Find all School-related info fast with the new School-Specific MBA Forum

It is currently 18 Sep 2014, 23:59

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

A certain city offers publicly owned, desirable

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:
1 KUDOS received
Senior Manager
Senior Manager
avatar
Status: Up again.
Joined: 31 Oct 2010
Posts: 493
Location: India
GMAT 1: 710 Q48 V40
WE: Project Management (Manufacturing)
Followers: 13

Kudos [?]: 54 [1] , given: 75

A certain city offers publicly owned, desirable [#permalink] New post 22 Mar 2011, 02:09
1
This post received
KUDOS
2
This post was
BOOKMARKED
00:00
A
B
C
D
E

Difficulty:

  45% (medium)

Question Stats:

55% (02:18) correct 45% (01:40) wrong based on 131 sessions
A certain city offers publicly owned, desirable billboard-advertising space at heavily discounted monthly rates to locally owned businesses. Since the implementation of this policy, the city has increased the amount of billboard space sold per month. Nevertheless, the city could increase its revenues by revoking these discounts.
Which of the following, if true, most strongly supports the claim above regarding the city's revenues?

A. The amount of discount generally offered is carefully calculated to represent the minimum needed to drive sales to local businesses.

B. The discount was announced through select news channels and websites, but did not receive sufficient coverage for many local businesses to hear about it.

C. Many local businesses sub-lease their billboard space to non-local businesses at a significant markup.

D. For established local businesses, the purpose of this promotion is to allow such local businesses to fortify their market position against new chain stores that generally have better access to high-visibility advertisement space.

E. Prior to the implementation of the discount, many city-owned billboards went empty for lack of interested buyers.
[Reveal] Spoiler: OA

_________________

My GMAT debrief: from-620-to-710-my-gmat-journey-114437.html

Senior Manager
Senior Manager
avatar
Status: Up again.
Joined: 31 Oct 2010
Posts: 493
Location: India
GMAT 1: 710 Q48 V40
WE: Project Management (Manufacturing)
Followers: 13

Kudos [?]: 54 [0], given: 75

Re: billboard-advertising space [#permalink] New post 22 Mar 2011, 02:23
gmatpapa wrote:
A certain city offers publicly owned, desirable billboard-advertising space at heavily discounted monthly rates to locally owned businesses. Since the implementation of this policy, the city has increased the amount of billboard space sold per month. Nevertheless, the city could increase its revenues by revoking these discounts.
Which of the following, if true, most strongly supports the claim above regarding the city's revenues?

A. The amount of discount generally offered is carefully calculated to represent the minimum needed to drive sales to local businesses. Does not say anything about increasing revenues by revoking discounts. Irrelevant

B. The discount was announced through select news channels and websites, but did not receive sufficient coverage for many local businesses to hear about it. Even though local businesses did not hear about the promotional campaign, they still bought the city's advertising space. So even without the discounts, the advertising space will sell as much as it did during discounted rates and without discounting the rates, the city could actually increase its revenues. IMO this option looks okay. But unfortunately, this is not the OA.

C. Many local businesses sub-lease their billboard space to non-local businesses at a significant markup. This is the OA and here's the OE

Choice C says that local businesses re-sell their advertising space to non-local businesses "at a significant markup." In other words, local businesses are selling the valuable ad space to buyers who will pay more. If the city revoked their discount, they could boost revenues by selling the desirable ad space at a higher rate to non-local businesses. Choice C is correct.

Here, can we assume that the city is willing to sell advertising space to outside businesses?. Are there no restrictions s such in having such assumption?

D. For established local businesses, the purpose of this promotion is to allow such local businesses to fortify their market position against new chain stores that generally have better access to high-visibility advertisement space. Strengthening local businesses is never mentioned in the argument. Out of Scope.

E. Prior to the implementation of the discount, many city-owned billboards went empty for lack of interested buyers.Opposite answer. This option actually goes on to say that promotional campaigns are in fact necessary. It would've been a very good answer choice if this was a weakening question. But not to be.

