GMAT Verbal : Business Passages

Study concepts, example questions & explanations for GMAT Verbal

varsity tutors app store varsity tutors android store

Example Questions

← Previous 1

Example Question #1 : 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.

Which of the following is the main purpose of the article?

Possible Answers:

To explain how the landscape of international trade has evolved in recent years

To explain why Rwanda should become a member of the CISG

To provide a broad overview of Rwanda’s trading practices

To weigh and balance the reasons why Rwanda should join the CISG versus why Rwanda should not join the CISG

To argue that countries should always heed the recommendations of the United Nations Development Program

Correct answer:

To explain why Rwanda should become a member of the CISG

Explanation:

The article is written with a heavy-handed favoritism towards Rwanda becoming a member of the CISG. This is especially apparent in the opening and closing paragraphs. Therefore, the correct answer is "Explain why Rwanda should become a member of the CISG."

Example Question #1 : Analyzing Meaning, Purpose, And Effect Of Specified Text In 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:

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

explain the intersection of community and business

rationalize a negative phenomenon

point out the weaknesses in a widely accepted point of view 

advocate for a particular position 

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 : 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

overbearing restrictions

unfair rules

impractical barriers

useful regulations

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 #1 : Understanding The Content Of 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:

strong debate

emotional conversation

unfair exchange

combative discourse

intense persuasion 

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. 

Example Question #1 : 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 author would most likely agree with which of the following statements?

Possible Answers:

Although short-term rentals are popular right now, it is likely that they will diminish in value as more restrictions are enstated against them.

While short-term rentals and communities would mutually benefit from regulations, a hard ban against them would be counterproductive.

Communities should see short-term rentals as an adversary, when they can just as easily be made an ally.

In general, regulations have proven to do a disservice to travel industry, as the red tape prevents commerce from moving freely, and discourages travel as a whole.

Hotels and short-term rentals complement each other and can contribute to one another's mutual development.

Correct answer:

While short-term rentals and communities would mutually benefit from regulations, a hard ban against them would be counterproductive.

Explanation:

The author would most likely agree with the statement "While short-term rentals and communities would mutually benefit from regulations, a hard ban against them would be mutually counter-productive." This is because the author explicitly states that communities and short-term rentals should be allies as opposed to enemies. Thus, mutually beneficial regulations would serve them both well. 

This answer choice says the exact opposite, and so it is incorrect: "Communities should see short-term rentals as an adversary, when they can just as easily be made an ally."

There is no evidence to suggest that the author supports this statement: "Although short-term rentals are popular right now, it is likely that they will diminish in value as more restrictions are enstated against them."

The author implies that hotels and short-term rentals are competitors, so this statement is not correct: "Hotels and short-term rentals complement each other and can contribute to one another's mutual development."

The author believes that some regulations are beneficial, so this statement is incorrect: "In general, regulations have proven to do a disservice to travel industry, as the red tape prevents commerce from moving freely, and discourages travel as a whole."

Example Question #1 : 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.

Which of the following most likely explains why Homeowners' Associations do not tend to support short-term rentals?

Possible Answers:

Homeowners' Associations see short-term rentals as being competition for the market of vacationers. 

Short-term rentals directly confer extra fees on Homeowners' Associations.

Short-term rentals, due to the transitory nature of their inhabitants, can make the members of a community feel uncomfortable, thereby negatively impacting the Homeowners' Association. 

Short-term rentals do not confer a benefit on the Homeowners' Association that is comparable to that conferred on the proprietor of a short-term rental. 

Homeowners' Associations, as a general policy, have always looked down upon short-term rentals because they are unsanitary. 

Correct answer:

Short-term rentals, due to the transitory nature of their inhabitants, can make the members of a community feel uncomfortable, thereby negatively impacting the Homeowners' Association. 

Explanation:

The best answer is "Short-term rentals, due to the transitory nature of their inhabitants, can make the members of a community feel uncomfortable, thereby negatively impacting the Homeowners' Association." Given that the patrons of short-term rentals are constantly coming and going, the nature of short-term rentals can upset members of a Homeowners' Association, who usually strive for consistency and stability. 

While short-term rentals may be competition for hotels, there is no evidence that they are competition for Homeowners' Associations. Therefore, this answer choice is wrong: "Homeowners' Associations see short-term rentals as being competition for the market of vacationers."

The fact that short-term rentals experience success would not be an upsetting factor for Homeowners' Associations. Therefore, this answer choice is wrong: "Short-term rentals do not confer a benefit on the Homeowners' Association that is comparable to that conferred on the proprietor of a short-term rental."

There is no evidence in the passage to support either "Short-term rentals directly confer extra fees on Homeowners' Associations" or "Homeowners' Associations, as a general policy, have always looked down upon short-term rentals because they are unsanitary."

Example Question #31 : Purpose In Humanities 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 primary purpose of the second paragraph is to __________.

