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

It is currently 15 Apr 2014, 21:07

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

Because of steep increases in the average price per box of

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:
1 KUDOS received
Intern
Intern
Joined: 27 Apr 2012
Posts: 10
Location: India
Concentration: General Management, Organizational Behavior
GMAT Date: 11-21-2012
WE: Consulting (Consulting)
Followers: 1

Kudos [?]: 6 [1] , given: 7

Because of steep increases in the average price per box of [#permalink] New post 10 Aug 2012, 04:30
1
This post received
KUDOS
00:00
A
B
C
D
E

Difficulty:

  25% (low)

Question Stats:

76% (02:16) correct 23% (01:26) wrong based on 158 sessions
Because of steep increases in the average price per box of cereal over the last 10 years, overall sales of cereal have recently begun to drop. In an attempt to improve sales, one major cereal manufacturer reduced the wholesale prices of its cereals by 20 percent. Since most other cereal manufacturers have announced that they will follow suit, it is likely that the level of overall sales of cereal will rise significantly.

Which of the following would it be most useful to establish in evaluating the argument?

A. Whether the high marketing expenses of the highly competitive cereal market led to the increase in cereal prices

B. Whether cereal manufacturers use marketing techniques that encourage brand loyalty among consumers

C. Whether the variety of cereals available on the market has significantly increased over the last 10 years

D. Whether the prices that supermarkets charge for these cereals will reflect the lower prices the supermarkets will be paying the manufacturers

E. Whether the sales of certain types of cereal have declined disproportionately over the last 10 years
[Reveal] Spoiler: OA
Manager
Manager
User avatar
Joined: 31 Aug 2011
Posts: 209
Followers: 2

Kudos [?]: 35 [0], given: 44

Re: Because of steep increases in the average price per box [#permalink] New post 10 Aug 2012, 05:20
D. Whether the prices that supermarkets charge for these cereals will reflect the lower prices the supermarkets will be paying the manufacturers

high prices >>> drop in sales

whole sale price dropped

high sale only if it results in lower price to consumer
_________________

If you found my contribution helpful, please click the +1 Kudos button on the left, I kinda need some =)

Director
Director
User avatar
Status: Final Countdown
Joined: 17 Mar 2010
Posts: 565
Location: India
GPA: 3.82
WE: Account Management (Retail Banking)
Followers: 11

Kudos [?]: 109 [0], given: 75

Re: Because of steep increases in the average price per box [#permalink] New post 10 Aug 2012, 06:47
in 54 secs

D. Whether the prices that supermarkets charge for these cereals will reflect the lower prices the supermarkets will be paying the manufacturers

The manufacturers reduced the price so that the end users(customers) will find it cheap and hence the sale will grow, but if the supermarkets(intermediaries) doesn't sell the cereals at the reduced rate then the plan will fail.
so (D) wins.
_________________

" Make more efforts "
Press Kudos if you liked my post

2 KUDOS received
Manhattan GMAT Instructor
User avatar
Joined: 05 Jun 2012
Posts: 73
Location: United States
Schools: UCSD (Rady) - Class of 2011
GMAT 1: 760 Q49 V44
GPA: 3.7
WE: Education (Education)
Followers: 173

Kudos [?]: 72 [2] , given: 3

Re: Because of steep increases in the average price per box [#permalink] New post 10 Aug 2012, 08:10
2
This post received
KUDOS
Expert's post
(D). This is a classic logic gap: the argument assumes that wholesale price is linked to sale price. Notice how the GMAT disguises the gap: by using the word "price" twice to make us think these concepts are the same.
_________________

Ryan Jacobs | Manhattan GMAT Instructor | San Francisco

Manhattan GMAT Discount | Manhattan GMAT Course Reviews | View Instructor Profile

Intern
Intern
Joined: 30 Jun 2010
Posts: 11
Followers: 0

Kudos [?]: 1 [0], given: 25

Re: Because of steep increases in the average price per box of [#permalink] New post 25 Aug 2012, 22:16
Although d) appears to be the right answer, as per the explanation above, I previously concerned the overall demands of cereal that it may have dropped and unlikely to rebound shortly, since steep increases in average price per box of cereal has an effect over 10 years. The overall sales might take some time to rebound.
Director
Director
User avatar
Joined: 01 Oct 2013
Posts: 706
Followers: 110

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

Premium Member
Re: Because of steep increases in the average price per box of [#permalink] New post 23 Oct 2013, 12:49
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
Manager
Manager
Joined: 11 Aug 2011
Posts: 76
Location: United States
Concentration: Economics, Finance
GMAT Date: 10-16-2013
GPA: 3
WE: Analyst (Computer Software)
Followers: 0

Kudos [?]: 19 [0], given: 131

Re: Because of steep increases in the average price per box of [#permalink] New post 24 Oct 2013, 03:19
prem2056 wrote:
Because of steep increases in the average price per box of cereal over the last 10 years, overall sales of cereal have recently begun to drop. In an attempt to improve sales, one major cereal manufacturer reduced the wholesale prices of its cereals by 20 percent. Since most other cereal manufacturers have announced that they will follow suit, it is likely that the level of overall sales of cereal will rise significantly.

