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In 2000, Gregory's Grocery had a total of 50 stores in the

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In 2000, Gregory's Grocery had a total of 50 stores in the [#permalink] New post 07 Oct 2011, 11:39
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In 2000, Gregory's Grocery had a total of 50 stores in the United States and reported
profits of $50 million in 2000. During the next five years, the chain added 20 stores per
year for a total of 150 stores in the United States and Canada in 2005. Profits increased
each year at a rate of 10 percent.
Which of the following can be concluded based on the passage above?
A. The stores in Canada were not as profitable as those in the United States.
B. Between 2000 and 2005, average revenue per store decreased.
C. On average, the stores were less profitable in 2005 than in 2000.
D. Profit per store, or average profit, will continue to decrease if the chain continues to
expand the number of stores.
E. If Gregory’s Grocery shuts down some of its stores, average profitability will increase.

Per the question stem...arn't the stores more profitable in 2005 than in 2000? or am i missing something...pls help explain..
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Re: Gregory's Grocery!! [#permalink] New post 07 Oct 2011, 13:23
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DeeptiM wrote:
In 2000, Gregory's Grocery had a total of 50 stores in the United States and reported
profits of $50 million in 2000. During the next five years, the chain added 20 stores per
year for a total of 150 stores in the United States and Canada in 2005. Profits increased
each year at a rate of 10 percent.
Which of the following can be concluded based on the passage above?
A. The stores in Canada were not as profitable as those in the United States.
B. Between 2000 and 2005, average revenue per store decreased.
C. On average, the stores were less profitable in 2005 than in 2000.
D. Profit per store, or average profit, will continue to decrease if the chain continues to
expand the number of stores.
E. If Gregory’s Grocery shuts down some of its stores, average profitability will increase.

Per the question stem...arn't the stores more profitable in 2005 than in 2000? or am i missing something...pls help explain..


C)
In 2000: 50 stores; 50$ profit; Average profit=1
In 2001: 70 stores; 55$ profit; Average profit=55/70<1
In 2002: 90 stores; 61$ profit; Average profit=61/90<1 and also less than previous.
So, the average profit per store is decreasing.

B) Sole possible contender.
We know nothing about the revenue; So, we can't comment.

2000; Expenditure=50 million; Revenue=100 mill; Profit= 50 mil
2001; Expenditure=200 million; Revenue=255 mill; Profit= 55 mil
OR
2001; Expenditure=1 million; Revenue=56 mill; Profit= 55 mil

We saw that revenue could have increased or decreased. So, not must be true.

Ans: "C"
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Re: Gregory's Grocery!! [#permalink] New post 07 Oct 2011, 13:32
I think it's 'C' .
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Re: Gregory's Grocery!! [#permalink] New post 08 Oct 2011, 21:24
It's C, I actually did a quick mental calculation of profits earned each year but I don't think it's necessary.

Good explanation fluke, I spent more than 1.5 min calculating profits, what a waste of time :(
Re: Gregory's Grocery!!   [#permalink] 08 Oct 2011, 21:24
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