_________________

My GMAT debrief: from-620-to-710-my-gmat-journey-114437.html

Manager
Manager
User avatar
Joined: 07 Jan 2010
Posts: 147
Location: So. CA
WE 1: 2 IT
WE 2: 4 Software Analyst
Followers: 2

Kudos [?]: 11 [0], given: 57

GMAT Tests User
Re: billboard-advertising space [#permalink] New post 23 Mar 2011, 20:28
yah (C) made the most sense out of all, not a very hard question compared to the knewton challenge questions
Current Student
avatar
Joined: 17 Mar 2011
Posts: 453
Location: United States (DC)
Concentration: General Management, Technology
GMAT 1: 760 Q49 V45
GPA: 3.37
WE: Information Technology (Consulting)
Followers: 11

Kudos [?]: 151 [0], given: 5

GMAT Tests User
Re: billboard-advertising space [#permalink] New post 24 Mar 2011, 07:48
A certain city offers publicly owned, desirable billboard-advertising space at heavily discounted monthly rates to locally owned businesses. Since the implementation of this policy, the city has increased the amount of billboard space sold per month. Nevertheless, the city could increase its revenues by revoking these discounts.
Which of the following, if true, most strongly supports the claim above regarding the city's revenues?

A. The amount of discount generally offered is carefully calculated to represent the minimum needed to drive sales to local businesses.
This provides evidence to the contrary. If the discount offered is calculated to be the exact amount to drive sales, eliminating the discount will lower sales.

B. The discount was announced through select news channels and websites, but did not receive sufficient coverage for many local businesses to hear about it.
If anything, this provides evidence to the contrary. This evidence weakens instead of strengthens.

C. Many local businesses sub-lease their billboard space to non-local businesses at a significant markup.
Correct, this suggests that if they remove the discount, non-local businesses will buy the billboard space at a higher price.

D. For established local businesses, the purpose of this promotion is to allow such local businesses to fortify their market position against new chain stores that generally have better access to high-visibility advertisement space.
This is out of scope. This has no bearing on how much revenue will be gained. Incorrect.

E. Prior to the implementation of the discount, many city-owned billboards went empty for lack of interested buyers.
This provides evidence to the contrary. Incorrect.
Senior Manager
Senior Manager
avatar
Status: Up again.
Joined: 31 Oct 2010
Posts: 493
Location: India
GMAT 1: 710 Q48 V40
WE: Project Management (Manufacturing)
Followers: 13

Kudos [?]: 54 [0], given: 75

Re: billboard-advertising space [#permalink] New post 24 Mar 2011, 09:58
I said B.. see reasoning in my above post.. But the OA is C, which IMO makes assumptions i'm not too convinced of.. CR specialists, please give your views!
_________________

My GMAT debrief: from-620-to-710-my-gmat-journey-114437.html


Last edited by gmatpapa on 25 Mar 2011, 05:38, edited 1 time in total.
Manager
Manager
User avatar
Joined: 04 Apr 2010
Posts: 165
Followers: 1

Kudos [?]: 54 [0], given: 31

GMAT Tests User
Re: billboard-advertising space [#permalink] New post 24 Mar 2011, 10:43
I am with C but can't deny gmatpapa's reasoning regarding assumption.
can we assume that the city is willing to sell advertising space to outside businesses?
Please help us in this regard!
_________________

Consider me giving KUDOS, if you find my post helpful.
If at first you don't succeed, you're running about average. ~Anonymous

Current Student
avatar
Joined: 17 Mar 2011
Posts: 453
Location: United States (DC)
Concentration: General Management, Technology
GMAT 1: 760 Q49 V45
GPA: 3.37
WE: Information Technology (Consulting)
Followers: 11

Kudos [?]: 151 [0], given: 5

GMAT Tests User
Re: billboard-advertising space [#permalink] New post 24 Mar 2011, 19:33
Well, if the city didn't also sell to non-local businesses, then the prices that they sell billboard space to local businesses for wouldnt be "discounted"

If the city only sells to local businesses, then the question would read:
A certain city offers publicly owned, desirable billboard-advertising space at low monthly rates to locally owned businesses.

