In the question three statements are given, followed by three conclusions, I, II and III. You have to consider the statements to be true even if it seems to be at variance from commonly known facts. You have to decide which of the given conclusions, if any, follows from the given statements.
Statement I: All caterpillars are butterflies
Statement II: Some caterpillars are insects
Statement III: No butterflies are animals
Conclusion I: Some insects are butterflies
Conclusion II: All insects are animals
Conclusion III: Some animals are caterpillars
The basic diagram for the given statements
I. Some insects are butterflies
From the basic diagram, some insects are butterflies. Hence conclusion I follows.
II. All insects are animals
From the basic diagram, no insect is animal. Hence conclusion II do not follow.
III. Some animals are caterpillars
From the basic diagram, no animal is caterpillar. Hence conclusion III do not follow.
$$\therefore\ $$Only conclusion I follows the given statements.
Hence, the correct answer is Option A
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