LSAT Explanation PT 19, S4, Q23: Construction contractors working on the cutting

LSAT Question Stem

Which one of the following, if true, most helps to resolve the apparent paradox in the situation described above? 

Logical Reasoning Question Type

This is a Paradox question. 

Correct Answer

The correct answer to this question is D. 

LSAT Question Complete Explanation

Let's break down the passage and the paradox it presents. There are two types of cost-plus contracts: fixed percentage and fixed amount. One might expect that contractors would inflate costs under the fixed percentage model, as their profit is directly proportional to the costs. However, the passage tells us that cost overruns are more common in the fixed amount model, which is the paradox we need to resolve.

Now, let's analyze the question and the answer choices. The question is a Paradox type, asking us to find an explanation that helps resolve the apparent contradiction in the passage.

Answer choice (A) doesn't help resolve the paradox, as it discusses the basis for clients choosing one contract type over another, which occurs before the paradoxical situation arises.

Answer choice (B) also doesn't help resolve the paradox, as the effect of underestimated inflation would apply to both contract types equally and doesn't explain the difference in cost overruns.

Answer choice (C) doesn't resolve the paradox either, as the billing frequency would affect both contract types equally and doesn't address the difference in cost overruns.

Answer choice (D) is the correct answer. It suggests that clients are more likely to review billings and uncover wasteful expenditures when the contractor's profit varies with cost (fixed percentage model). This added scrutiny could discourage contractors from inflating costs, explaining why cost overruns are less common in fixed percentage contracts compared to fixed amount contracts.

Answer choice (E) doesn't resolve the paradox, as it actually complicates the issue further. It implies that contractors under fixed profit contracts might avoid cost overruns since their original estimates were exaggerated. This answer choice doesn't address the actual reported costs being inflated, which is the focus of the paradox.

In summary, answer choice (D) best resolves the paradox by providing a reason for contractors in fixed percentage contracts to refrain from inflating costs, as increased scrutiny from clients would likely lead to trouble.