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Question

Difficulty: MediumEvaluating Argument Validity and Test of Variance

A municipal public transit authority plans to address its operational deficit by installing automated turnstile gates at all underground metro stations and laying off all human ticket inspectors. The authority's financial analysts claim that because the annual maintenance cost of the automated gates will be significantly less than the total annual salaries of the inspectors, implementing this plan is guaranteed to decrease the authority's net operating deficit in its first year. Which of the following would it be most useful to determine in order to evaluate the validity of the financial analysts' conclusion?

  1. Whether passenger fare evasion is likely to increase significantly following the removal of human ticket inspectorsAnswer
  2. B
    Whether neighboring municipalities with similar transit networks have successfully implemented automated gate systems to reduce overall municipal debt
  3. C
    Whether human ticket inspectors currently receive performance-based monetary bonuses in addition to their base annual salaries
  4. D
    Whether the automated turnstile gates will require an initial software calibration period prior to being fully deployed to the public
  5. E
    Whether decreasing the net operating deficit of the transit authority guarantees that total municipal government debt will also decline

Answer

Determining whether passenger fare evasion is likely to increase significantly following the removal of human ticket inspectors is most useful for evaluating the argument.
The correct option addresses an unstated financial variable: revenue from ticket sales. Operating deficit equals operating expenses minus revenue. The premises establish that one category of expenses (maintenance) is lower than another (salaries). However, if replacing human inspectors with automated gates leads to higher fare evasion, the resulting loss in ticket revenue could outweigh the net expense savings. Applying the Test of Variance: if fare evasion increases significantly, the plan will fail to decrease the deficit; if fare evasion does not increase, the plan will succeed. Because extreme answers produce opposite impacts on the conclusion's validity, this information is critical.

Step-by-Step Solution

1
Deconstruct the argument structure
Premise: Automated gate annual maintenance costs are significantly lower than total annual inspector salaries. Conclusion: Installing gates and laying off inspectors is guaranteed to decrease the net operating deficit in the first year.
The conclusion relies on the assumption that salary savings minus maintenance costs represents the total net financial impact of the policy change.
2
Identify the unstated logical gap
The argument considers expenses (salaries vs. maintenance) but completely ignores revenue impacts (ticket sales and fare enforcement).
Net operating deficit is calculated as Total Operating Expenses minus Total Revenue. Any change affecting revenue directly impacts the deficit.
3
Apply the Test of Variance to the evaluating question
If fare evasion increases significantly without human inspectors, the revenue lost from unpaid fares could easily exceed the net salary savings, causing the net operating deficit to increase (weakening the conclusion). Conversely, if fare evasion does not increase, the net cost savings will reduce the deficit as claimed (strengthening the conclusion).
The opposite extreme answers to this question yield opposite effects on the validity of the analysts' conclusion, confirming it as the correct evaluation criteria.

Key Concept

Evaluating Argument Validity and Test of Variance
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Topics

Evaluating Argument Validity and Test of Variance

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