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GMAT · Argument structure, explanations and plans · TOPIC LESSON

Evaluating plans, trade-offs and consequences

Evaluate whether a proposed action can achieve its stated goal after costs, constraints and responses are counted.

GMAT45 min study guide9 indexed sections

BY THE END, YOU CAN

  • Explain and apply goal and proposed action
  • Explain and apply feasibility
  • Explain and apply unintended consequences
  • Explain and apply costs and benefits
  • Explain and apply countervailing effects
  • Explain and apply alternative plans
  • Explain and apply relevant criteria
  • Explain and apply evidence that supports or undermines the plan

BEFORE YOU START

  • Read an argument or passage without assuming that every speaker agrees.
  • Distinguish a claim from the evidence offered for it; interpret simple counts and percentages.

Original educational lesson. Work through the examples before revealing the practice answers. This original lesson supports current GMAT study through an editorial skill map. It does not reproduce official questions, predict exam content or guarantee a score.

LEARN THROUGH ORIGINAL PRACTICE

Original GMAT-style worked examples and practice

All passages, examples and exercises here are original. No official GMAC questions, choices or explanations are reproduced. This independent preparation resource is not affiliated with or endorsed by GMAC. GMAT is a trademark of the Graduate Management Admission Council.

01 / UNDERSTAND & APPLY

Separate the goal from the proposed action

A plan argument has a desired outcome, a proposed action and a mechanism expected to connect them. State all three. “Install more charging points” is an action; “reduce vehicles waiting for a charger” is a goal. More installed equipment is not automatically proof of shorter waits.

The relevant criterion comes from the stated goal. A traffic plan may be judged by car trips, travel time, emissions or accessibility; these can move differently. Do not replace the given objective with your preferred one.

ORIGINAL WORKED EXAMPLE

Find the mechanism

A library proposes automatic reminders before due dates to reduce overdue returns. State goal, action and mechanism.

  1. Goal: fewer overdue returns.
  2. Action: send automatic reminders before the due date.
  3. Mechanism: patrons who would otherwise forget act on timely messages and return or validly renew before becoming overdue.

Answer The plan relies on reaching patrons and changing the behavior that causes overdue returns, not merely sending messages.

02 / UNDERSTAND & APPLY

Feasibility: resources, timing and execution

A plan can be desirable yet infeasible. Check whether the required staff, equipment, authority, time and information exist when needed. A demand survey does not establish supply capacity. A one-time pilot may rely on resources unavailable at scale.

Focus on constraints relevant to the mechanism. A minor inconvenience is not necessarily fatal, while a small missing resource can be decisive if the plan requires it. For a deadline, distinguish average completion time from the capacity to complete by the actual cutoff.

ORIGINAL WORKED EXAMPLE

A missing resource

A clinic plans to add evening appointments without reducing daytime appointments. Every currently scheduled qualified staffing hour is required to maintain the existing daytime service. Current staff are already scheduled for their maximum permitted hours. Each additional evening appointment requires additional qualified staffing hours; no efficiency change or unused capacity can substitute for them. No additional qualified staff can be hired or reassigned during the proposed period. What does this show?

  1. The proposed evening appointments require qualified hours in addition to all hours needed for unchanged daytime service.
  2. Current staff cannot add hours, existing hours cannot be shifted without reducing daytime service, and no hiring, reassignment, efficiency change or unused capacity supplies the additional hours.
  3. The stated implementation therefore cannot meet its staffing requirement during the proposed period, even if patients want evening appointments.

Answer The plan is infeasible as specified for that period; demand does not solve the staffing constraint.

03 / UNDERSTAND & APPLY

Unintended consequences and behavioral responses

An intervention changes incentives. Drivers may reroute, customers may delay purchases, or employees may optimize a measured target at the expense of the real goal. Ask how affected people are likely to respond and whether that response offsets the intended benefit.

An unintended consequence is not automatically decisive. Its direction and magnitude matter. A policy can still produce a net benefit despite a side effect, so evaluate the stated objective after counting both effects.

ORIGINAL WORKED EXAMPLE

Displacement versus reduction

A city closes one street to cars to reduce traffic across the district. Counts show nearly all affected drivers now use adjacent district streets. Evaluate.

  1. The closed street has less traffic, so the local outcome may succeed.
  2. The district-wide goal is not established if the same trips are displaced within the district.
  3. The result does not prove closure lacks every benefit, such as pedestrian safety on that street.

Answer The evidence undermines district-wide traffic reduction by showing displacement rather than eliminated trips.

04 / UNDERSTAND & APPLY

Costs and benefits need a common boundary

For a monetary objective, compare relevant incremental benefits and costs over the same time period. Separate recurring operating costs from one-time installation costs. For nonmonetary objectives, identify the relevant outcomes rather than forcing everything into money.

A cost already paid and unrecoverable is not an incremental cost of choosing among future plans, though future maintenance or recoverable resale value can matter. Do not omit opportunity costs when the argument depends on scarce resources that could serve another important use.

ORIGINAL WORKED EXAMPLE

Compute the first-year trade-off

A business considers a scheduling system. Installation costs $12,000 once. Annual fees are $4,000. Expected annual labor savings are $10,000. Using only these figures, calculate first-year net savings and recurring annual net savings afterward.

  1. First-year net savings: $10,000−$4,000−$12,000=−$6,000.
  2. Later full-year recurring net savings: $10,000−$4,000=$6,000, assuming benefits and fees remain unchanged.
  3. A plan can have negative first-year savings but positive recurring savings; the preferred decision depends on horizon and other constraints.

Answer First year: a $6,000 net cost. Later full years: $6,000 net savings.

