Critical Reasoning Review

GMAT® Theory, Concepts & Practice Questions

This GMAT practice question is a verbal critical reasoning question. Concept tested in the question: Resolve the paradox in the argument.


A survey conducted recently in the city indicated that most college welfare-aid applicants understate the number of luxury items - such as cars and TVs – that their family owned, in an effort to maximize the amount of aid they can claim from the city. Paradoxically, the same study also found that many applicants claimed that they had running water and a gas connection even when they did not.

Which of the following best explains the apparent paradox?

  1. The city does not pay welfare unless the applicants have at least some things working for them.
  2. Claiming that they do not have a car or a TV ensures that the city looks at the applicant more favorably.
  3. While the applicants may be willing to accept that they don't have certain things, they felt embarrassed having to accept that they don't have most things.
  4. Historically, at least 30℅ of the claims have had people understating what they have while only 22℅ overstated what they had.
  5. The people who understated what they had were not the same people who overstated what they had.

Explanatory Answer

Video explanation will be added soon.
  1. Step 1: Analyzing the Argument

    The argument presents a contradiction in the behavior of college welfare-aid applicants. While they understate the extent to which they have certain items, in order to maximize the loan, they also seem to overstate the extent to which they have some items.

    To resolve the discrepancy, the correct answer option must explain their motivation to overstate certain things. Why they understate certain items is explained in the argument itself – to maximize the amount of loan. So, even though understating can possibly maximize their loan, why do many of these applicants overstate some items? That is the question that the correct option must answer.

  2. Step 2: Eliminating Options

    • Option (A) does not work for a couple of reasons. The option states that the city wants people to already have certain things. That is contrary to the very notion of welfare-aid. Moreover, if the city just wants people to already have certain things, why not just claim that they have a TV? The option does not specify what the city expects the people to already have.
    • Option (B) explains why candidates for aid would understate the extent to which they have certain things. But why would they claim to have running water when they do not? If option (B) were true, would not their application be treated even more favourably if they do not have water. Essentially, the option repeats one part of what is already given in the argument and provides no justification for the other part.
    • Option (D) has no impact on the argument. What does the percentage of people understating or overstating matter when attempting to explain WHY they do so?
    • Option (E) like Option (D), has no impact on the argument. Whether the people were the same or different does not explain WHY they under or overstated what they had.
    • Option (C) explains why they would overstate certain things such as running water – they were too embarrassed to confide that they did not have necessities. However, they understated other things to maximize aid.
Option C is the correct answer.

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