The question is - The risk of living near a volcano is more than offset by the benefits. To what extent is this true?
If I agree with this statement, does it mean that I agree that there are more benefits than the risk in living near a volcano?
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There are two questions here: What does the first sentence mean, and what is the correct response to the second sentence?
The risk(s) of living near a volcano are more than offset by the benefits.
(I corrected a typo - "risk" is singular, and "are more" is plural.)
To simplify this idea, we can split it up:
Living near a volcano has risks.
Living near a volcano also has benefits.
The benefits of living near a volcano offset the risks of living near a volcano.
The benefits more than offset the risks.
The most complex idea here is "offset", which in this context means "to balance out". (Definition #1 here: http://www.dictionary.com/browse/offset ) In this case, the author is weighing the benefits against the risks on an imaginary scale, and believes that the good balances the bad. In fact, the good more than balances the bad.
To use it in another way, I might say that the benefits of exercise more than offsets the inconveniences of exercise. That is to say, exercise is worth the costs.
To what extent is this true ?
If the author asked "Is this true?", we could provide a simple "Yes, that is true" and be done with it. However, by asking "To what extent is this true?" the author is saying this is true only to a point, and is asking us where that point is.
For instance, consider: "It is perfectly safe to drink beer. To what extent is this true?" Beer is safe to drink, as long as you stop before you make yourself sick, or impair your judgement enough to be dangerous. It's true that beer is safe to drink...to a point.
So, to what extent is it true that the benefits of living near a volcano outweigh the risks? I would say that the benefits outweigh the risks, until the volcano erupts.