CRITICAL REASONING HANDOUT
(Assumptions and Logic)
Ref: CRHO1002104
Directions for questions 1 to 25: Select the correct alternative from the given choices.
1. Investors buy shares of a company when its profits
increase, increasing the share price and sell
a company's shares when its profitability decreases,
resulting in the drop in the price. Recently the profits
of Morepen decreased significantly and the share
price was expected to plunge, but a lot of buying
interest substantially increased the share price.
Basing on this, we cannot conclude that the share
price movement is irrational because ______.
Which of the following most logically completes the
argument?
(A) the profits of Morepen decreased far less than
the profits of other companies belonging to the
same industry as Morepen
(B) to revitalize the economy, the government
recently offered some financial incentives to
companies that are incurring losses
(C) most of the times, investors buy shares basing
on future profit potential, rather than on existing
profitability
(D) even slight decrease in profits of a company
creates panic among investors, leading to rapid
sell off
2. Sisco, a computer software company, employs many
programmers for its software development. The
highly competitive market has forced it to decrease
prices of its products, adversely affecting its profit
margins. So, to minimize the costs, the company has
planned to terminate senior programmers who
demand higher wages and recruit employees with
lesser programming experience. The company
predicts that this significant cost reduction will enable
it to improve its profits, despite increasing competition
in the field.
In determining the impact on the Company's profits
by recruiting employees with lesser experience, it
would be important for Sisco to research all of the
following EXCEPT
(A) Are the companies in the industry undertaking
similar strategies to minimize the costs in order
to face stiff competition prevalent?
(B) Do the employees with lesser programming
experience need as much time to start and close
a project as do the existing senior programmers
working for the company?
(C) Do the programs developed by lesser
experienced programmers successfully cater to
the needs of the clients for whom the programs
are developed?
(D) Can the Company employ more number of
programmers with lesser experience spending
the same amount paid to the senior
programmers to offset the former programmers'
demerit, if any?
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3. Mohan: There are many good reasons for the
government to spend tax revenues on education.
But, the claim that education offers economic benefit
seems to be misguided. The government has to
spend a lot of money to develop infrastructure
needed for education facilities and to pay salaries to
the teachers, while the students virtually pay nothing
for the education they receive.
Ram: Your argument fails because you neglect gains
outside the education system: after growing up, these
educated citizens produce wealth for the whole of the
country.
Ram's response to Mohan makes which of the
following assumptions?
(A) Educated people get better employment with
higher wages, paying higher income tax and
other indirect taxes to the government than
uneducated workforce does.
(B) Mohan is generally against public funding
because he believes that funds in private entities
are used more efficiently than those in publicly
funded organizations.
(C) The economic contributions of those receiving
education from public funded institutions can
outweigh expenditure incurred for the provision
of education.
(D) Funding human resource development should
take into consideration economic factors before
such investments are made.
4. During elections, educated voters tend to support
a candidate for an office, if they believe that the
candidate enters politics with the genuine desire to
serve people. As soon as they find that such
a candidate starts spending exorbitant amounts of
money on campaigning to win the election, they start
believing that the propagandist does not deserve their
votes and thus do not vote for him.
The explanation offered above for educated voters'
not supporting a candidate who spends exorbitant
money on campaigning assumes that
(A) educated voters use proper discretion in deciding
whether or not a candidate for an office is worthy
of electoral support.
(B) educated voters believe that a candidate
spending a lot of money on campaigning is not
motivated to undertake genuine public service.
(C) the amount spent on campaigning during an
election constitutes a significant proportion of all
expenditure of a candidate running for an office.
(D) candidates can have fair chances of winning an
election only if they spend a lot of money on
campaigning during that election.
CRHO1002104/1
5. Sardonia was formerly a major exporter of coal, but
in recent decades economic stagnation there and
import restrictions in coal-importing countries
inhibited the new investment for development of new
coal fields. Consequently, Sardonian coal exports
dropped steadily as the old coal mines gradually
became depleted. Sardonia's currently improving
economic situation, together with less-restrictive
regulations outside, will undoubtedly result in the
rapid development of new coal fields. However, it
would be premature to conclude that the rapid
development of new coal fields will result in higher
coal exports, because ______.
Which of the following most logically completes the
argument?
