PrepTest 74, Section 3, Question 23
The constitution of Country F requires that whenever the government sells a state-owned entity, it must sell that entity for the highest price it can command on the open market. The constitution also requires that whenever the government sells a state-owned entity, it must ensure that citizens of Country F will have majority ownership of the resulting company for at least one year after the sale.
The constitution of Country F requires that whenever the government sells a state-owned entity, it must sell that entity for the highest price it can command on the open market. The constitution also requires that whenever the government sells a state-owned entity, it must ensure that citizens of Country F will have majority ownership of the resulting company for at least one year after the sale.
The constitution of Country F requires that whenever the government sells a state-owned entity, it must sell that entity for the highest price it can command on the open market. The constitution also requires that whenever the government sells a state-owned entity, it must ensure that citizens of Country F will have majority ownership of the resulting company for at least one year after the sale.
The constitution of Country F requires that whenever the government sells a state-owned entity, it must sell that entity for the highest price it can command on the open market. The constitution also requires that whenever the government sells a state-owned entity, it must ensure that citizens of Country F will have majority ownership of the resulting company for at least one year after the sale.
The government of Country F must violate at least one of the constitutional requirements described above if it is faced with which one of the following situations?
The government will sell StateAir, a state-owned airline. The highest bid received was from a corporation that was owned entirely by citizens of Country F when the bid was received. Shortly after the bid was received, however, noncitizens purchased a minority share in the corporation.
The government has agreed to sell National Silver, a state-owned mine, to a corporation. Although citizens of Country F have majority ownership of the corporation, most of the corporation's operations and sales take place in other countries.
The government will sell PetroNat, a state-owned oil company. World Oil Company has made one of the highest offers for PetroNat, but World Oil's ownership structure is so complex that the government cannot determine whether citizens of Country F have majority ownership.
The government will sell National Telephone, a state-owned utility. The highest bid received was from a company in which citizens of Country F have majority ownership but noncitizens own a minority share. However, the second-highest bid, from a consortium of investors all of whom are citizens of Country F, was almost as high as the highest bid.
The government will sell StateRail, a state-owned railway. The government must place significant restrictions on who can purchase StateRail to ensure that citizens of Country F will gain majority ownership. However, any such restrictions will reduce the price the government receives for StateRail.
Explanations
I love these little Logic-Games-like LR questions. We're given some rules about a fictitious country, then asked which answer choice necessarily violates one of the rules. The correct answer should stick out like a sore thumb.
So, what are our rules?
We have two of them, and they're both triggered by the same sufficient condition: Country F selling a state-owned entity. Whenever (i.e. if) this happens Country F must both get as much money for it as possible, and ensure citizens own a majority stake of the purchasing entity for at least one year after the sale.
All we need to do is find a scenario in the answer choices where we meet this sufficient condition, but clearly break one of the two necessary conditions.
Let's take a look.
Nope. Here, we meet the sufficient condition by selling StateAir, a state-owned airline. But we don't break either necessary condition. If anything, we meet them both.
No again. Here, we meet the sufficient condition by selling National Silver, a state-owned mine. But we explicitly meet one of the two conditions (selling to a citizen-majority-owned company) without mentioning the other. It's possible we could fail to meet the other condition, but we didn't fail to meet it explicitly.
Nope. Such a trap. Here, we meet the sufficient condition by selling PetroNat, a state-owned oil company. But not told much about the buyer. All we know is that World Oil has made one of the highest offers, and that it has a confusing ownership structure. We don't actually know if World Oil is the buyer. And even if they were, the ownership structure simply could break our second condition, it doesn't necessarily have to break it.
Nah. Similar to A, here we meet the sufficient condition by selling National Telephone, but we all but meet each necessary condition.
Bingo. This is the answer. Here, we meet the necessary condition by selling StateRail. But, by meeting the condition to sell to a citizen-majority buyer, we will necessarily reduce the price StateRail will sell for, and that breaks our first necessary condition.
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