The phrasing used in the actual question indicates that there is a price that they charge for advertising space, and a heavily-discounted price that they charge locally owned businesses
Senior Manager
Senior Manager
avatar
Status: Up again.
Joined: 31 Oct 2010
Posts: 493
Location: India
GMAT 1: 710 Q48 V40
WE: Project Management (Manufacturing)
Followers: 13

Kudos [?]: 54 [0], given: 75

Re: billboard-advertising space [#permalink] New post 25 Mar 2011, 05:45
jko wrote:
Well, if the city didn't also sell to non-local businesses, then the prices that they sell billboard space to local businesses for wouldnt be "discounted"

If the city only sells to local businesses, then the question would read:
A certain city offers publicly owned, desirable billboard-advertising space at low monthly rates to locally owned businesses.

The phrasing used in the actual question indicates that there is a price that they charge for advertising space, and a heavily-discounted price that they charge locally owned businesses


Hmmm.. the premise doesn't let us assume that the city only sells to local businesses. Nor does it let us assume that it does not sell to outside businesses. The answer would be clear if any of the two assumptions were made explicit. I remain confused.
_________________

My GMAT debrief: from-620-to-710-my-gmat-journey-114437.html

Current Student
avatar
Joined: 17 Mar 2011
Posts: 453
Location: United States (DC)
Concentration: General Management, Technology
GMAT 1: 760 Q49 V45
GPA: 3.37
WE: Information Technology (Consulting)
Followers: 11

Kudos [?]: 151 [0], given: 5

GMAT Tests User
Re: billboard-advertising space [#permalink] New post 25 Mar 2011, 06:00
gmatpapa wrote:
jko wrote:
Well, if the city didn't also sell to non-local businesses, then the prices that they sell billboard space to local businesses for wouldnt be "discounted"

If the city only sells to local businesses, then the question would read:
A certain city offers publicly owned, desirable billboard-advertising space at low monthly rates to locally owned businesses.

The phrasing used in the actual question indicates that there is a price that they charge for advertising space, and a heavily-discounted price that they charge locally owned businesses


Hmmm.. the premise doesn't let us assume that the city only sells to local businesses. Nor does it let us assume that it does not sell to outside businesses. The answer would be clear if any of the two assumptions were made explicit. I remain confused.



"the premise doesn't let us assume that the city only sells to local businesses."
"the premise doesn't let us assume that it does not sell to outside businesses."
The statements above are saying the same thing, since if a city only sells to local businesses, then it does not sell to outside businesses (and vice versa).


Since the premise doesn't let us assume that the city only sells to local businesses, we can agree that the premise indicates otherwise.

Thus, "the premise indicates the city sells to both local and outside businesses"

I feel that the first sentence of the argument clearly implies that they sell to both local and outside businesses. Observing implications is not the same as making assumptions.
Manager
Manager
User avatar
Joined: 07 Jan 2010
Posts: 147
Location: So. CA
WE 1: 2 IT
WE 2: 4 Software Analyst
Followers: 2

Kudos [?]: 11 [0], given: 57

GMAT Tests User
Re: billboard-advertising space [#permalink] New post 26 Mar 2011, 13:25
gmatpapa wrote:
A certain city offers publicly owned, desirable billboard-advertising space at heavily discounted monthly rates to locally owned businesses. Since the implementation of this policy, the city has increased the amount of billboard space sold per month. Nevertheless, the city could increase its revenues by revoking these discounts.
Which of the following, if true, most strongly supports the claim above regarding the city's revenues?

