ParadoxDiff: Easy

Logic Breakdown

Passage Summary: Rich countries have many new businesses because there are many ways to make money. Surprisingly, the poorest countries have even more new businesses than the rich ones do.

Reasoning: High-income countries have high entrepreneurship due to opportunity, but low-income countries have even higher rates of entrepreneurship despite fewer perceived opportunities.

Analysis: The paradox here is the 'U-shaped' curve of entrepreneurship: it is high in rich countries (driven by opportunity) but even higher in poor countries (where those opportunities are scarce). To resolve this, we need a reason for starting a business that applies specifically to low-income environments. If people in poor countries start businesses out of necessity or survival because there are no other jobs, it would explain the high numbers. Look for an answer that introduces a different motivation for entrepreneurship in low-income settings.

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3.

Which one of the following, if true, would most help to explain the researchers' surprising finding?

Correct Answer
E
It explains the surprise by introducing necessity-driven entrepreneurship in low-income countries. If most people start businesses because acceptable jobs are absent, startup rates can be higher even when opportunity-driven starts are fewer.
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