Suncorp, A New Corporation with Limited Funds, has been Clearing Large Sections

Question: Suncorp, a new corporation with limited funds, has been clearing large sections of the tropical Amazon forest for cattle ranching. This practice continues even though greater profits can be made from rubber tapping, which does not destroy the forest, than from cattle ranching, which does destroy the forest.

Which of the following, if true, most helps to explain why Suncorp has been pursuing the less profitable of the two economic activities mentioned above?

(A) The soil of the Amazon forest is very rich in nutrients that are important in the development of grazing lands.
(B) Cattle-ranching operations that are located in tropical climates are more profitable than cattle-ranching operations that are located in cold-weather climates.
(C) In certain districts, profits made from cattle ranching are more heavily taxed than profits made from any other industry.
(D) Some of the cattle that are raised on land cleared in the Amazon are killed by wildcats.
(E) The amount of money required to begin a rubber-tapping operation is twice as high as the amount needed to begin a cattle ranch.

Answer: E
Explanation: Assumption GMAT critical reasoning questions ask candidates to pick that answer choice that comprises the assumption that must be accurate to support the given argument.

Let us check the option that helps to explain why Suncorp has been pursuing the less profitable of the two economic activities mentioned above:

(A) The soil of the Amazon forest is very rich in nutrients that are important in the development of grazing lands.
Incorrect.
Option A states that the soil of the amazon forest is equally good for rubber plants. So this statement is not directly related to the two businesses related above.

(B) Cattle-ranching operations that are located in tropical climates are more profitable than cattle-ranching operations that are located in cold-weather climates.
Incorrect.
Option B states about climatic conditions which are not under consideration.

(C) In certain districts, profits made from cattle ranching are more heavily taxed than profits made from any other industry.
Incorrect.
Option C states about cattle ranching, which is opposite to the answer that we are looking for.

(D) Some of the cattle that are raised on land cleared in the Amazon are killed by wildcats.
Irrelevant.
Option D suggests cattle ranching to avoid these problems

(E) The amount of money required to begin a rubber-tapping operation is twice as high as the amount needed to begin a cattle ranch.
Correct.
In option E we find two things-

i) rubber-tapping operation and cattle ranch;
ii) explains the situation of investing in less profitable business.
Anyone would require double the required money to start a rubber-tapping business and make it profitable.

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