The following appeared as part of the business plan of an investment and financial consulting firm. Studies suggest that an average coffee drinkers consumption of coffee increases with age, from age 10 through age 60. Even after age 60, coffee consumption remains high. The average cola drinkers consumption of cola, however, declines with increasing age. Both of these trends have remained stable for the past 40 years. Given that the number of older adults will significantly increase as the population ages over the next 20 years, it follows that the demand for coffee will increase and the demand for cola will decrease during this period. We should, therefore, consider transferring our investments from Cola Loca to Early Bird Coffee. Discuss how well reasoned... etc.
In this argument a consulting firm recommends the transfer of investments from Cola Loca to Early Bird Coffee because, during the next 20 years, coffee demand will increase while cola demand will decrease. This prediction is based on the expectation that the number of older adults will significantly increase over the next 20 years, together with statistics, reportedly stable for the past 40 years, indicating that coffee consumption increases with age while cola consumption declines with increasing age. For three reasons, this financial advice may not be sound.
First, the argument assumes that relative supply conditions will remain unchanged over the next twenty years. However, the supply and cost of cola and coffee beans, as well as other costs of doing business as a producer of coffee or cola, may fluctuate greatly over a long time period. These factors may affect comparative prices of coffee and cola, which in turn may affect comparative demand and the value of investments in coffee and cola companies. Without considering other factors that contribute to the value of a coffee or cola company, the firm cannot justify its recommendation.
Secondly, the argument fails to account for the timing of the increase in coffee consumption. Perhaps the population will age dramatically during the next five years, then remain relatively flat over the following 15 years. Or perhaps most of the increase in average age will occur toward the end of the 20-year period. An investor has more opportunity to profit over the short and long term in the first scenario than in the second, assuming the investor can switch investments along the way. If the second scenario reflects the facts, the firms recommendation would be ill-founded.
Finally, the firm unjustifiably relies on the studies that correlate coffee and cola consumption with age. The firm does not provide evidence to confirm the reliability of the studies. Moreover, while the phrase studies suggest may appear to lend credibility to these claims, the phrase is vague enough to actually render the claims worthless, in the absence of any information about them.
In conclusion, the firm should not transfer investments from Cola Loca to Early Bird Coffee on the basis of this argument. To better evaluate the recommendation, we would need more information about the study upon which it relies. We would also need more detailed projections of population trends during the next 20 years.
2017届高考北师大版英语二轮复习专题技能突破:13 写作之提纲作文(含解析)
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2017届高考北师大版英语二轮复习单元限时规范练:必修5 Unit 15《learning》(含解析)
2017届高考北师大版英语二轮复习专题技能突破:1 阅读理解之细节理解(含解析)
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2017届高考北师大版英语二轮复习模拟演练:6 并列句和状语从句(含解析)
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2017届高考北师大版英语二轮复习模拟演练:5 名词性从句(含解析)
2017届高考北师大版英语二轮复习模拟演练:1 词性转换(含解析)
2017届高考北师大版英语二轮复习单元限时规范练:必修3 Unit 9《wheels》(含解析)
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2017届高考北师大版英语二轮复习单元限时规范练:必修3 Unit 8《adventure》(含解析)
2017届高考北师大版英语二轮复习单元限时规范练:必修5 Unit 13《people》(含解析)
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2017届高考北师大版英语二轮复习模拟演练:8 冠词(含解析)
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