05 / UNDERSTAND & APPLY

Countervailing effects can offset an intended gain

Write the mechanism in both directions. A faster checkout may attract more customers, raising the queue; a cheaper price may increase units but reduce revenue per unit. The outcome depends on the net effect rather than on the existence of one favorable link.

Avoid assuming that offsets are always complete. A plausible offset weakens an unqualified prediction; a measured offset can support a firmer conclusion about the size or sign of the net result.

ORIGINAL WORKED EXAMPLE

A measured offset

A packaging redesign saves $0.30 per shipment but increases breakage costs by an average of $0.45 per shipment. Other costs and shipment volume are unchanged. Will it lower total shipment-related costs?

  1. The saving and added cost share the same per-shipment denominator.
  2. Net cost change is −$0.30+$0.45=+$0.15 per shipment.
  3. With unchanged positive volume, total shipment-related costs rise.

Answer No; costs increase by $0.15 per shipment under the supplied conditions.

06 / UNDERSTAND & APPLY

Compare alternative plans fairly

An alternative plan matters when it achieves the same goal with a relevant advantage or avoids a crucial constraint. Use a common baseline and time horizon. Compare complete plans rather than the best feature of one against the worst feature of another.

The existence of an alternative does not refute the claim that the original plan can work. It can weaken a claim that the original is necessary, best or cheapest. Match the criticism to the exact wording: “will help” and “is the only way” require different support.

ORIGINAL WORKED EXAMPLE

A better alternative and a weaker claim

A manager says outsourcing is the only way to clear a backlog by Friday. A verified internal reassignment can also clear it by Friday without disrupting other required work. What is undermined?

  1. The alternative directly contradicts exclusivity.
  2. It does not establish outsourcing would fail to clear the backlog.
  3. Whether reassignment is cheaper or better in other respects requires additional evidence.

Answer The claim that outsourcing is the only feasible route, not necessarily its effectiveness.

07 / UNDERSTAND & APPLY

Relevant criteria and evidence quality

A plan’s support improves when evidence tests its actual mechanism, population, scale and goal. Satisfaction with reminders is weaker evidence for fewer late returns than actual late-return rates under comparable conditions. High adoption is not the same as successful impact.

When outcomes conflict, state the trade-off rather than inventing a single ranking. A transport plan can shorten commutes while increasing cost. If the task gives no priority or weighting, the evidence may not determine which plan is best. On a multiple-choice question, however, the stated conclusion normally identifies the target criterion.

08 / UNDERSTAND & APPLY

Practice: feasibility, arithmetic and mechanism

Treat the stated conditions as complete for the numerical exercises; give the requested outcome.

ORIGINAL PRACTICE · 1

1. A school wants fewer missed appointments and proposes reminder texts. Which most directly supports the mechanism? A: Many missed appointments result from forgetting, and recipients act on timely texts. B: The logo is attractive. C: The school has a long name. D: Texts use a common font. E: The office has new chairs.

Reveal answer & reasoning

A

A links the action to the cause of missed appointments and supplies behavioral response. B through E are background without a stated causal link.

ORIGINAL PRACTICE · 2

2. A program saves $15,000 annually, costs $5,000 annually to run and $25,000 to install. What is first-year net savings?

Reveal answer & reasoning

−$15,000, a net first-year cost.

$15,000−$5,000−$25,000=−$15,000. Recurring annual savings would be $10,000 under unchanged conditions; the first year includes installation.

ORIGINAL PRACTICE · 3

3. A policy aims to reduce total water use. New fixtures cut use per visit by 20%, but visits double. What happens to total use if all else is unchanged?

Reveal answer & reasoning

It rises by 60%.

New total =0.8×2=1.6 times old total. Efficiency per visit improves, but the larger number of visits more than offsets it.

ORIGINAL PRACTICE · 4

4. A town shifts parking from Main Street to nearby streets while preserving the same car trips. Does this establish reduced town-wide car traffic?

Reveal answer & reasoning

No.

It changes parking location without necessarily eliminating trips. A local-space goal might be met, but the stated town-wide traffic goal is not established.

ORIGINAL PRACTICE · 5

5. A repair plan needs a part by Monday, but the earliest available arrival is Wednesday and there is no substitute. What type of problem is this?

Reveal answer & reasoning

A timing-based feasibility failure for the Monday plan.

The required input cannot arrive before the deadline. The plan might work later, but that does not satisfy the stated timing.

ORIGINAL PRACTICE · 6

6. A new box saves $0.50 in materials and adds $0.20 in handling per shipment. Volume and all other costs remain unchanged. What is the net effect?

Reveal answer & reasoning

A saving of $0.30 per shipment.

$0.50−$0.20=$0.30. The added handling is a countervailing effect but does not fully offset the materials saving.

09 / UNDERSTAND & APPLY

Practice: what can the evidence decide?

A complete evaluation preserves both the objective and the strength of the claim.

ORIGINAL PRACTICE · 1

7. Plan A reduces average travel time by ten minutes and costs $4 million. Plan B reduces it by eight minutes and costs $1 million. Without a budget or criterion weighting, must A be the better plan?

Reveal answer & reasoning

No.

A provides more time reduction; B costs less. Which trade-off is preferred requires a criterion or constraint. The data alone do not supply the missing preference.

ORIGINAL PRACTICE · 2

8. A director says a new website is the only way to increase bookings. A tested phone-booking service also increases bookings. Does this prove the website would not work?

Reveal answer & reasoning

No; it refutes the “only way” claim.

An effective alternative defeats necessity or exclusivity, not the original plan’s possible effectiveness. Claims of cheapest or best would require comparative evidence.

KEEP THE BIG IDEAS

Quick revision

  • A plan must connect action to goal through a feasible mechanism.
  • Count relevant costs, offsets and behavioral responses over a consistent horizon.
  • An alternative may refute “only” or “best” without proving the original plan ineffective.
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