GMAT Verbal : Analyzing Meaning, Purpose, and Effect of Specified Text in Business Passages

Study concepts, example questions & explanations for GMAT Verbal

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Example Questions

Example Question #2 : Business Passages

While hotels have traditionally held a firm grip on the market of vacation-goers, the emergence of companies fostering short-term rentals are dramatically changing the landscape of the travel industry. Before the advent of the modern online forum, short-term rentals were an arrangement limited by sheer logistics. Information about the availability of (and desire for) a short-term rental was difficult to transmit and share. However, with the current explosion of social media and cyber enterprise, the business model of short-term rentals has blossomed.

In 2011, 40% of travelers reported that they would be staying in a short-term rental during the year, as opposed to a traditional hotel. By 2013, this figure had jumped up to a staggering 49%. The short-term rental business is a $24 billion market, holding 8% of the total market of U.S. travel. Rapidly expanding and growing with the innovations of creative renters, the question that hangs in the air is what this means for communities. Short-term rentals have had a polarizing effect in many ways, becoming a source of joy for venturists and cause of dismay for many homeowners.

In recent news, there have been incredible scandals in which short-term renters have abused the property loaned to them, causing thousands of dollars' worth of property damage. Other accusations include disturbing the peace and the commission of criminal acts. Homeowners' Associations (HOAs) have been up in arms, and the legal backlash has been significant. New York enacted firm restrictions on short-term renters, and many HOAs now embed limits on the purposes that a space may be used for, barring short-term rentals.

However, this reaction is an over-reaction, and a detrimental one at that. Cities and towns that set hard limits against short-term rentals are halting the economic growth that would otherwise accompany them. Vacationers are likely to be deterred from venturing out to towns that have banned more affordable short-term rentals. While some vacationers might opt to stay at a hotel in desirable locations, as the short-term rental industry continues to grow, it will become more and more likely that vacation-goers will simply choose alternative destinations that actually allow for short-term rentals.

This is not to say, however, that short-term rentals should be completely unregulated. The key is imposing useful regulations that are mutually beneficial to both communities and to the proprietors of short-term rentals. One potential solution would be to impose reasonable taxes on visitors that use short-term rentals; having requirements for minimum stays could also ensure more consistency for the communities. This also has the added benefit of generating income for towns and cities. There is no reason why communities should see the short-term rental industry as an adversary, when it can just as easily be made into an ally.

The purpose of this passage is to __________.

Possible Answers:

explain the intersection of community and business

point out the weaknesses in a widely accepted point of view 

advocate for a particular position 

provide an objective and unbiased point of view on a complex topic

rationalize a negative phenomenon

Correct answer:

advocate for a particular position 

Explanation:

This passage is written to support short-term rentals and provide arguments as to why they should be supported. Therefore, the correct answer is "advocate for a particular position." The passage is not objective and unbiased, as it clearly has a particular agenda. While the intersection of business and community is a theme discussed in the passage, it is not the primary purpose. Short-term rentals are not a negative phenonmen, and so the answer choice, "rationalize a negative phenomenon," is also incorrect. The passage also does not "point out the weaknesses in a widely accepted point of view."

Example Question #1 : Understanding The Content Of Business Passages

While hotels have traditionally held a firm grip on the market of vacation-goers, the emergence of companies fostering short-term rentals are dramatically changing the landscape of the travel industry. Before the advent of the modern online forum, short-term rentals were an arrangement limited by sheer logistics. Information about the availability of (and desire for) a short-term rental was difficult to transmit and share. However, with the current explosion of social media and cyber enterprise, the business model of short-term rentals has blossomed.

In 2011, 40% of travelers reported that they would be staying in a short-term rental during the year, as opposed to a traditional hotel. By 2013, this figure had jumped up to a staggering 49%. The short-term rental business is a $24 billion market, holding 8% of the total market of U.S. travel. Rapidly expanding and growing with the innovations of creative renters, the question that hangs in the air is what this means for communities. Short-term rentals have had a polarizing effect in many ways, becoming a source of joy for venturists and cause of dismay for many homeowners.

In recent news, there have been incredible scandals in which short-term renters have abused the property loaned to them, causing thousands of dollars' worth of property damage. Other accusations include disturbing the peace and the commission of criminal acts. Homeowners' Associations (HOAs) have been up in arms, and the legal backlash has been significant. New York enacted firm restrictions on short-term renters, and many HOAs now embed limits on the purposes that a space may be used for, barring short-term rentals.