B. The discount was announced through select news channels and websites, but did not receive sufficient coverage for many local businesses to hear about it. Even though local businesses did not hear about the promotional campaign, they still bought the city's advertising space. So even without the discounts, the advertising space will sell as much as it did during discounted rates and without discounting the rates, the city could actually increase its revenues. IMO this option looks okay. But unfortunately, this is not the OA.


conclusion: the city could increase its revenues by revoking these discounts.

i actually think (B) weakens the claim, if the discount went out to only select news channels and websites, it is possible that not all businesses area aware of the billboard discounts? therefore, revoking the discounts can hurt revenue?
Senior Manager
Senior Manager
avatar
Status: Up again.
Joined: 31 Oct 2010
Posts: 493
Location: India
GMAT 1: 710 Q48 V40
WE: Project Management (Manufacturing)
Followers: 13

Kudos [?]: 54 [0], given: 75

Re: billboard-advertising space [#permalink] New post 26 Mar 2011, 21:29
gtr022001 wrote:
gmatpapa wrote:
A certain city offers publicly owned, desirable billboard-advertising space at heavily discounted monthly rates to locally owned businesses. Since the implementation of this policy, the city has increased the amount of billboard space sold per month. Nevertheless, the city could increase its revenues by revoking these discounts.
Which of the following, if true, most strongly supports the claim above regarding the city's revenues?

B. The discount was announced through select news channels and websites, but did not receive sufficient coverage for many local businesses to hear about it. Even though local businesses did not hear about the promotional campaign, they still bought the city's advertising space. So even without the discounts, the advertising space will sell as much as it did during discounted rates and without discounting the rates, the city could actually increase its revenues. IMO this option looks okay. But unfortunately, this is not the OA.


conclusion: the city could increase its revenues by revoking these discounts.

i actually think (B) weakens the claim, if the discount went out to only select news channels and websites, it is possible that not all businesses area aware of the billboard discounts? therefore, revoking the discounts can hurt revenue?


The premise says that the city has increased its number of billboard sales since the implementation of the policy. Option B says that many businesses were unaware of the policy, but still went ahead and bought the advertising spaces. So discount or no discount, the city was able to increase its sales. And since the city offered discounts, the revenues would be lesser than when there were no discounts. So, if it stops offering discounts, there still will be sales and the city will be able to fetch more revenues.
_________________

My GMAT debrief: from-620-to-710-my-gmat-journey-114437.html

Director
Director
User avatar
Joined: 21 Dec 2010
Posts: 658
Followers: 10

Kudos [?]: 81 [0], given: 51

GMAT Tests User
Re: billboard-advertising space [#permalink] New post 26 Apr 2011, 07:20
C clearly, revenues could be increased without discounts , if the billboards which are sub-leased by the local businesses at higher rates, could be directly leased by the city authorities.
_________________

What is of supreme importance in war is to attack the enemy's strategy.

VP
VP
avatar
Status: There is always something new !!
Affiliations: PMI,QAI Global,eXampleCG
Joined: 08 May 2009
Posts: 1365
Followers: 11

Kudos [?]: 140 [0], given: 10

GMAT Tests User
Re: billboard-advertising space [#permalink] New post 26 Apr 2011, 17:58
A is a nice shell game answer.
C is straight.
_________________

Visit -- http://www.sustainable-sphere.com/
Promote Green Business,Sustainable Living and Green Earth !!

Intern
Intern
avatar
Joined: 23 Jul 2012
Posts: 2
Followers: 0

Kudos [?]: 0 [0], given: 0

Re: A certain city offers publicly owned, desirable [#permalink] New post 15 Sep 2012, 01:36
I still wonder about Choice C.
C: "Many local businesses sub-lease their billboard space to non-local businesses at a significant markup."
If normal price is 5000, the deduced price for local business is 4000, the markup is 500, then the price for non-local business is 4500.
If the we revoke the discount, non-local business would have less incentive to buy the ad, then there is no way revenue for the city will increase.
I think Choice C depends on the level of the "significant markup"
Intern
Intern
avatar
Joined: 06 Mar 2012
Posts: 36
Location: India
Concentration: Operations, International Business
GPA: 3.4
Followers: 1

Kudos [?]: 14 [0], given: 12

Re: A certain city offers publicly owned, desirable [#permalink] New post 15 Sep 2012, 08:42
I picked "C" but my line of reasoning was different than the few others explained above.

