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

It is currently 02 Sep 2014, 01:27

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

Country X imposes heavy tariffs on imported manufactured

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:
Manager
Manager
User avatar
Status: Its Wow or Never
Joined: 11 Dec 2009
Posts: 208
Location: India
Concentration: Technology, Strategy
GMAT 1: 670 Q47 V35
GMAT 2: 710 Q48 V40
WE: Information Technology (Computer Software)
Followers: 5

Kudos [?]: 45 [0], given: 7

GMAT Tests User
Country X imposes heavy tariffs on imported manufactured [#permalink] New post 20 Jan 2010, 13:39
00:00
A
B
C
D
E

Difficulty:

(N/A)

Question Stats:

75% (02:10) correct 25% (01:55) wrong based on 12 sessions
Country X imposes heavy tariffs on imported manufactured goods. Company
Y has determined that it could increase its profits in the long term by opening
a factory in Country X to manufacture the goods that it currently produces in
its home country for sale in Country X.
For Company Y’s determination to be true, which of the following assumptions must also be true?

A. Company Y will be able to obtain all the necessary permits to open a factory in Country X.
B.Company Y currently produces no goods outside its home country.
C.A sustainable market for Company Y’s goods currently exists in Country X.
D.Company Y’s home country does not impose tariffs on imported goods.
E.Labor costs in Country X are lower than those in Company Y’s home country.
[Reveal] Spoiler:
C

_________________

---------------------------------------------------------------------------------------
If you think you can,you can
If you think you can't,you are right.


Last edited by mojorising800 on 21 Jan 2010, 09:49, edited 1 time in total.
Senior Manager
Senior Manager
User avatar
Joined: 22 Dec 2009
Posts: 365
Followers: 10

Kudos [?]: 201 [0], given: 47

GMAT ToolKit User GMAT Tests User
Re: Country X imposes heavy tariffs [#permalink] New post 20 Jan 2010, 13:51
Country X imposes heavy tariffs on imported manufactured goods. Company
Y has determined that it could increase its profits in the long term by opening
a factory in Country X to manufacture the goods that it currently produces in
its home country for sale in Country X.
For Company Y’s determination to be true, which of the following assumptions must also be true?

A. Company Y will be able to obtain all the necessary permits to open a factory in Country X. - Irrelevant. The conclusion talks about increasing profits and hence this statement doesn't help

B.Company Y currently produces no goods outside its home country. - Irrelevant

C.A sustainable market for Company Y’s goods currently exists in Country X. - The stem stays in the long runn. Hence currently existing is hardly anything to bother.

D.Company Y’s home country does not impose tariffs on imported goods. - Imported goods in Company Y's home country is not the point of discussion

E.Labor costs in Country X are lower than those in Company Y’s home country. - Correct. For the determination of Country Y to be true, this should be true. Else you cannot achieve increased profits

IMO... E
_________________

Cheers!
JT...........
If u like my post..... payback in Kudos!! :beer

|Do not post questions with OA|Please underline your SC questions while posting|Try posting the explanation along with your answer choice|
|For CR refer Powerscore CR Bible|For SC refer Manhattan SC Guide|


~~Better Burn Out... Than Fade Away~~

Intern
Intern
avatar
Joined: 08 Nov 2009
Posts: 48
Followers: 0

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

Re: Country X imposes heavy tariffs [#permalink] New post 20 Jan 2010, 14:42
I think that the key here is in the words "...it could increase its profits in the long term...".

A) The statement is hypotetical, therefore it does not require certainty in terms of viability
B) Out of scope. The passage concerns only Country X, the home country of Company Y and Company Y
C) In order to increase profits IN THE LONG TERM, the internal market of Country X cannot collapse. Hence C is my pick.
D) Out of scope. Company Y is considering the production of goods to be sold in Country Y, not back home. The passage does not suggest that Company Y would be relocating in Country X, just that it will open a factory there.
E) If labor costs are equal in the two countries, Company Y would still benefit from avoiding import taxes, hence E is unnecessary.
Manager
Manager
avatar
Joined: 24 Dec 2009
Posts: 227
Followers: 2

Kudos [?]: 25 [0], given: 3

GMAT Tests User
Re: Country X imposes heavy tariffs [#permalink] New post 20 Jan 2010, 15:17
My answer is C. Company Y's aim is to increase profit in long terms.
It can do so if and only if it has got sustainable market in country X.

E is incorrect since argument doesn't mention anything about the labor cost.

