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Question

Difficulty: MediumSingle-Sentence Inferences

In a study of nineteenth-century North American corporate history, an analyst notes: "While nineteenth-century railroad syndicates in North America frequently consolidated regional trunk lines under central holding companies to eliminate competitive rate wars, these mergers rarely achieved their intended operational efficiencies because local branch managers retained discretionary authority over regional freight pricing."

Which of the following claims regarding nineteenth-century North American railroad holding companies is most directly supported by the excerpt?

  1. They did not exercise exclusive administrative control over the regional pricing decisions made by local branch managers.Answer
  2. B
    They collapsed financially within a few years of consolidation as a direct result of insubordination by local branch managers.
  3. C
    They successfully eliminated rate wars while seamlessly achieving their intended operational efficiencies across regional lines.
  4. D
    They completely failed in every strategic objective because local branch managers possessed absolute veto power over corporate governance.
  5. E
    They retained discretionary authority over regional freight pricing rather than delegating pricing decisions to local branch managers.

Answer

The correct option is the one stating that holding companies did not exercise exclusive administrative control over the regional pricing decisions made by local branch managers.
The sentence specifically establishes that central holding companies consolidated ownership of regional lines, yet local branch managers retained discretionary control over regional freight pricing. This directly proves that the holding companies lacked complete or exclusive administrative pricing control.

Step-by-Step Solution

1
Analyze the core assertion of the target sentence.
The target sentence explains that despite consolidating regional trunk lines under central holding companies, operational efficiencies were rarely achieved because local branch managers kept discretionary pricing authority.
Single-sentence inference requires determining what must be strictly true based solely on the explicit details provided.
2
Evaluate the direct logical deduction from the target sentence.
Since local branch managers retained discretionary pricing authority, the central holding companies did not hold sole or exclusive authority over those pricing decisions.
If local branch managers held discretionary authority, central authority was not absolute or exclusive in that specific domain.

Key Concept

Strict Single-Sentence Deduction
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Topics

Single-Sentence Inferences

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