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.
32.
In this argument the author concludes that West Cambria can increase revenues and provide better care to accident victims by disbanding the volunteer ambulance service and hiring a commercial one. The author reasons that this change would yield additional revenues because service fees could be imposed for ambulance use. The author also reasons that the city would provide better service to accident victims because a commercial service would respond more quickly to accidents than a volunteer service would. The authors argument is flawed in two respects.
To begin with, the authors plan for raising revenue for West Cambria is questionable. Unless the service fees are considerable or the accident rate is extremely high, it is unlikely that significant revenues will be raised by charging a fee for ambulance use. Consequently, revenue generation is not a good reason to disband the volunteer service and hire a commercial service.
Next, the authors belief that better patient care would be provided by a commercial ambulance service than by a volunteer service is based on insufficient evidence. The fact that the commercial service in East Cambria has a lower average response time than the volunteer service in West Cambria is insufficient evidence for the claim that this will be the case for all commercial services. Moreover, the authors recommendation depends upon the assumption that response time to an accident is the only factor that influences patient care. Other pertinent factors―such as ambulance-crew proficiency and training, and emergency equipment―are not considered.
In conclusion, this argument is unconvincing. To strengthen the argument the author would have to show that substantial revenue for the town could be raised by charging service fees for ambulance use. Additionally, the author would have to provide more evidence to support the claim that commercial ambulance services provide better patient care than volunteer services.
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