First of all, there is no reason to believe or assume that the city offers the advertising space directly to the non-local businesses. lets have a look at Option c . Many local businesses sub-lease their billboard space to non-local businesses at a significant markup. 1) Subleasing is renting out on lease and is different than directly selling the advertising space. Now the initial policy of offering the ad space to the local businesses at discounted rates seems like a strategy to attract the local businesses to advertise at a lower cost but once they (local business) see another lucrative opportunity to sublease the ad space to a nonlocal business thereby earning even more profits - they make it a practice and start subleasing. Now, the local businesses realise that the profits that they can make out of subleasing is sufficiently high. Even if they have to buy the ad space at a comparatively higher price (i.e. discounts revoked by the city) , they can consider doing the same.
Retired Moderator
User avatar
Status: 2000 posts! I don't know whether I should feel great or sad about it! LOL
Joined: 04 Oct 2009
Posts: 1726
Location: Peru
Schools: Harvard, Stanford, Wharton, MIT & HKS (Government)
WE 1: Economic research
WE 2: Banking
WE 3: Government: Foreign Trade and SMEs
Followers: 66

Kudos [?]: 299 [0], given: 109

GMAT Tests User
Re: A certain city offers publicly owned, desirable [#permalink] New post 15 Sep 2012, 12:33
+1 C

There are companies interested in paying for those spaces without a discount.
_________________

"Life’s battle doesn’t always go to stronger or faster men; but sooner or later the man who wins is the one who thinks he can."

My Integrated Reasoning Logbook / Diary: my-ir-logbook-diary-133264.html

Get the best GMAT Prep Resources with GMAT Club Premium Membership

VP
VP
avatar
Status: Final Lap Up!!!
Affiliations: NYK Line
Joined: 21 Sep 2012
Posts: 1096
Location: India
GMAT 1: 410 Q35 V11
GMAT 2: 530 Q44 V20
GMAT 3: 630 Q45 V31
GPA: 3.84
WE: Engineering (Transportation)
Followers: 31

Kudos [?]: 265 [0], given: 67

Re: A certain city offers publicly owned, desirable [#permalink] New post 27 Oct 2012, 02:07
I think the Assumption here is

Discount given has excess of margin to earn a lot of profit.
The billboard has been rented to local business on heavily discounted prices...
Conclusion: the city can earn more if the discount is narrowed.....

C fits in the gap
Manager
Manager
User avatar
Joined: 24 Oct 2013
Posts: 147
Location: Canada
GMAT Date: 10-16-2014
WE: Design (Transportation)
Followers: 4

Kudos [?]: 22 [0], given: 73

GMAT ToolKit User Premium Member CAT Tests
Re: A certain city offers publicly owned, desirable [#permalink] New post 11 Apr 2014, 14:33
Can anyone please explain me the reason for C? the existing explanations don't seem to make sense to me.
Re: A certain city offers publicly owned, desirable   [#permalink] 11 Apr 2014, 14:33
    Similar topics Author Replies Last post
Similar
Topics:
A certain city owns 298 buses, whose routes are divided into rxs0005 12 21 Jun 2011, 06:03
In a certain city GMATD11 1 13 Feb 2011, 13:27
A jogger desires to run a certain course in 1/4 less time puma 4 30 Mar 2008, 02:36
Of the families in City X in 1994, 40 percent owned a dinesh8 3 02 May 2006, 02:31
A private house in New York City is a building owned by an gmataquaguy 10 06 Sep 2005, 04:30
Display posts from previous: Sort by

A certain city offers publicly owned, desirable

  Question banks Downloads My Bookmarks Reviews Important topics  


GMAT Club MBA Forum Home| About| Privacy Policy| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group and phpBB SEO

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.