Most cable television companies currently require customers : GMAT Critical Reasoning (CR)
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# Most cable television companies currently require customers

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Most cable television companies currently require customers [#permalink]

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10 Dec 2009, 17:59
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65% (hard)

Question Stats:

65% (02:49) correct 35% (01:47) wrong based on 58 sessions

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Most cable television companies currently require customers to subscribe to packages of channels, but consumer groups have recently proposed legislation that would force the companies to offer a la carte pricing. Subscribers would pay less, argue the consumer groups, because they could purchase only the desired channels. However, the cable industry argues that under the current package pricing, popular channels subsidize less-popular ones, providing more options for viewers. For this reason, the industry claims that it is always cheaper for the consumer to purchase many bundled channels than to buy them individually.

Which of the following would be most important for the government to determine before deciding whether to require cable television companies to offer a la carte pricing in order to reduce consumer costs?
a) Whether the total number of channels offered to consumers would decrease, along with programming diversity, as a result of the a la carte pricing structure
b) Whether advertising revenue for the cable television companies would decrease as a result of the a la carte pricing structure
c) Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually
d) Whether cable and satellite companies currently have the ability to buy channels individually from programmers and content providers
e) Whether a la carte subscribers would be required to have new television set-top boxes

Please post reasoning because I had some problems with this one.

[Reveal] Spoiler:
OA C
[Reveal] Spoiler: OA

Last edited by Skywalker18 on 23 Oct 2016, 09:36, edited 1 time in total.
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Re: Most cable television companies currently require customers [#permalink]

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10 Dec 2009, 20:58
IMO: C

It will clearly reduce the price for majority of customers that is goal of consumer group to propose the new legislation.
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11 Dec 2009, 10:23
I think Ans should be (A)
"However, the cable industry argues that under the current package pricing, popular channels subsidize less-popular ones, providing more options for viewers"

To take the decision Government should verify the claim posted by Cable Companies...that packages provide more options....same should continue....

Pls provide the OA.
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11 Dec 2009, 22:07
All options except A C are irrelevent..

A states that whether cable company would reduce the no. of channels offered to the customers..But why would the company do so..It would result in less revenue to the company because cunstomers would have less channels to choose from..

C is the correct option..If customers are given the option they would like to reduce the no. of channels they want to watch thus reducing their subscription cost...
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Re: Most cable television companies currently require customers [#permalink]

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12 Dec 2009, 04:53
My ans is also C
My reasoning ...

Quote:
Govt would favor people not companies.
hence it would like to reduce the extra cost of channels that people don't want to see.

if there are 50 channels(avg) in package and on a average user sees 10-20 then buying them separately would not cost.

But what if the viewers watch most of the 50 channels, then separate buying will cost more

Wats the source ??
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Re: Most cable television companies currently require customers [#permalink]

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14 Dec 2009, 02:37
a) Whether the total number of channels offered to consumers would decrease, along with programming diversity, as a result of the a la carte pricing structure
- Government decision has to be based on “cost to the consumer for a la carte pricing” and not on the diversity. Hence incorrect

b) Whether advertising revenue for the cable television companies would decrease as a result of the a la carte pricing structure
- Government decision has to be based on “cost to the consumer for a la carte pricing” and not on advertising revenue. Hence incorrect

c) Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually
- If consumer greatly reduce the number of channels purchased, then the overall cost for the a la carte would be less then price for combined packaging. Hence Correct

d) Whether cable and satellite companies currently have the ability to buy channels individually from programmers and content providers
- Government decision has to be based on “cost to the consumer for a la carte pricing” and not on Whether cable and satellite companies currently have the ability to buy channels. Hence incorrect

e) Whether a la carte subscribers would be required to have new television set-top boxes
- Government decision has to be based on “cost to the consumer for a la carte pricing” and not on new television set-top boxes. Hence incorrect
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Re: Most cable television companies currently require customers [#permalink]

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03 Jan 2010, 20:22
This question does not look to be 700 level question at all.
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14 May 2011, 10:49
its a clean C.
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14 May 2011, 14:44
C is the clear answer.
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Re: Most cable television companies currently require customers [#permalink]

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14 May 2011, 19:59
The answer is C.

a-la-carte-subscribers-81637.html
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Re: Most cable television companies currently require customers   [#permalink] 14 May 2011, 19:59
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