What's the OA?
Manager
Manager
avatar
Joined: 20 Mar 2007
Posts: 62
Followers: 1

Kudos [?]: 6 [0], given: 0

Re: Country X imposes heavy tariffs [#permalink] New post 21 Jan 2010, 09:33
Option E.If high labor costs offset the gains made by avoiding import duties,there is no real benefit.
Senior Manager
Senior Manager
avatar
Joined: 25 Jul 2009
Posts: 331
Followers: 1

Kudos [?]: 26 [0], given: 0

GMAT Tests User
Re: Country X imposes heavy tariffs [#permalink] New post 21 Jan 2010, 09:57
IMO C ; if there is no market for goods produced in a factory, there will be no profit
Director
Director
avatar
Joined: 12 Oct 2008
Posts: 558
Followers: 2

Kudos [?]: 60 [0], given: 2

GMAT Tests User
Re: Country X imposes heavy tariffs [#permalink] New post 06 Feb 2010, 08:20
I do not agree with the OA if it is C. C is already stated in the passage.

Country X imposes heavy tariffs on imported manufactured goods. Company
Y has determined that it could increase its profits in the long term by opening
a factory in Country X to manufacture the goods that it currently produces in
its home country for sale in Country X.

Company Y does already has a market in country X and it is planning to increase the profit. Therefore, C is already in the passage.

I think answer must be A. Let's negate A.....

A - Company Y will be able to obtain all the necessary permits to open a factory in Country X.

Negate A - Company Y will not be able to obtain all the necessary permits to open a factory in Country X.

If Y didn't able to get all necessary permits then it may open and may not open the factory in X. Conclusion fails apart and therefore, A must be the answer.

Please correct me if I am wrong.

What is the source of the answer and what is the OE?
Intern
Intern
avatar
Joined: 14 Sep 2009
Posts: 3
Followers: 0

Kudos [?]: 0 [0], given: 2

Re: Country X imposes heavy tariffs [#permalink] New post 06 Feb 2010, 10:50
IMO --- C
Current scenario :

Comapny Y is currently making profit when goods are imported and sold in country X . Since the import duties/tarifffs are very high, profit of company Y is low. So inorder to avoid import duties it plan to localize the manufacturing process.....but with the assumption that labour cost shouldnt offset the benefit derived from saving import duties.

sustainability is out of scope of the stem ......(however in the long run is does mentioned but main point of the stem is about increasing profit)
Senior Manager
Senior Manager
avatar
Joined: 07 Jan 2010
Posts: 250
Followers: 1

Kudos [?]: 6 [0], given: 16

GMAT Tests User
Re: Country X imposes heavy tariffs [#permalink] New post 09 Feb 2010, 07:21
My answer is C, but I thought about A as well.

E is not an answer: low labor cost alone would not guarantee low production cost. What if raw material is more expensive because of a duty/tax/high demand.

A is not an answer: it is very basic requirement and true, but maybe the company does not need a permit for inside production. I eliminated it because it did not fit in with the 'increase its profits in the long term' part.
Manager
Manager
avatar
Joined: 09 Jul 2010
Posts: 128
Followers: 0

Kudos [?]: 3 [0], given: 2

GMAT ToolKit User
Re: Country X imposes heavy tariffs on imported manufactured [#permalink] New post 04 Mar 2012, 20:12
Hi,

Could someone tell the answer for this and also explain it,

Thanks

Ravi
Manager
Manager
avatar
Joined: 28 Feb 2011
Posts: 58
GMAT 1: Q V
Followers: 0

Kudos [?]: 12 [0], given: 18

GMAT Tests User
Re: Country X imposes heavy tariffs on imported manufactured [#permalink] New post 04 Mar 2012, 23:08
profit = sales - cost

cost has many component out of which 1 is mentioned in stimulus (import tariff ). thus any valid assumption here could be sales price would remain as high as previously . any other factors that would come under cost (like price of raw materials, machinery labor )would remain same or get lowered in country X .

Option E mention abt cost of labor and hence seems like a valid choice
Manager
Manager
avatar
Joined: 28 Feb 2011
Posts: 58
GMAT 1: Q V
Followers: 0

Kudos [?]: 12 [0], given: 18

GMAT Tests User
Re: Country X imposes heavy tariffs on imported manufactured [#permalink] New post 04 Mar 2012, 23:15
after going thru the explanation choice A seems like correct option. Negating both A and E

Negating A Company Y will NOT be able to obtain all the necessary permits to open a factory in Country X. thus conclusion abt increased profit falls apart.

Negating E Labor costs in Country X are NOT lower than those in Company Y’s home country. Even if they are same in two countries, profit in setting facotry in country X could still result in higher profit due to saving on import tariff. hence conclusin can still be correct.
Manager
Manager
avatar
Joined: 17 Sep 2011
Posts: 209
Followers: 0

Kudos [?]: 18 [0], given: 8

GMAT Tests User
Re: Country X imposes heavy tariffs on imported manufactured [#permalink] New post 05 Mar 2012, 00:13
I think the correct answer is C because if there is no sustainable market for Company Y’s goods currently existing in Country X the company's determination to increase profits is impossible to achieve.
_________________

_________________
Giving +1 kudos is a better way of saying 'Thank You'.

Senior Manager
Senior Manager
avatar
Joined: 08 Jun 2010
Posts: 397
Location: United States
Concentration: General Management, Finance
GMAT 1: 680 Q50 V32
Followers: 2

Kudos [?]: 55 [0], given: 13

GMAT Tests User
Re: Country X imposes heavy tariffs on imported manufactured [#permalink] New post 05 Mar 2012, 00:19
A. Company Y will be able to obtain all the necessary permits to open a factory in Country X.
B.Company Y currently produces no goods outside its home country.
C.A sustainable market for Company Y’s goods currently exists in Country X.
D.Company Y’s home country does not impose tariffs on imported goods.
E.Labor costs in Country X are lower than those in Company Y’s home country.


