hard · LSAT Logical Reasoning

Economist: A widely cited study found that firms which adopted the new inventory-tracking software in a given year had, on average, 12% higher profits the following year than firms that did not adopt it. The study's authors conclude that the software raises profits. But this conclusion is unwarranted. After all, the firms that adopted the software were precisely those that had recently hired data-savvy managers, and it is well established that such managers tend to improve profits through many channels. The economist's argument proceeds by

1. identifying a factor that could independently explain both the adoption of the software and the subsequent rise in profits, thereby undermining the claim that the first causes the second
2. showing that the cited study relied on a sample too small to support any general conclusion about the software's effects on profits
3. arguing that because the software's benefit cannot be measured in isolation, it must therefore be nonexistent rather than merely difficult to detect
4. demonstrating that the correlation reported by the study was an artifact of the particular year chosen and would vanish over a longer span
5. conceding that the software raises profits but contending that the increase is too small to justify the cost of adopting it

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