LSAT 156 | Section 2 | Logical Reasoning: Q20

LR Question 20 Explanation

QUESTION TEXT: Economist: When national governments dispense funds to local governments …

QUESTION TYPE: Principle – Application

CONCLUSION: Government funding of these projects is likely wasteful.

REASONING: Private firms don’t invest in these projects, which suggests they aren’t financially worthwhile.

ANALYSIS: When people whose job is to make profitable decisions consistently reject something, that means the “something” isn’t financially sound.

So decision-making is used as a basis to assess financial value. The answer should reflect that.

___________

1. Shows a firm chose to invest in something, but doesn’t use that choice to infer anything about financial value.
2. This is about preferences, not using firm decisions as evidence of value.
3. CORRECT. This treats the decisions of private firms as meaningful evidence about financial viability. That’s exactly what the economist is doing in the stimulus.
4. Great, people are bad at estimating spending and budgeting. That’s not relevant.
5. The communities want the center because of revenue. That’s not showing that decisions are about financial viability.