Possible Answers:

Provide a roadmap for the rest of the passage, given that the first paragraph served as an introductory paragraph to acquaint the reader with the topic. 

Emphasize the impact that short-term rentals have had on the travel industry, thereby transitioning betwen the first and third paragraphs.  

Argue that short-term rentals have reached their peak, and that they will never command more eminence than that which they currently have. 

Provide a quantitative valuation of a significant trend that would otherwise be difficult to tangibilize when drawing on subjective terms. 

Convince the reader that short-term rentals are the most significant development in the realm in which the housing industry and the travel industry intersect. 

Correct answer:

Emphasize the impact that short-term rentals have had on the travel industry, thereby transitioning betwen the first and third paragraphs.  

Explanation:

While the first paragraph provides background on the short-term rental phenomenon, explaining how the internet aided its spread, the third paragraph addresses the controversies that it has sparked. As a means of transitioning between these two topics, the second paragraph explains the significance of short-term rentals in order to allow the full impact of the controversial issues to be comprehended by the reader. Therefore, the correct answer is "Emphasize the impact that short-term rentals have had on the travel industry, thereby transitioning betwen the first and third paragraphs."

A tempting wrong answer is "Convince the reader that short-term rentals are the most significant development in the realm in which the housing industry and the travel industry intersect." While this sounds like it could be accurate, there is no evidence in the passage to indicate that short-term rentals are "the most significant development in the realm in which the housing industry and the travel industry intersect." The author does not provide sufficient information to justify use of the superlative "most."

Example Question #2 : Purpose In Law 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 primary purpose of the second paragraph is to __________.

Possible Answers:

indirectly offer a counter-argument to the author's thesis

suggest that China and Uganda should join the CISG

demonstrate the deleterious effects that can result from a trade dispute

directly support the author's thesis

provide an example that makes an abstract concept easier to understand

Correct answer:

provide an example that makes an abstract concept easier to understand

Explanation:

The purpose of the second paragraph is to "provide an example that makes an abstract concept easier to understand." In fact, the second paragraph discusses the scenario of a trade arrangement between Uganda and China in order to show the practial applications of the CISG. The purpose of the second paragraph is also signaled in the last sentence of the first paragraph, which reads, "To help make this concept more tangible, consider the following hypothetical."

Example Question #1 : 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.

Which of the following, if true, best supports the author's contention that bans against short-term rentals would inhibit economic development?

Possible Answers:

Many vacationers enjoy short-term rentals and could visit a town or city without them.

The average vacationer is very flexible with respect to the types of housing that they will use when travling, which includes the use of short-term rentals.

Vacationers who enjoy short-term rentals tend to spend more money in tourist destinations.

Many vacationers exclusively use short-term rentals and would be unlikely to visit a town or city without them.

All vacationers enjoy short-term rentals, but would substitute hotels if they were not available.

Correct answer:

Many vacationers exclusively use short-term rentals and would be unlikely to visit a town or city without them.

Explanation:

The author's conclusion that bans against short-term rentals would inhibit economic development hinges on the fact that short-term rentals are a non-substitutable commodity that consumers seek out. 

The only answer choice that describes short-term rentals as a non-substitutable commodity is "Many vacationers exclusively use short-term rentals and would be unlikely to visit a town or city without them."

If many vacationers exclusively use short-term rentals, then that means they will not use hotels as a replacement. As a result, towns and businesses would lose the business that these patrons would otherwise provide. 

A tempting wrong answer is "Vacationers who enjoy short-term rentals tend to spend more money in tourist destinations." This answer is not as strong as the correct answer because it does not make an argument that short-term rentals are non-substitutable. There is nothing to suggest that vacationers who enjoy short-term rentals would not settle for hotels if short-term rentals were not available.

Example Question #1 : 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.

Which of the following, if true, best supports the author’s contention that Rwanda should become a member of the CISG?

Possible Answers:

Disputes over which country's laws to apply in commercial trade situations can chill future trade arrangements with other countries, even those which belong to the CISG. 

Even if a country is a CISG member, commercial trade disputes are just as likely to occur. 

Participation fees for becoming a CISG member can hinder certain countries from joining. 

Status as a CISG member can deter non-CISG countries from engaging in trade arrangements. 

Becoming a CISG member can sometimes delay the processing of trade agreements because additional protocols are set in place for members to follow. 

Correct answer:

Disputes over which country's laws to apply in commercial trade situations can chill future trade arrangements with other countries, even those which belong to the CISG. 

Explanation:

Given that the purpose of CISG is to reduce disputes over trade between countries, the correct answer is, "Disputes over which country's laws to apply in commercial trade situations can chill future trade arrangements with other countries, even those which belong to the CISG." This is the correct answer because the inference can be made that if the CISG is reducing disputes between countries, and that there is a weaker chance of future trade arrangements being chilled. 

← Previous 1
Learning Tools by Varsity Tutors