Questions 98-105 refer to the passage on page 54. 98.The author’s main point is that (A) modern multinationals originated in the sixteenth and seventeenth centuries with the establishment of chartered trading companies (B) the success of early chartered trading companies,like that of modern multinationals,depended primarily on their ability to carry out complex operations (C) early chartered trading companies should be more seriously considered by scholars studying the origins of modern multinationals (D) scholars are quite mistaken concerning the origins of modern multinationals (E) the management structures of early chartered trading companies are fundamentally the same as those of modern multinationals Main idea To understand the main point of the whole passage,review what the author does in each paragraph.The first paragraph presents the general view that the conditions in which early trading companies in which early trading companies operated were too primitive to make a comparison to modem multinational corporations interesting.The second paragraph corrects this impression by citing their complex activities, and the third paragraph,after reminding the reader of important differences between them,closes by saying that early trading companies merit further study as analogues of more modern structures(fines 53—54).The author's main point is to show that an interesting comparison between early trading companies and modem multinational companies exists and deserves further study. A Early trading companies share similarities with modern multinational companies but ale not credited with having originated them. B Early trading companies are compared to modern companies on the basis of their complex activities,but their success is not discussed. C Correct.An interesting comparison between early trading companies and modern multinational companies may be drawn and should be further studied. D The author does not say that the general view is mistaken,only that a comparison of early and modern companies deserves further study. E Early trading companies had hierarchical management structures(1ine 28),but the author does not say they were the same as those in modern companies. The correct answer is C. 99. According to the passage,early chartered trading companies are usually described as (A) irrelevant to a discussion of the origins of the modern multinational corporation (B) interesting but ultimately too unusual to be good subjects for economic study (C) analogues of nineteenth’ century British trading firms (D) rudimentary and very early forms of the modern multinational corporation (E) important national institutions because they existed to further the political aims of the governments of their home countries Supporting ideas The question uses the phrase according to the passage, indicating that the answer is explicitly stated in the passage.In the first paragraph,early trading companies are called irrelevant to a discussion about the origins of modern multinational corporations (fines 12—19). A Correct.The early trading companies are usually dismissed as irrelevant to a discussion of the origins of modern multinational corporations. B The passage does not characterize the early trading companies as unusual C The passage compares the early trading companies to modern companies,not nineteenth-century ones. D The author argues that,in contrast to the discussions that usually dismiss their relevance,early trading companies do offer an interesting comparison to the modern multinationals. E Early trading companies acted abroad to promote national interests(1ines 43-44),but no claim is made that they existed for solely political ends. The correct answer is A.
100.It can be inferred from the passage that the author would characterize the activities engaged in by early chartered trading companies as being (A) complex enough in scope to require a substantial amount of planning and coordination on the part of management (B) too simple to be considered similar to those of a modern multinational corporation (C) as intricate as those carried out by the largest multinational corporations today (D) often unprofitable due to slow communications and unreliable means of transportation (E)hampered by the political demands imposed on them by the governments of their home countries Inference To discover what the author believes about the activities of early trading companies,look at the beginning of the second paragraph.The previous paragraph had ended with the prevailing dismissal of these companies as unimportant.The author begins the second paragraph with a transitional expression,in reality, however, to emphasize a contrasting point of view.The first sentence lists an impressive array of complex activities,and then the author notes that the large volume of transactions associated with these activities seems to have necessitated hierarchical management structures(fines 26-28).The author befieves the complex activities of the early companies required a multi-leveled management structure to oversee them. A Correct.The activities of early trading companies were so complex that they required hierarchical management structures to oversee them(1ine 28). B This is the prevailing view rather than the author’s view. C The author demonstrates their complexity, but does not claim they are as intricate as those of modern multinational corporations. D The large volume of transactions suggests they were profitable,but the author’ s focus is on the complexity of the activities rather than on their outcomes. E The author shows they depended heavily on the governments of their counties(1ines 37-38),but does not imply they were hampered by politics. The correct answer is A.
101.The author lists the various activities of early chartered trading companies in order to (A) analyze the various ways in which these activities contributed to changes in management structure in such companies (B) demonstrate that the volume of business transactions of such companies exceeded that of earlier firms (C) refute the view that the volume of business undertaken by such companies was relatively low (D) emphasize the international scope of these companies’ operations (E) support the argument that such firms coordinated such activities by using available means of communication and transport Logical structure To find the purpose of the list in lines 20-26,look at the context that surrounds it.The previous paragraph closes with the point of view, not shared by the author, that the volume of transactions of these early companies is assumed to be low.The author immediately contradicts this evaluation and counters it by listing the activities the trading companies actually engaged in,noting the large volume of transactions associated with these activities.Thus, the author includes this list in order to attack the common assumption that the volume of business transactions was low. A Management structures were necessary to oversee the activities,but the passage does not mention specific ways in which the activities contributed to changes. B No comparison to earlier firms is made. C Correct.The list contradicts the statement in the previous paragraph that the volume of transactions was low. D The international scope of the activities is not in question(1ines 13—15)and does not need to be defended. E The list is included to argue against a common assumption,not to argue for a position that this passage does not call into question. The correct answer is C.
