LA 3 Critical Reasoning and Problem Solving Skills PDF

Learning area 3 Critical reasoning and problem solving skills Lecture 1 Continuous Assessment 1 ➜ Date and time - Friday 16 August 2024 @ 07h30 – 17h30 ➜ Scope: - LA 1 Introduction to finance and investment - LA 2 Time value of money - LA 3 Critical reasoning and pro...

Learning area 3 Critical reasoning and problem solving skills Lecture 1 Continuous Assessment 1 ➜ Date and time - Friday 16 August 2024 @ 07h30 – 17h30 ➜ Scope: - LA 1 Introduction to finance and investment - LA 2 Time value of money - LA 3 Critical reasoning and problem-solving skills Continuous Assessment 1 ➜ Format: - Online Click_Up Test consisting of 15 multiple choice questions of 2 marks each. ➜ Total - 30 marks; 45 minutes Learning outcomes ➜ Understand, and apply on a limited basis, the various elements needed to make inferences, logical assumptions and to reason (with support). This includes the understanding of: - An argument; - An assumption; - A deduction; - An inference; and - An interpretation. Learning outcomes ➜ Understand the difference between association and causation (for the purposes of a logical argument). ➜ Develop the ability to structure an argumentative essay in a business context. ➜ Develop an understanding of the sustainable development goals (SDGs). Learning outcomes ➜ Understand the difference between association and causation (for the purposes of a logical argument). ➜ Develop the ability to structure an argumentative essay in a business context. ➜ Develop an understanding of the sustainable development goals (SDGs). Critical thinking in business ➜ Critical thinking is the analysis of facts to form a judgement ➜ The subject is complex and several definitions exist, which is generally include the rational, skeptical, unbiased analysis or evaluation of factual evidence Analysis requires the Involves analyzing evaluation of an argument information which is based on claims Arguments are there to persuade us (convincing?) The core activities of critical thinking ➜ Analysis - Identify the key parts of information and reconstruct it in a way that full and fairly captures its meaning ➜ Evaluation - Judging how successful the information is (i.e. how well an argument supports the conclusion) ➜ Further argument - The advisor’s opportunity to give an opinion The basic elements of reasoning ➜ Claims and assertions are statements that are supposedly true ➜ Claims can be matter of fact (true or false) or matters of opinion (truth is subjective) - Woolworths is the best retailer in SA - Woolworths has 218 full-line stores in SA and 480 food stand-alone stores The basic elements of reasoning ➜ Arguments is a set of claims to draw a conclusion - The conclusion must follow from the set of claims (i.e. must be valid) - PnP sells milk for R20 for 2l, Other retailers sell milk for a minimum amount of R25 for 2l. PnP is the cheapest retailer ➜ IS THIS A SOUND ARGUMENT? The basic elements of reasoning ➜ A sound argument is a valid argument that has all true premises. - That means that the conclusion of a sound argument will always be true. ➜ Why? - Because if an argument is valid, the premises transmit truth to the conclusion on the assumption of the truth of the premises. Impact of Interest Rate Changes on Home Loans ➜ Premise 1: The South African Reserve Bank (SARB) has increased the repo rate by 50 basis points. ➜ Premise 2: Higher repo rates lead to increased interest rates on home loans. ➜ Conclusion: Therefore, South African homeowners with variable-rate home loans will experience higher monthly repayments. ➜ Explanation: This argument is sound because it is based on a well-established relationship between the repo rate and interest rates on loans. Investment in Renewable Energy ➜ Premise 1: The South African government is promoting renewable energy through incentives and favorable policies. ➜ Premise 2: Companies investing in renewable energy are likely to benefit from these government incentives. ➜ Conclusion: Therefore, South African businesses that invest in renewable energy will experience long-term financial and operational benefits. ➜ Explanation: The argument is sound because it is based on the cause-and-effect relationship between government policies and business decisions. The Influence of Load Shedding on Manufacturing Costs ➜ Premise 1: Eskom's load shedding has resulted in frequent power outages across South Africa. ➜ Premise 2: Manufacturing companies rely on a stable power supply to maintain production levels. ➜ Conclusion: Therefore, load shedding increases the operational costs for South African manufacturing companies as they need to invest in alternative power sources like generators. ➜ Explanation: This argument is sound because it logically follows that interruptions in power supply increase the cost of doing business for