However, this reaction is an over-reaction, and a detrimental one at that. Cities and towns that set hard limits against short-term rentals are halting the economic growth that would otherwise accompany them. Vacationers are likely to be deterred from venturing out to towns that have banned more affordable short-term rentals. While some vacationers might opt to stay at a hotel in desirable locations, as the short-term rental industry continues to grow, it will become more and more likely that vacation-goers will simply choose alternative destinations that actually allow for short-term rentals.

This is not to say, however, that short-term rentals should be completely unregulated. The key is imposing useful regulations that are mutually beneficial to both communities and to the proprietors of short-term rentals. One potential solution would be to impose reasonable taxes on visitors that use short-term rentals; having requirements for minimum stays could also ensure more consistency for the communities. This also has the added benefit of generating income for towns and cities. There is no reason why communities should see the short-term rental industry as an adversary, when it can just as easily be made into an ally.

The use of the underlined phrase "hard limits" in the context of the fourth paragraph most closely means __________.

Possible Answers:

restrictions that are uncompromising

impractical barriers

unfair rules

useful regulations

overbearing restrictions

Correct answer:

restrictions that are uncompromising

Explanation:

The use of the term "hard limits" is used in the paragraph that describes how some cities and towns do not allow any short-term rentals. Based on this context, "hard limits" refers to a decisive ban, so the term that is closest in meaning would be "restrictions that are uncompromising."

While the author might see the rules as unfair, impratical, or as being overbearing restrictions, these are not the meaning carried by the term "hard limits." Additionally, the author does not see the hard limits as being "useful regulations," so this answer choice is wrong. 

Example Question #4 : Business Passages

The United Nations Convention on Contracts for the International Sale of Goods (CISG) can help countries throughout the world have a more uniform way of navigating the challenging waters of international law surrounding trade. It is not uncommon for two countries to have adopted different laws on international trade that conflict with each other. This becomes a serious problem when trade disputes arise. To help make this concept more tangible, consider the following hypothetical.

Suppose China ships three million dollars' worth of electronics to Uganda using standard bulk shipping transportation methods via a commonly traveled sea route. However, the packaging isn't secured in a manner sufficient to withstand unforeseen weather conditions. As a result, the goods become damaged in transit and are no longer fit for resale. Given that two countries are involved in this transaction–China and Uganda–the question arises as to which country’s trade laws will apply to resolve the matter at hand.

In this scenario, it is fortunate that both China and Uganda are parties to the CISG, which provide for a uniform set of laws governing trade. Such laws cover which party would be responsible for the damaged goods in this scenario. As a result, there will be no dispute as to whether China’s or Uganda's trade laws apply. Given that both countries are parties to the CISG, the laws set forth by the CISG would be applicable.

However, not all countries are parties to the CISG. One example is Rwanda. Even though Rwanda is not a party to the CISG, the fact of the matter is that CISG laws can still apply to it. The CISG applies to trade between countries so long as one of those countries is a party to the CISG (unless the parties expressly specify that the CISG will not apply to their specific trade arrangement). Several of Rwanda's main trade partners, such as the United States, China, Belgium, and Uganda, are parties to the CISG, so the laws of the treaty will apply in those trade agreements. Meanwhile, there is a different story when it comes to Rwanda's trade agreements with Kenya, Swaziland, Tanzania, and Thailand, which are not parties to the CISG. Due to these countries’ lack of membership in the CISG, if a problem ever arose in a trade agreement between Rwanda and one those countries, it would be unclear as to which country’s laws would apply.

There has been heated discussion as to whether Rwanda should sign the CISG. The United Nations Development Program takes the stance that it would behoove Rwanda to join. Whether or not Rwanda decides to become a member, the CISG will still apply to a large portion of its trade agreements, as about 100 countries are in fact CISG members, with a strong portion of those members also being trade partners with Rwanda. On the flip side, some Rwandan politicians believe that valuable autonomy would be lost if Rwanda assented to the CISG. However, given the potential benefits that Rwanda stands to gain from the CISG, these fears do not merit forgoing such a valuable opportunity.

The use of the underlined phrase "heated discussion“ in the context of the last paragraph of the passage most closely means __________.

Possible Answers:

intense persuasion 

emotional conversation

combative discourse

strong debate

unfair exchange

Correct answer:

strong debate

Explanation:

The phrase, "heated discussion" appears in the last paragraph in this sentence: "There has been heated discussion as to whether Rwanda should sign the CISG." Given the context in which the phrase appears, it seems to mean that strong arguments are being made both for and against membership in the CISG. As such, "strong debate" is the best answer, as the discoure is not emotional, is not characerized as being combative, nor unfair, and there is no indication that "intense persuasion" is being utilized. 

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