(A) there has been rapid surge in demand for power
in many developing countries which mostly use
coal for power generation.
(B) new coal fields can become economically viable
only after a minimum of five years of operations.
(C) a major proportion of the export revenues in
Sardonia come from the export oil, whose
reserves are abundant in the country.
(D) the improving Sardonian economic situation is
likely to result in dramatic increase in power
demand, which is to be catered to by the
country's coal-based thermal power plants.
6. Many customers of Alpha, a service provider, believe
that the most frequent reason for complaint about
Alpha is delay in the delivery of service purchased.
This belief is apparently correct, since, of the twenty
five thousand complaints received during last year by
Alpha's call center, twenty percent are related to the
delivery of service.
Which of the following is an assumption on which the
argument depends?
(A) The number of complaints received during the
last year with regard to the quality of service
provided and other factors was negligible.
(B) A majority of call centers mostly receives
complaints about the delay in the delivery of
services.
(C) Some of the complaints received by Alpha's call
center are related to other aspects of services.
(D) For all call centers, at least twenty percent of
complaints received are related to delay in
service delivery.
7. Sociologist: In a study, researchers gave 200 subjects
a sociometry questionnaire to measure their
sociability. The researchers then asked each subject
the number of friends he/she has. The subjects with
the highest number of friends consistently rated
themselves as having much higher sociability than
did the subjects with fewer number of friends.
This suggests that making friends with more number
of friends greatly improves one's sociability.
The sociologist's argument is most vulnerable to
criticism on which of the following grounds?
(A) It fails to adequately address the possibility
that many subjects may not have understood
the actual criterion basing on which the
questionnaire is made.
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(B) It takes for granted that the subjects who had
more friends than other subjects had high
sociability even before they were aware of the
sociability scales.
(C) It overlooks the possibility that subjects with high
levels of sociability tend to make friends with
many people than subjects with low levels of
sociability.
(D) It overlooks the possibility that factors other than
the tendency to make friends may be of greater
importance in developing sociability in subjects.
8. Catalonia has long been narrowly self-sufficient in both
iron ore and steel. However, as the country has
become more and more industrialized, the
consumption of both iron ore and steel has risen to
higher levels each year. Therefore, since the
industrialization continues to be more prevalent,
whereas domestic production of iron ore will not
increase due to limitations of iron ore mines, Catalonia
will soon have to import either iron ore or steel or both.
Which of the following is an assumption on which the
argument depends?
(A) The annual production of iron ore will not
decrease in Catalonia.
(B) The demand for iron ore and steel was more in
Catalonia than in countries with similar economy.
(C) The consumption of iron ore and steel is similar
in different industries of Catalonia.
(D) The consumption of iron ore and steel has been
increasing over the past few years.
9. Large manufacturers in Sardonia, as per the recently
passed law, are now required to implement latest
emission control technologies that bring industrial
effluents to minimal levels. But this change is unlikely
to result in a significant decrease in pollution levels,
because large manufacturers are likely to circumvent
the law, exploiting the exemptions in the law to their
advantage, and ______.
Which of the following most logically completes the
argument?
(A) the use of latest technologies to control industrial
effluents are far more expensive than the
alternative technologies available in this regard.
(B) small or medium manufacturing units, which are
exempt from the law, contribute to significant
proportion of pollution caused in Sardonia.
(C) many of the industrial effluents detected are
immediately taken care of by the departments of
Sardonia that are related to environment.
(D) approximately 45% of industrial effluents were
attributed to large manufacturing units of
Sardonia before the law was implemented.
10. Although Repair Now, which employs skilled workers
on a permanent basis, is now incurring operating
losses, the management of the company will lower
the service fee across all the services it provides.
The management predicts that the lower service
charges will result in a ten percent increase in the
number of its customers. Since the additional income
from the larger clientele base will more than offset the
decrease due to lower service charges, the company
actually expects the service fee reduction to reduce
or eliminate the company's operating losses for
next year.
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 Which of the following, if true, provides most support
for the company's expectation of reducing the
operating losses?
(A) The company can provide services to the
increased customers without recruiting any more
skilled workers.
(B) Throughout the years that the company has been
in service, the service charges have never before
been reduced.
(C) The reduced service charges are not applicable
to customers who are subscribers, rather to one-
time customers of the company.
