Mr. Blatt: Expert consultants are sought after by management because they help executives make better decisions. That...
kensApril 24, 2020
question 3
I read all the discussions, but still have hard time understanding why C is the correct answer. I understand that if the price does down the companies should seek more of its service; yet, it's quite the opposite in this situation. However, I don't understand why companies would not seek less expensive consultants to blame on? Ms. Fring doesn't say that companies seek only those they can blame "more". She only says if the service is more expensive the execs could blame more. I hope this makes sense. Thanks in advance.
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Thanks for the question! Let’s take a look at the stimulus first. Mr. Blatt tells us that expert consultants are worth it because they help executives make better decisions. But Ms. Fring disagrees, saying that they are hired to enable executives to avoid responsibility.
Now we’re looking for evidence that supports Ms. Fring’s position over Mr. Blatt’s position, which is the position that suggests that it’s to avoid responsibility, not to help make better decisions. If an answer choice does one of these two things, then it does this (though we still need to make sure we pick the “strongest” evidence).
Now let’s take a look a (C). (C) tells us that there’s a firm of consultants that starts charging less, but when they do so, their volume of business drops. Normally, if we’re paying for a certain service, and the quality stays the same but the price drops, we should expect the quantity demanded of that service to increase. It’s like how things that go on sale often run out more quickly. This suggests that Mr. Blatt’s theory is wrong, because if people are paying for help making better decisions, then the service should stay the same, and we should expect an increase in demand for the services. But demand actually decreased, which doesn’t follow from Mr. Blatt’s theory.
This does, however, follow from Ms. Fring’s theory. Remember that Ms. Fring tells us that the actual service being paid for is avoiding responsibility, and that the more experts cost, the more responsibility can be diverted. In this sense, consultants become a kind of “luxury good,” where people are actually more likely to buy it in part because of how high the price is. So when the price goes down, companies can’t divert as much responsibility, and so will go to other firms where they can avoid more responsibility because the experts seem more expert because of their higher prices. In other words, we would expect the demand to decrease if the price decreased under Ms. Fring’s theory, and this is what happened. So (C) helps out Ms. Fring and hurts Mr. Blatt, and this is what we’re looking for, so it’s the right answer here.
Hope this helps! Feel free to ask any other questions that you might have.