Which of the following would it be most useful to establish in evaluating the argument?

A. Whether the high marketing expenses of the highly competitive cereal market led to the increase in cereal prices

B. Whether cereal manufacturers use marketing techniques that encourage brand loyalty among consumers

C. Whether the variety of cereals available on the market has significantly increased over the last 10 years

D. Whether the prices that supermarkets charge for these cereals will reflect the lower prices the supermarkets will be paying the manufacturers

E. Whether the sales of certain types of cereal have declined disproportionately over the last 10 years



I approach the evaluate questions by following a simple technique - determine whether the answer choice is going to strenghthen or weaken the conclusion in concrete terms - YES or NO.
If the answer choice is either of the two that is going to help the argument and give us an answer.
Applying the technique above to this question:

Conclusion - Reduction in wholesale prices will have an effect on increase in sales due to more spending by the consumers on cereals.
Some pre thinking steps:
1. What if the consumer does not get the benefit of the wholesale prices and still pays the price as he was paying before.
Answer to this would help us evaluate the argument.
2. What if the consumer does not buy wholesale cereals and only buys from retail - then too the argument would give us our answer.

Applying the technique here:

A. Whether the high marketing expenses of the highly competitive cereal market led to the increase in cereal prices
- no effect

B. Whether cereal manufacturers use marketing techniques that encourage brand loyalty among consumers
- no effect

C. Whether the variety of cereals available on the market has significantly increased over the last 10 years
- no effect

D. Whether the prices that supermarkets charge for these cereals will reflect the lower prices the supermarkets will be paying the manufacturers
- Bingo , if the benefit is not getting passed over to the end user the prices will not reduce

E. Whether the sales of certain types of cereal have declined disproportionately over the last 10 years[/quote]
- no effect
VP
VP
User avatar
Status: I'm back and not stopping until I hit 760+
Joined: 06 Sep 2013
Posts: 1321
Location: United States
Concentration: Finance, General Management
Schools: Wharton '17
GPA: 3.5
WE: Corporate Finance (Investment Banking)
Followers: 7

Kudos [?]: 86 [0], given: 169

GMAT ToolKit User CAT Tests
Re: Because of steep increases in the average price per box [#permalink] New post 05 Feb 2014, 13:09
rjacobsMGMAT wrote:
(D). This is a classic logic gap: the argument assumes that wholesale price is linked to sale price. Notice how the GMAT disguises the gap: by using the word "price" twice to make us think these concepts are the same.


Yes Mr. Jacobs, I noticed that but on the other hand, one needs to assume that people by on supermarkets rather than in other distribution channels. I believe this type of assumption is acceptable and by no means is going to far out, but still, one could clarify this much better in the given question

Cheers
J
Senior Manager
Senior Manager
Joined: 20 Dec 2013
Posts: 267
Location: India
Followers: 0

Kudos [?]: 44 [0], given: 29

CAT Tests
Re: Because of steep increases in the average price per box of [#permalink] New post 10 Mar 2014, 19:11
Option D.
There is a gap in the argument:wholesale prices have declined-->sales will increase.
The intermediaries have been ignored ie the retailers and distributors.
Option D takes that into account.

Posted from my mobile device Image
Re: Because of steep increases in the average price per box of   [#permalink] 10 Mar 2014, 19:11
    Similar topics Author Replies Last post
Similar
Topics:
New posts Last year the price per share of Stock X increased by k crackgmat04 2 10 Dec 2004, 21:07
New posts Last year the price per share of Stock X increased by k chunjuwu 2 14 Jan 2005, 10:02
New posts Last year the price per share of Stock X increased by k Folaa3 2 03 Jul 2005, 21:01
Popular new posts The price of postage stamps has increased 5 cents per year sudhagar 11 30 Oct 2005, 00:31
Popular new posts 1 Month Average Price per Dozen ----- qhoc0010 12 01 Feb 2005, 06:33
Display posts from previous: Sort by

Because of steep increases in the average price per box of

  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®.