TASK DEFINITION: You are given a background paragraph that describes one or more causal or qualitative relationships such as a relationship in economics or a scientific law and a story that makes use of the concepts or the relationship described in the provided paragraph. You are also given a question about the story that requires an understanding of the relationship described in the background paragraph and the story. You need to come up with an answer to the given question; the answer will be a span from either the question or the story. In order to correctly answer the given question, you need to understand the relationship mentioned in the background paragraph and should be able to use it to understand that in the story. Your answer can not consist of any word that is not mentioned in any of these: the background paragraph, the story, or the question. You can directly copy and paste a span from the story or the question while answering the given question.
PROBLEM: Background Paragraph: The trade-off theory of capital structure is the idea that a company chooses how much debt finance and how much equity finance to use by balancing the costs and benefits. The classical version of the hypothesis goes back to Kraus and Litzenberger[1] who considered a balance between the dead-weight costs of bankruptcy and the tax saving benefits of debt. Often agency costs are also included in the balance. This theory is often set up as a competitor theory to the pecking order theory of capital structure. A review of the literature is provided by Frank and Goyal.[2]

An important purpose of the theory is to explain the fact that corporations usually are financed partly with debt and partly with equity. It states that there is an advantage to financing with debt, the tax benefits of debt and there is a cost of financing with debt, the costs of financial distress including bankruptcy costs of debt and non-bankruptcy costs (e.g. staff leaving, suppliers demanding disadvantageous payment terms, bondholder/stockholder infighting, etc.). The marginal benefit of further increases in debt declines as debt increases, while the marginal cost increases, so that a firm that is optimizing its overall value will focus on this trade-off when choosing how much debt and equity to use for financing.
Story: Company X stopped taking on more debt, and decided to file for bankruptcy, while company Y, kept benefiting from the tax benefits of debt, having a lower debt level.
Question: Which company had more costs than benefits related to debt, company X or company Y?

SOLUTION: company X.

PROBLEM: Background Paragraph: Ocean acidification occurs when excess carbon dioxide in the atmosphere causes the oceans to become acidic. Burning fossil fuels has led to an increase in carbon dioxide in the atmosphere. This carbon dioxide is then absorbed by the oceans, which lowers the pH of the water. Ocean acidification can kill corals and shellfish. It may also cause marine organisms to reproduce less, which could harm other organisms in the food chain. As a result, there also may be fewer marine organisms for humans to consume.
Story: Two islands were situated in different oceans. Hill island used fossil fuels and released a lot of carbon dioxide into the atmosphere, while Coral island was very protective towards the air and the ocean.
Question: Which island contributed more to ocean acidification?

SOLUTION: Hill.

PROBLEM: Background Paragraph: Matter, dark matter, and dark energy are distributed homogeneously throughout the Universe over length scales longer than 300 million light-years or so. However, over shorter length-scales, matter tends to clump hierarchically; many atoms are condensed into stars, most stars into galaxies, most galaxies into clusters, superclusters and, finally, large-scale galactic filaments. The observable Universe contains approximately 300 sextillion (31023) stars and more than 100 billion (1011) galaxies. Typical galaxies range from dwarfs with as few as ten million (107) stars up to giants with one trillion (1012) stars. Between the larger structures are voids, which are typically 10150 Mpc (33 million490 million ly) in diameter. The Milky Way is in the Local Group of galaxies, which in turn is in the Laniakea Supercluster. This supercluster spans over 500 million light-years, while the Local Group spans over 10 million light-years. The Universe also has vast regions of relative emptiness; the largest known void measures 1.8 billion ly (550 Mpc) across.
Story: Rob is an amateur astronomer. He was looking at the sky with his telescope. First he took a longer length observation. He noted his observation as case A. Then he took a shorter length observation. He noted that observation as case B. He found that it's beneficial to take both observations to get a fuller view of the observable universe.
Question: Which observation would not detect stars and galaxies well, case A or case B?

SOLUTION:
case A.