LSAT Explanation PT 19, S2, Q13: A company with long-outstanding bills owed

LSAT Question Stem

The argument depends on the assumption that 

Logical Reasoning Question Type

This is a Necessary Assumption question. 

Correct Answer

The correct answer to this question is A. 

LSAT Question Complete Explanation

Let's begin by analyzing the argument in the passage. The passage states that when a company has long-outstanding bills owed by its customers, it can assign those bills to a collection agency. However, since the collection agency only pays the company 15 percent of the total amount of the outstanding bills, the passage concludes that a company interested in reducing losses should pursue its debtors on its own.

The structure of the argument is as follows:

Premise: Collection agencies pay companies only 15 percent of the total amount of the outstanding bills.

Conclusion: A company interested in reducing losses should pursue its debtors on its own.

An "Evaluate" question for this argument could be: "What percentage of the total amount of long-outstanding bills can a company typically collect on its own?"

Now, let's discuss the answer choices for the Necessary Assumption question:

a) A company that pursues its debtors on its own typically collects more than 15 percent of the total amount of the long-outstanding bills that it is owed.

This is the correct answer choice because the argument assumes that a company can collect more than 15 percent of the outstanding bills on its own to make it worth pursuing debtors independently. This assumption is necessary for the conclusion to be valid.

b) The cost to a company of pursuing its debtors on its own for payment of long-outstanding bills does not exceed 15 percent of the total amount of those bills.

This answer choice is incorrect because even if the cost exceeded 15 percent, the company might still collect a significantly higher percentage of the bills, making it worthwhile to pursue debtors independently. The argument does not necessarily assume that the cost must be less than 15 percent.

c) Collection agencies that are assigned bills for collection by companies are unsuccessful in collecting, on average, only 15 percent of the total amount of those bills.

This answer choice is incorrect because the passage does not make any assumptions about the success rate of collection agencies. The focus is on the percentage paid to the company, not the percentage collected by the agency.

d) At least 15 percent of the customers that owe money to companies eventually pay their bills whether or not those bills are assigned to a collection agency.

This answer choice is incorrect because it is not necessary for the argument. Even if every customer must be pursued to obtain payment, the company might still get more than 15% by pursuing collections on its own.

e) Unless most of the customers of a company pay their bills, that company in the long run will not be profitable.

This answer choice is incorrect because the passage does not discuss the overall profitability of the company or the proportion of customers that must pay their bills. The focus is on reducing losses from long-outstanding bills specifically, not on the company's overall profitability.