7: Baxe Interiors, one of the largest interior design

LR Question 7 Explanation

QUESTION TEXT: Baxe Interiors, one of the largest interior design…

QUESTION TYPE: Most Strongly Supported

FACTS:

Baxe Interiors has a near monopoly on the corporate design market.
Baxe has won no awards for corporate work.
Some small companies have won awards.
Corporate design work only goes to companies that managers don’t think will go bankrupt.

ANALYSIS: What are the criteria for corporate work? We can draw the following chain:

Corporate work ➞ unlikely to go bankrupt ➞ very large company

So any company getting corporate design work must be a large company. Which means that those small company that won design awards can’t get corporate work and they can’t threaten Baxe’s near monopoly.

___________

It’s possible Baxe produces low quality designs. The only necessary conditions we know of for corporate design work are: “unlikely to go bankrupt” and “large company”.
Since the argument didn’t say what role quality plays in corporate design decisions, we have no idea what quality is like at large competitors to Baxe.
We don’t know anything about non-corporate work. It’s possible that Baxe has a near monopoly in other interior design markets as well.
This say that small companies produce better designs “for the most part”. This is a stretch. We know some small companies won awards, but Baxe may have better work that most other small companies that didn’t win awards.
The stimulus says nothing about the role quality plays in design purchasing decisions, so we have no basis for this answer.
CORRECT. This is likely. Small companies may have won awards, but corporate managers will never choose them because of the bankruptcy risk. The stimulus says that managers only give business to very large companies.

There could of course be other threads to Baxe that we don’t know about. But this is just a “Most Strongly Supported” question, so there is some wiggle room. And we do know that the small companies aren’t a threat.