(D) The current reduction in service charges, which
had been higher than those of competitors, will
make them on par with those of competitors.
11. Often, patients who are supposedly prone to
diabetes, but are not actually affected by the disease,
are prescribed a repeat diabetes diagnostic test every
six months, because endocrinologists are concerned
about possibly having misjudged the proneness of
the patients. When a number of the diagnostic tests
were reviewed, however, it has been proved that the
most of the patients have been identified with the
problem within six or seven repeat diagnostic tests.
Therefore, it is not a waste of money to order
a repeat diagnostic test for persons supposedly prone
to diabetes.
14. Estonia recently introduced a law requiring private
Which of the following is an assumption on which the
above conclusion depends?
(A) Doctors who are general practitioners rather
than endocrinologists are less likely than
endocrinologists to judge the proneness to
diabetes.
(B) The test reports of patients of many
endocrinologists from different hospitals were
reviewed.
(C) Patients prone to diabetes are more likely to
have endocrine related problems than are
patients not prone to diabetes.
(D) Endocrinologists are less prone to error in
estimating the onset of diabetes than are other
medical specialists.
12. In deciding the ways to optimize the potential of
students at a younger age, it is inadvisable to
mandate conduction of psychometric tests to identify
the flair of individual students. While such an attempt
does identify the potential of individual students, it is
possible only at prohibitive costs. So it would be
practical to identify the students' innate abilities by
observing their behavior in the routine classroom
activities.
The argument given concerning the practical way to
optimize the potential of students at a younger age
presupposes that
(A) the education sector has now some system,
though inefficient, to identify students' potential.
15. Insta Write, whose full-version is given free to all
(B) the only way to optimize students' potential is to
use psychometric tests that identify students'
flair.
(C) minute differences among students in their flair
might make significant impact on their potential.
(D) there are effective ways to determine students'
potential by studying their regular classroom
activities.
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13. In a mathematics examination, a complex problem
requiring numerous steps to arrive at the solution was
given. During evaluation, it was found that students
who arrived at the correct solution were those who
used fewer than the minimum number of steps
required to solve that problem, while students who
went wrong with the problem used far more than the
minimum number of steps.
Which of the following hypotheses best accounts for
the findings of the experiment?
(A) Solving complex mathematical problems
requires higher levels of intelligence that is
seldom present in most of the students solving
them.
(B) A person undertaking mathematical problem
solving, especially when the problem is complex,
requires more deliberation than he does when to
solve an easier problem.
(C) Students good at complex mathematical problem
solving can efficiently anticipate the outcome of
future steps without actually undertaking the
steps.
(D) The longer the steps required to solve a problem,
the more complex it will be for students to solve
that problem.
schools not funded by government to not collect as
school fee beyond a certain amount, which is, even
after the limit, far higher than that collected in
government funded schools. Parents who educate
their children in private schools are generally
expected to choose to shift them to government-
funded schools, when their disposable incomes go
below a certain level. These parents, however, are
likely to continue their kids in private schools even
during economic recessions, because of the lure of
private education.
Which of the following would be most important to
determine to decide whether the conclusion about the
parents’ inclination is correct or not?
(A) Whether these parents are inclined to limit their
spending of disposable incomes on other things
to continue their kids education in private
schools.
(B) Whether private schools that charge high fee
offer education that is as good as that offered in
publicly funded schools.
(C) What are the percentages of disposable income
that are generally spent on kids' education both
during economic uptrend and economic
recession.
(D) What are the advantages of educating children in
private schools in comparison with their getting
educated in publicly funded schools.
users, is a software program developed by Alpha
Company. A recent survey has found that most of the
users of the program are ready to pay some amount
to use the program. Even though Alpha Company is
seeking ways to improve its profitability, it has
decided not to charge anything from the users of the
program.
CRHO1002104/3
 Which of the following, if true, would most help to
explain Alpha’s decision in the light of its objectives?
(A) Insta Write program runs only on limited
platforms which are to be separately downloaded
and used exclusively for the sake of Insta Write
program.
(B) Free users of the program, who very frequently
find Insta Write to be efficient, tend to purchase
other high-priced programs developed by Alpha.
(C) None of the competitors of Insta Write program
offers features that are more intuitive and more
user-friendly than those offered by Insta Write.
