#3- Researchers have found that the percentage of people who

[Administrator]

Complete Question Explanation

Resolve the Paradox. The correct answer choice is (E).

Answer choice (A):

Answer choice (B):

Answer choice (C):

Answer choice (D):

Answer choice (E): This is the correct answer choice.

This explanation is still in progress. Please post any questions below!

[maximbasu]

Hi,
I chose B while the correct ANS was E.

The stimulus states:
1. % people who start business is higher in HIGH/ cap than in LOW/ cap countries
2. POV author: this is expected; why? business opportunities motivate entrepreneurs: there are more opportunities in "high-income countries"
3. Paradox: % people who start businesses is higher in low-income countries than in high-income countries

Task: Resolve

Alarm bells should go off: why? The stimulus changes its language. First, we're comparing HIGH/ cap to LOW/ cap countries + then all of a sudden, like a tsunami, you don't see it coming, the paradox states a fact about high-income vs. low-income countries. Not the same thing!!

Unfortunately, this is not of much use in the ANS choices.

My reasoning for B: If govt's of high-income countries provide assistance to people, then its EASIER to take advantage of opportunities + prosper in high-income countries. There may be millions in low-income countries who try to start a business, but fail, due to no gov't assistance.
Is B wrong because I am assuming too much about how assistance benefits the SBOs (small business owners, #teenage slang)?

Is E correct because you have people who are disinterested starting businesses in a field that is low-ranked on the career hierarchy?

MB

[Nikki Siclunov]

Hi Micah,

The stimulus states:
1. % people who start business is higher in HIGH/ cap than in LOW/ cap countries
2. POV author: this is expected; why? business opportunities motivate entrepreneurs: there are more opportunities in "high-income countries"
3. Paradox: % people who start businesses is higher in low-income countries than in high-income countries

Task: Resolve

Alarm bells should go off: why? The stimulus changes its language. First, we're comparing HIGH/ cap to LOW/ cap countries + then all of a sudden, like a tsunami, you don't see it coming, the paradox states a fact about high-income vs. low-income countries. Not the same thing!!

I'm afraid your response to the Resolve task is based on a misreading of the facts. The first sentence states that the percentage of people who start new businesses is higher in high-income countries than in moderate-income countries. Contrary to what you indicate, "moderate" is not the same as "low": it's just lower than "high" income. The correlation is unsurprising, the author remarks, because there are more perceived business opportunities in richer countries than in poorer countries. Fine. It turns out, however, that the percentage of people who start businesses is even higher in low-income countries. The question is why? If poorer countries have worse business opportunities, we'd expect that entrepreneurship would be the lowest in such countries. The opposite, in fact is true.

Our job is to identify the cause for this disparity, and answer choice (E) gives us that cause: in low-income countries, entrepreneurs start business out of desperation, because other business employment options are absent. Even if the perceived business opportunities are dim, the employment prospects may well be dimmer. This answer explains the statistical disparity without deviating from the facts presented.

Answer choices (A) and (C) present irrelevant similarities between high- and low-income countries. Answer choice (D) suggests that the business opportunities in high-income countries may be illusory. So what? This might explain why many new businesses there don't prosper, but this is not the issue at hand.

Answer choice (B) is the Opposite answer, because it only clouds the issue further. If there is a big disparity in government assistance between high-income and low-income countries, we'd expect entrepreneurs to be far more likely to prosper in high-income countries than in low-income countries. This is a reasonable assumption to make: you aren't assuming too much. But if this is so, then why do so many people start new businesses in low-income countries? We'd expect the opposite to be true, given the lack of government assistance.

At any rate, we aren't concerned with whether (or why) new businesses prosper. Our only job is to explain what causes the unexpectedly high levels of entrepreneurship in low-income countries. Answer choice (E) gives us that answer, and is therefore correct.

Hope this helps! Let me know.

Thanks,