manufacturers. Investment in Renewable Energy ➜ Premise 1: The South African government is promoting renewable energy through incentives and favorable policies. ➜ Premise 2: Companies investing in renewable energy are likely to benefit from these government incentives. ➜ Conclusion: Therefore, South African businesses that invest in renewable energy will experience long-term financial and operational benefits. ➜ Explanation: The argument is sound because it is based on the cause-and-effect relationship between government policies and business decisions. Investing in Cryptocurrency to Avoid the Effects of Inflation ➜ Premise 1: South Africa is currently experiencing higher-than-usual inflation rates. ➜ Premise 2: Cryptocurrencies, such as Bitcoin, have seen significant price increases over the past few years. ➜ Conclusion: Therefore, investing in cryptocurrencies is a guaranteed way to protect against inflation in South Africa. Investing in Cryptocurrency to Avoid the Effects of Inflation ➜ Faulty Premise Connection: While it's true that South Africa has experienced higher inflation, and cryptocurrencies have seen price increases, the connection between the premises and the conclusion is weak. The argument assumes that the historical price increase of cryptocurrencies will continue and directly counteract inflation, which is not necessarily true. Cryptocurrencies are highly volatile and can experience significant price swings independent of inflation rates. Investing in Cryptocurrency to Avoid the Effects of Inflation ➜ Overgeneralization: The conclusion overgeneralizes the potential benefits of investing in cryptocurrencies without considering the risks and volatility associated with them. It ignores other factors, such as market sentiment, regulatory changes, and technological risks, which can lead to significant losses. ➜ Assumption of Guarantee: The argument assumes that cryptocurrency investment is a "guaranteed" protection against inflation, which is misleading. There is no guaranteed investment, especially in a volatile asset like cryptocurrency. Expansion into African Markets Without Market Research ➜ Premise 1: South African businesses are geographically close to other African countries. ➜ Premise 2: Many African countries are experiencing rapid economic growth. ➜ Conclusion: Therefore, any South African business expanding into African markets will automatically succeed. Expansion into African Markets Without Market Research ➜ Explanation of Unsoundness: ➜ Flaw: The argument assumes that proximity and general economic growth are sufficient for success in new markets, without considering other crucial factors like market research, cultural differences, competition, regulatory environments, or the specific demand for products/services. ➜ Correction: A sound argument would include the necessity of thorough market research and strategic planning before expansion. Load Shedding and Business Failure ➜ Premise 1: Eskom’s load shedding causes frequent power outages across South Africa. ➜ Premise 2: Power outages disrupt business operations. ➜ Conclusion: Therefore, any business in South Africa experiencing load shedding will fail. Load Shedding and Business Failure ➜ Flaw: The argument jumps to a hasty generalization that all businesses affected by load shedding will fail, ignoring the fact that many businesses have successfully mitigated these challenges through strategies like using backup generators, shifting operational hours, or investing in renewable energy sources. ➜ Correction: A sound argument would recognize that while load shedding poses challenges, businesses can and do adapt to these conditions, and their success depends on various factors, including their resilience and resourcefulness. Assessing the validity of claims ➜ It is not always possible to know whether a claim is true/false ➜ In absence of certainty, best one can do is ascertain whether claim is justified or warranted ➜ A claim has strong justification if: - It can be shown beyond reasonable doubt to be true - It can be shown to have a high probability - Convincing grounds can be given to believe it ➜ PLAUSABILITY AND RELIABILITY Evidence ➜ Evidence is used to justify claims ➜ Evidence can be: - Direct - Eyewitness or testimony - Indirect - Combination of facts ➜ PLAUSABILITY AND RELIABILITY Evidence ➜ Consider: - Reputation - Expertise and knowledge - Neutrality - Vested interest - Corroboration - Consistency Assessing statistical evidence ➜ Assessing statistical evidence - Credibility - Presentation of data - Plausability Inferences ➜ Inferences - An inference is an idea or conclusion that's drawn from evidence and reasoning. - An inference is an educated guess. - We learn about some things by experiencing them first-hand, but we gain other knowledge by inference — the process of inferring things based on what is already known.