, not a trend
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:
B
This argument can be diagrammed as follows:
(P1) Deregulation of electricity markets...has resulted in supply disruptions and in higher prices for consumers.
(P2) Certain particularities of electricity as a commodity...are peculiar obstacles to the creation of competitive electricity markets.
(C) Properly understood...the phenomenon in (P1) does not cast doubt on the economic principle that free-market competition is generally more efficient than state planning.
The argument describes (in P1) what happened after electricity deregulation, explains (in P2) why this is an anomaly attributable to the particularities of electricity, and concludes that the phenomenon described in (P1) does not really challenge the general principle that free markets are more efficient than state planning.
Notice that the first boldface is simply (P1), and that the second boldface is the economic principle that, according to the conclusion, is not really challenged by (P1). In picking your answer choice, it is a good idea to focus first on how each answer choice characterizes the first boldface. Once you have eliminated the ones that incorrectly characterize the first boldface, you should choose among the remaining answer choices based on how they characterize the second boldface.
(A) The author presents the first boldface as a fact; he does not "reject" it. The second boldface is, therefore, not a theoretical justification for any such rejection.
(B) CORRECT. The first boldface is an apparent exception to the economic theory or principle stated in the second boldface. (The point of the argument is to show that this apparent exception does not invalidate the principle.)
(C) The author never offers a critique of "conventional economics"; if anything, he seems concerned to defend an economic principle. The second boldface is far too short and restricted to be a "summary of conventional economic thought.".
(D) The passage gives no indication that the problems with electricity deregulation are part of a "broader trend." Indeed the whole of sentence 3 is an explanation of why electricity is a special case. This answer choice fares even worse in its characterization of the second boldface, which is a principle, not a trend
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