102.With which of the following generalizations regarding management structures would the author of the passage most probably agree? (A) Hierarchical management structures are the most efficient management structures possible in a modern context. (B) Firms that routinely have a high volume of business transactions find it necessary to adopt hierarchical management structures. (C) Hierarchical management structures cannot be successfully implemented without modern communications and transportation. (D) Modern multinational firms with a relatively small volume of business transactions usually do not have hierarchically organized management structures. (E) Companies that adopt hierarchical management structures usually do so in order to facilitate expansion into foreign trade. Application Consider what the author says about hierarchical management structures in the second paragraph in order to find a statement(independent of the passage)with which the author would agree.After listing activities of the early trading companies,the author says in fines 26-28:The large volume of transactions associated with these activities seems to have necessitated hierarchical management structures.Thus,it is likely that the author would agree that,in general,firms with large volumes of transactions must have hierarchical management structures. A Since the passage does not discuss hierarchical management as the most efficient possible in a modern context,there is no evidence that the author would agree. B Correct.The author would agree that firms with large volumes of transactions need hierarchical management structures. C This statement is explicitly contradicted in lines26-28. D The passage links hierarchical management with a high volume of business but provides no evidence about a low volume of business. E The high volume of transactions,rather than foreign trade,necessitates hierarchical management. The correct answer is B.
103.The passage suggests that modern multinationals differ from early chartered trading companies in that A the top managers of modern multinationals own stock in their own companies rather than simply receiving a salary B modern multinationals depend 0n a system of capitalist International trade rather than on less modern trading systems C modern multinationals have operations in a number of different foreign countries rather than merely in one or two D the operations of modern multinationals are highly profitable despite the more stringent environmental and safety regulations of modern governments E the overseas operations of modern multi-nationals are not governed by the national interests of their home countries Inference Since the question asks about differences,focus on the third paragraph,where differences are described.The first sentence is a general statement,indicating that the early trading companies did differ strikingly from modern multinationals in many respects.Because the author sets up this first general statement as a contrast between the early and modem companies,the examples that follow it imply that whatever is true of the early trading companies is not true of modern multinationals.Thus,when the author says the early companies depended heavily on their national governments,the implication is that modern companies do not. A Lines 45-47 contradict this statement:Senior managers’ holdings in modern multinationals are usually insignificant. B Lines 48-49 show that the early trading companies established a system of capitalist international trade. C The passage does not say that early trading companies conducted business with only one or two foreign countries. D The passage does not imply that early trading companies failed to make profits,nor does it discuss modern regulations. E Correct.The passage implies that modern multinational companies,unlike early trading companies,need not depend heavily on their national governments or promote national interests abroad. The correct answer is E.
104.The author mentions the artisan and peasant production systems of early chartered trading companies as an example of (A) an area of operations of these companies that was unhampered by rudimentary systems of communications and transport (B) a similarity that allows fruitful comparison of these companies with modern multinationals (C) a positive achievement of these companies in the face of various difficulties (D) a system that could not have emerged in the absence of management hierarchies (E) a characteristic that distinguishes these companies from modern multinationals Logical structure To answer this question, examine how the author uses this reference.Itoccursinfines47-50 as the last of three examples that show the differences between early trading companies and modem multinational companies.The trading companies operated in a preindustrial world, dependent on a premodern system of artisan and peasant production. With this example,the author is showing one of the differences between early and modem companies. A The author does not show that artisan and peasant production systems were unhampered by primitive communication and transport. B This reference points to a dissimilarity, not a similarity. C The passage does not show artisan and peasant production as a positive achievement. D The author does not link artisan and peasant production with management hierarchies. E Correct.The author uses the example of artisan and peasant production systems to illustrate one of the differences between early and modern companies. The correct answer is E.
105.The passage suggests that one of the reasons that early chartered trading companies deserve comparison with early modern multinationals is (A) the degree to which they both depended on new technology (B) the similar nature of their management Structures (C) similarities in their top managements’ degree of ownership in the company (D) their common dependence on political stability abroad in order to carry on foreign operations (E) their common tendency to revolutionize systems of production Inference Since the questions uses the word suggests, the answer depends on making an inference.In order to make an inference about one of the similarities between early and modern companies, draw together information from different parts of the passage.The author begins by noting that the modern multinational corporation is usually said to have begun when the owner-managers of nineteenth-century firms were replaced by teams of salaried managers organized into hierarchies(1ines4-6).The author thus associates a hierarchical management structure with modern multinational corporations.In the second paragraph,the author shows that the many transactions of early trading companies required hierarchical management structures to oversee them.Both early and modern companies share similar management structures. A The passage does not describe their dependence on new technology. B Correct.Their similar management structures lead the author to conclude that the early trading companies may aptly be compared with modern multinationals. C Lines 41_44 point to a difference rather than a similarity in the top managers’ degree of ownership. D The passage does not discuss their need for political stability abroad. E A common tendency to revolutionize production systems is not mentioned. The correct answer is B.
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