E. Paradox Questions

     These questions present you with a paradox, a seeming contradiction in the argument, and ask you to resolve it or explain how that contradiction could exist. Paradox questions are rare and more common at the higher skill levels. Here are some examples of the ways in which these questions are worded:

• Which of the following, if true, would help to resolve the apparent paradox presented above?
• Which of the following, if true, contributes most to an explanation of the apparent discrepancy described above?

How to approach paradox questions

1. Read the argument and find the apparent paradox, discrepancy, or contradiction.

2. State the apparent paradox, discrepancy, or contradiction in your own words.

3. Use POE (process of elimination). The best answer will explain how both sides of the paradox, discrepancy, or contradiction can be true. Eliminate answers that are out of scope.

SAMPLE QUESTION

Inflation rose by 5.1% over the 2nd quarter, up from 4.1% during the first quarter of the year, and higher than the 3.3% recorded during the same time last year. However, the higher price index did not seem to alarm Wall Street, as stock prices remained steady.

Which of the following, if true, could explain the reaction of Wall Street?

a) Stock prices were steady because of a fear that inflation would continue.

b) The President announced that he was concerned about rising inflation.

c) Economists warned that inflation would persist.

d) Much of the quarterly increase in the price level was due to a summer drought's effect on food prices.

e) Other unfavorable economic news had overshadowed the fact of inflation.

  

Explanation: This is a paradox because the high inflation report would seem to indicate that the stock market should go down. A fear that inflation would continue (A), an announcement by the president that he was concerned about inflation (B), economists' warnings about inflation (C), and other unfavorable economic news (E) would all tend to cause stock prices to decline and cause alarm on Wall Street. What we are looking for instead is an explanation which suggests why a high-inflation report would not spook the markets. (D) is most appropriate. If most of the quarterly inflation was due to a rise in food prices caused by a drought, then other prices rose less or no more than in the last quarter. Since the drought is probably a temporary phenomenon, it may be expected that inflation will decline next quarter. Thus, there is no cause for alarm on Wall Street, and the high-inflation report should not scare the equity markets.

 

w F. Reasoning Questions

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