GMAT Question of the Day: Critical Reasoning
The First Banking Group’s decision to invest in an electronic network for transferring funds was based on a cost advantage over a nonelectronic system of about ten dollars per transaction in using an elec- tronic system. Executives reasoned further that the system would give them an advantage over competi-tors. Which of the following, if it is a realistic possibility, most seriously weakens the executives’projection of an advantage over competitors?
(A) The cost advantage of using the electronic sys-tem will not increase sufficiently to match the
pace of inflation.
(B) Competitors will for the same reasons install electronic systems, and the resulting overca-
pacity will lead to mutually damaging price wars.
(C) The electronic system will provide a means for faster transfer of funds, if the First Banking
Group wishes to provide faster transfer to its customers.
(D) Large banks from outside the area served by the First Banking Group have recently estab-
lished branches in that area as competitors to the First Banking Group.
(E) Equipment used in the electronic network for transferring funds will be compatible with
equipment used in other such networks.
Written by Take GMAT Team on September 16th, 2008 with
31 comments.
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Kuldeep Sharma
#1. September 17th, 2006, at 5:41 PM.
B)