Between C and E its a clear E. The reason is the C is not even an assumption, its a fact stated in the stimulus. "the goods that it currently produces in its home country for sale in Country X. "
Manager
Manager
avatar
Joined: 12 Nov 2011
Posts: 143
Followers: 0

Kudos [?]: 6 [0], given: 24

GMAT Tests User
Re: Country X imposes heavy tariffs [#permalink] New post 07 Mar 2012, 00:52
reply2spg wrote:
I do not agree with the OA if it is C. C is already stated in the passage.

Country X imposes heavy tariffs on imported manufactured goods. Company
Y has determined that it could increase its profits in the long term by opening
a factory in Country X to manufacture the goods that it currently produces in
its home country for sale in Country X.

Company Y does already has a market in country X and it is planning to increase the profit. Therefore, C is already in the passage.

I think answer must be A. Let's negate A.....

A - Company Y will be able to obtain all the necessary permits to open a factory in Country X.

Negate A - Company Y will not be able to obtain all the necessary permits to open a factory in Country X.

If Y didn't able to get all necessary permits then it may open and may not open the factory in X. Conclusion fails apart and therefore, A must be the answer.

Please correct me if I am wrong.

What is the source of the answer and what is the OE?

completely agree with that post
please explaine what is wrong with that reasoning?
Manager
Manager
avatar
Status: I will be back!
Joined: 13 Feb 2012
Posts: 69
Location: India
Followers: 0

Kudos [?]: 27 [0], given: 38

Re: Country X imposes heavy tariffs on imported manufactured [#permalink] New post 18 Mar 2012, 04:34
IMO E.

If the labor cost in country X is more than Y's country then this it will weaken the conclusion.

i think C would be right if it would have stated
"A sustainable market for Company Y’s goods WILL exists in Country X."

Correct me if i m wrong.

thanks
_________________

--shadab
Gmat FlashCard For Anki

Senior Manager
Senior Manager
avatar
Joined: 12 Mar 2012
Posts: 370
Concentration: Operations, Strategy
Followers: 2

Kudos [?]: 100 [0], given: 31

Re: Country X imposes heavy tariffs on imported manufactured [#permalink] New post 18 Mar 2012, 21:31
shadabkhaniet wrote:
IMO E.

If the labor cost in country X is more than Y's country then this it will weaken the conclusion.

i think C would be right if it would have stated
"A sustainable market for Company Y’s goods WILL exists in Country X."

Correct me if i m wrong.

thanks


Country X imposes heavy tariffs on imported manufactured goods. Company
Y has determined that it could increase its profits in the long term by opening
a factory in Country X to manufacture the goods that it currently produces in
its home country for sale in Country X.

For Company Y’s determination to be true, which of the following assumptions must also be true?

C.A sustainable market for Company Y’s goods currently exists in Country X.
E.Labor costs in Country X are lower than those in Company Y’s home country.


C is correct.
negate E. --> Labor costs in Country X are not lower than those in Company Y’s home country.
okay now this thing doesnt alters the conclusion. suppose the inflated tariffs that Y had to pay=200
labor cost in Y=50
labor cost in X=60
THEN also Y is in profit and its conclusion stands of increased profit.

hence for this case the negated assumption doesnt alters the conclusion. Also by argument we cant deduce anything regarding the labor cost and increased tariff, hence E is basically does nothing to the conclusion.

hope this helps..!!
_________________

Practice Practice and practice...!!

If my reply /analysis is helpful-->please press KUDOS
If there's a loophole in my analysis--> suggest measures to make it airtight.

Re: Country X imposes heavy tariffs on imported manufactured   [#permalink] 18 Mar 2012, 21:31
    Similar topics Author Replies Last post
Similar
Topics:
15 Experts publish their posts in the topic Last year, the government of country A imposed large tariffs JusTLucK04 10 01 Apr 2014, 11:55
25 Tariffs on imported manufactured goods nifoui 33 07 Feb 2010, 10:13
6 Country X imposes heavy tariffs on imported manufactured ISBtarget 29 17 Nov 2009, 19:32
Country X imposes heavy tariffs on imported manufactured noboru 14 01 Aug 2009, 12:59
Country X complains that Country Y*s high tariffs on perfectstranger 29 21 Jul 2008, 04:32
Display posts from previous: Sort by

Country X imposes heavy tariffs on imported manufactured

  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®.