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Difficulty: HardWeaken

Financial Analyst: Five years ago, the national government eliminated subsidies for domestic solar panel manufacturers. Since then, the total revenue of the domestic solar industry has increased by 40 percent. Conversely, the domestic wind turbine manufacturing sector, which retained its government subsidies, saw only a 5 percent increase in total revenue over the same period. Clearly, in the renewable energy sector, government subsidies stifle revenue growth rather than encourage it.

Which of the following, if true, most seriously weakens the financial analyst's argument?

  1. Five years ago, the government eliminated solar subsidies specifically because independent market forecasts projected that the domestic solar industry's revenue would soon grow by at least 40 percent due to surging global demand.Answer
  2. B
    Despite the 40 percent increase in total revenue, the average profit margins of domestic solar panel manufacturers have decreased significantly since the subsidies were eliminated.
  3. C
    Domestic geothermal energy companies, which also lost their government subsidies five years ago, saw a revenue increase of 35 percent over that same period.
  4. D
    Several of the largest individual domestic wind turbine manufacturers actually experienced revenue growth of more than 50 percent over the last five years.
  5. E
    The total amount of government funds spent on wind turbine subsidies over the past five years was significantly less than the amount spent on solar panel subsidies in the preceding five-year period.

Answer

The statement indicating that the government eliminated solar subsidies because forecasts already projected a 40 percent revenue growth due to global demand.
The analyst's argument relies on a classic causal assumption: because the elimination of subsidies preceded the massive revenue growth in the solar sector, the policy change must have caused that growth. The correct answer devastatingly weakens this by establishing reverse causation. If the government removed the subsidies because they already knew the industry's revenue was about to skyrocket due to independent global demand, then the lack of subsidies did not cause the growth. The growth was going to happen anyway, entirely invalidating the analyst's conclusion.

Step-by-Step Solution

1
Identify the argument's core components.
Premise 1: Solar lost subsidies and revenue grew 40%. Premise 2: Wind kept subsidies and revenue grew 5%. Conclusion: Subsidies stifle revenue growth.
Understanding the exact structural relationship between the evidence and the conclusion is required to evaluate logical gaps.
2
Analyze the reasoning flaw.
The analyst observes a correlation between the removal of subsidies and high revenue growth, and concludes a direct causal relationship (removal caused growth).
Identifying the assumption of causality (A caused B) highlights potential vulnerabilities, such as alternate causes or reverse causation.
3
Evaluate the options for the one that best exploits this flaw.
The correct answer demonstrates that the anticipated growth (B) actually caused the policy change (A), completely undermining the analyst's causal arrow.
An effective weakener often shows that the effect was already guaranteed to happen independently of the proposed cause.

Key Concept

Weakening causal arguments by introducing reverse causation or demonstrating that an alternate factor guaranteed the outcome.
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