LSAT 131 | Section 2 | Logical Reasoning: Q2

LR Question 2 Explanation

QUESTION TEXT: Price: A corporation’s primary responsibility is to its

QUESTION TYPE: Point at Issue

ARGUMENTS: Price says a corporation’s main responsibility is to its shareholders, because shareholders risk losing everything if the corporation goes bankrupt.

Albrecht counters that shareholders usually don’t have all their investments with one corporation. Whereas employees depend entirely on the company they work for. (It’s implied that employees bear more risk.)

ANALYSIS: Price and Albrecht are disagreeing about:

Who corporations owe responsibility to.

Who bears the most risk.

Note that on the second point, Albrecht doesn’t explicitly say “hey, I think employees have the most risk.” But from a fair reading of their statement, it’s clear they believe this.

___________

1. Albrecht isn’t saying that corporations have no responsibility to shareholders. She’s just saying they have more responsibility to employees.
2. Price doesn’t disagree with this. They just think corporations have more responsibility to their shareholders.
3. Neither person says what should happen in bankruptcy.
4. CORRECT. Price says shareholders take the greatest risks. Albrecht argues that shareholders are diversified, but employees have their livelihoods at stake. So they disagree.
    
   Normally I say you must find something the two explicitly disagree on. However, a fair reading of Albrecht makes clear that she does believe employees have the most risk. She all but says it.
5. Albrecht says shareholders are typically diversified. She’s open to the possibility that some aren’t.