(D) For the needs that Insta Write cater to, all the
available programs charge extremely high
amount of money and actually have fewer
favorable features than Insta Write does.
16. In an experiment, a group of volunteers was
presented a hypothetical situation, in which they
needed to impose on a close friend or relative
a punishment that could be either lenient or severe.
If they did not choose specific punishment, severe or
lenient punishment was to be given by the flip of
a coin. Then all of them imposed a lenient punishment
and said that they acted fairly. When the situation was
described to another group of volunteers, almost all
of them said that the first group acted unfairly. Basing
on these observations, the researchers concluded
that most people apply weaker moral standards to
themselves than to others.
Which of the following is a presupposition required by
this argument?
(A) At least some volunteers who said they acted
fairly in imposing lenient punishment would have
said that it was unfair for someone to do so.
(B) A person imposing punishment on a close friend
or a relative should be as objective as when he
was imposing punishment on others.
(C) Whether people give fair punishment or unfair
punishment does not depend on individual
circumstances.
(D) People's imposing punishment depends on
whether the punishment is imposed by an
individual or by a group.
17. Many people who commute to work everyday suffer
from allergic reactions due to Particulate Matter (PM)
emitted from diesel engines. A city in Liberia recently
prohibited, during daytime, the entry of heavy-duty
vehicles which exclusively use diesel engines.
Hence, we can expect that many such commuters
can now commute every day without the fear of
allergic reaction.
Which of the following is NOT an assumption on
which the argument depends?
(A) The Particulate Matter released by heavy-duty
vehicles during night does not persist for long.
(B) No other emission released by other vehicles
causes an allergic reaction caused by Particulate
Matter.
(C) Regular passenger vehicles that run on diesel do
not release the Particulate Matter, causing
allergy.
(D) People commuting to work during nighttime are
more prone to allergic reaction than are those
commuting during daytime.
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18. Loss of biodiversity results, in part, from the use of
pesticides and synthetic fertilizers, which adversely
affects populations of natural pollinators. As the
reproduction of most flowering plants depends on the
pollinators, the reducing populations of pollinators
adversely affect the plant diversity, which is essential
for sustenance of different species of animals.
Thus, to protect the biodiversity, Country A has
planned to minimize immediately and prohibit in the
long run the use of synthetic fertilizers and pesticides.
Which of the following is most useful to know in order
to assess the likelihood that Country A’s plan will be
successful?
(A) What species of flowering plants are primarily
dependent on natural pollinators to reproduce in
adequate numbers to sustain biodiversity?
(B) Whether the plants pollinated by air or water are
as important as are the plants pollinated by
natural pollinators.
(C) What proportion of natural pollinators are
adversely affected by factors other than
pesticides and synthetic fertilizers?
(D) Whether synthetic fertilizers do more harm to
natural pollinators or pesticides do more harm to
them.
19. Since 1900, India has utilized 80% of the coal mined
for power generation. If power demand continues to
rise at the present rate, in about 40 years, the coal
reserves present in India will be exhausted and India
will have to face serious power shortage for want of
coal.
Which of the following is an assumption on which the
argument is based?
(A) Since 1900, coal reserves have decreased
significantly as a result of increase in demand for
power.
(B) Any other power production other than thermal
power using coal will be insufficient to prevent the
power shortage from occurring.
(C) Other power sources that cater to the needs of
India have shown at least a slight improvement
in power generation.
(D) Voluntary power conservation will not by itself be
sufficient to hold India's current power
consumption at the current levels.
20. Any environmental issue discussion about the
potential threat to ecosystems due to global warming
is not effective if the participating bodies do not use
terms such as ‘extinction of species’ and use milder
expressions such as ‘decreasing biodiversity’
instead. In reality, the harsh expressions such as
‘extinction’ engenders desirable reactions, such as
higher level of concern, whereas the substitute
expressions do not. Therefore, of the two types of
terms, harsher words are the ones that should be
used during deliberations of this kind.
Which of the following is an assumption on which the
above argument depends?
(A) Words such as 'extinction of species' have not so
far been used as substitutes for words such as
decreasing biodiversity in the environmental
issue deliberations.
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 (B) In serious deliberations related to environment,
what is said by the participants is more important
than how it is expressed.
(C) In the kind of deliberations in question, the
advantages of desirable responses evoked from
the harsh terms outweigh the disadvantages,
if any, resulting from undesirable emotions from
those terms.
(D) The only reason that scholars would have for
using harsher expressions in the place of mild
expressions is to elicit reasonable responses
from the participants.
21. Fun for All, an entertainment conglomerate, is
undertaking ambitious construction of many
multiplexes, though it has many unused theaters.
These existing theaters, though available for
screening, unfortunately do not meet the safety
requirements recently mandated. The company,
therefore, is not guilty of fiscal wastefulness.
Which of the following is an assumption on which the
above argument depends?
(A) The company prefers using new facilities to using
the older ones in cases where these two
alternatives are equally cost-effective.
(B) The theaters now owned by the company and
available for screening are cost-effective to run,
though they are not as cozy as multiplexes.
(C) The new multiplexes constructed would not, after
completion, add to the stock of theaters that are
already owned, but not used by the company.
(D) Adaptation of currently available theaters to meet
the government’s safety requirement, if possible,
would not make using such theaters a more
cost-effective alternative to construction of new
theaters.
22. Scholars are intrigued by the accuracy of concentric
circles in which the iconic stones of Stonehenge
were erected. The perimeters of the rings of the
three-millennia old monument are evenly divisible by
a single standard measurement, that is to say, with no
fractions remaining. This measurement, later known
as ‘long foot’, is now attributed to ‘Lavant Drum’, an
intricately carved chalk cylinder found in a child’s
grave belonging to the same period during which
Stonehenge was built. Thus, scholars hypothesize
that the Lavant Drum was used as an instrument of
measurement during the construction of Stonehenge.
The scholars’ hypothesis is based on which of the
following assumptions?
(A) The Lavant Drum found in the child’s grave was
not placed there many generations later by
subsequent generations.
(B) Other ancient constructions built during the same
period as the Stonehenge have not used similar
measurement tools.
(C) The occupant of the grave was a member of
Neolithic tribe that built the Stonehenge which
has concentric circles.
(D) All concentric circles were drawn using a same
unit, the length of which can divide all the
perimeters without leaving behind a remainder.
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23. Several online retailers intensified their fierce
competition for business by offering cash-back on
future purchases that, if made within a certain
time period, will be eligible for the cash-back.
The cash-back amount is far higher than the discount
offered on cash purchases. The retailers’ long-term
gains from this cash-back will be enormous because,
unlike the cash purchase discounts, these
cash-backs can be availed only for a limited period.
The author assumes which of the following about
cash-backs in predicting the long-term gains in the
online retailers’ revenues?
(A) More cash-backs are offered than are actually
utilized in later purchases.
(B) Purchases for which discounts are offered are
not beneficial to the retailers.
(C) The retailers have to discontinue cash discounts
after introduction of cash-backs.
(D) Majority of the cash-backs are given to first time
customers.
24. Carbon credits are permits which allow a country to
produce a certain amount of carbon emissions and
which can be traded if the full allowance is not used.
An environmental organization argues that this will be
environmentally beneficial in the long run because
there is an upper limit for the carbon credits given to
any country and the money collected thus will be used
to develop environment-friendly technologies.
The organization's conclusion is based on the
assumption that
(A) the higher the carbon emissions a country
produces, the higher the possibility of limiting the
carbon credits.
(B) countries short of the credits do not purchase
them from countries that do not produce the
specific amounts of carbon emissions that have
been permitted.
(C) the money collected by selling carbon credits is
not adequate for the development of eco-friendly
technologies.
(D) the short term benefits of carbon credit system
are not likely to surpass the long term benefits of
the system.
25. The average monthly salary of a software
programmer in Sardonia is significantly lower than
that in Maxico. Since Maxico dropped all the import
tariffs on software products, the export revenues for
Sardonia from exporting software products to Maxico
has not changed. However, a recent study has shown
that the number of programmers in Sardonia has
decreased. And so, we can predict that the said
export revenues will be likely to decline in the present
financial year.
Which of the following is an assumption on which the
prediction depends?
(A) Maxico's software companies are likely to suffer
because of the removal of tariffs.
(B) The software programmers of both the countries
develop similar software programs.
(C) The efficiency of software programmers in
Sardonia has not significantly increased.
(D) The number of software programmers in
Sardonia is decided by the revenues they
generate.
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