Fish currently costs about the same at seafood stores throughout Eastv

D for me

If the retail prices were the same in the city and the suburb, then the new tax break would help city stores. And D tells you definitively that the prices has always been the same for city and suburb.

In E, what if the price in the city is already lower than in the suburb?

Or that the price in the city is already higher than the suburb? In this case, the profit margin is already higher, not just will be higher.

Conclusion:
Therefore, in the future, profit margins will be higher at seafood stores within the city than at
suburban seafood stores.

>>>We can come to teh conclusion when we know about the prices set at the stores within the city and the surban stores.

I disagree with the supposed E OA

Here is an example:

let say the current cost of a fish is $5 including tax

suburbs sell for $10, current profit $5

cities sell for $8, current profit is $3

After $1 tax break

it costs suburbs $5 a fish, but only cost cities $4 a fish

suburbs sell for $10, suburbs profit will continue to be $5

cities sell for $8, but cities profit will increase to $4 (still lower profit than suburbs)

BUT if cities sells for $9.50, cities profit will increase to $5.50 (higher profit than suburbs, BUT still lower selling price)

So the lower selling price of the city stores can still generate higher profit than suburb stores. The relative prices of city to suburb stores don't necessary correlate to the actual profit comparison.

Mate read the question premise:

"Fish currently costs about the same at seafood stores throughout Eastville and its
surrounding suburbs. Seafood stores buy fish from the same wholesalers and at the
same prices, and other business expenses have also been about the same"

This means currently the profits are identical.

My answer would be D. Profit margin is nothing but ( Profit / revenue ) * 100.
If the fish selling stores maintain the same price, then certainly profit margin increases.
I am not convinced with the answer choice 'E'.
Could anyone explain me why the answer is not 'D'.

You need the selling price for calculating the margin. D only talks about cost. Also, D is redundant as it is a rephrase of an info already given in the stem of the question.

E is the only one that talks about the selling price.

I don't get how E is the answer

Lets say cost in Eastville was 10$ and also in suburbs

Due to lower taxes cost became 9 $ for the city and remained 10$ for suburbs

Now profit =Selling Price-Cost Price

For city if Selling Price=20 then Profit would be 20-9=11
FOr suburbs Selling Price =20 then Profit would be 20-10=10

Hence Profit for city is higher even if the Selling Price is the same as suburbs

Now if I decrease the Selling Price in the city

Lets say is 19 then profit would be 19-9=10 so the profit will decrease

Am i missing a point here ??

Fish currently costs about the same at seafood stores throughout Eastville and its surrounding suburbs. Seafood stores buy fish from the same wholesalers and at the same prices, and other business expenses have also been about the same. But new tax breaks will substantially lower the cost of doing business within the city. Therefore, in the future, profit margins will be higher at seafood stores within the city than at suburban seafood stores.

For the purposes of evaluating the argument, it would be most useful to know whether

(A) More fish wholesalers are located within the city than in the surrounding suburbs
(B) Any people who currently own seafood stores in the suburbs surrounding Eastville will relocate their businesses nearer to the city
(C) The wholesale price of fish is likely to fall in the future
(D) Fish has always cost about the same at seafood stores throughout Eastville and its surrounding suburbs
(E) Seafood stores within the city will in the future set prices that are lower than those at suburban seafood stores

My 2 cents,

For an evaluation problem like this, the answer choice should be able to either strengthen or weaken the argument.

Choice D,
if assuming true, the conclusion will be strengthened. -> Profit margin in the city will be increased.

Then,
revert the choice D -> Fish hasn't always cost about the same at blah-blah.
if assuming true, you don't know whether the cost in city is less or more than the ones in the suburbs.
because there are two possible cases for the fish
1) $ in city > $ in suburb
2) $ in city < $ in suburb

Choice E,
Either you revert the choice or you assume the choice to be true, the conclusion will be either strengthened or weakened.

Choice E wins.

Please correct my reasoning if wrong.

I will vote for E because

question is asking to "evaluating the argument" - when u evaluate an argument we generally weaken the conclusion and the answer choices are Premises

Conclusion: "in the future, profit margins will be higher at seafood stores within the city than at suburban seafood stores"

Premise 1: new tax breaks will substantially lower the cost of doing business within the city.
premise 2: Fish currently costs about the same throughout Eastville and its surrounding suburbs

(A) More fish wholesalers are located within the city than in the surrounding suburbs
--> Out of scope - not talking about number of wholesales

(B) Any people who currently own seafood stores in the suburbs surrounding Eastville will relocate their businesses nearer to the city
--> Out of scope ardument doesnot talk about relocating doesnot impact out conclusion

(C) The wholesale price of fish is likely to fall in the future
--> already a premise cannot usee it again

(D) Fish has always cost about the same at seafood stores throughout Eastville and its surrounding suburbs
--> already a premise cannot usee it again

(E) Seafood stores within the city will in the future set prices that are lower than those at suburban seafood stores
--> if they set prices that are lower, then will weaken the conclusion of higher profit margins

hope that helps

This one's an E. And this is why:

(A) More fish wholesalers are located within the city than in the surrounding suburbs
Does not affect the conclusion in any way.

(B) Any people who currently own seafood stores in the suburbs surrounding Eastville will relocate their businesses nearer to the city
Nope. Irrelevant.

(C) The wholesale price of fish is likely to fall in the future
This comes close, but is too isolated to one part of the conclusion.

(D) Fish has always cost about the same at seafood stores throughout Eastville and its surrounding suburbs
Again worded in such a way that seems to tackle the argument and can seem closer than C, and therefore can be misleading. It's incorrect because it talks about the past not the future.

(E) Seafood stores within the city will in the future set prices that are lower than those at suburban seafood stores
This is the one! Knowing this will ascertain whether profit margins will be higher or will remain the same.

Yes, the thinking as you go through (E) to determine whether it's a critical variable:

Step 1: Figure out the two states of the answer choice

(1) City prices will be LOWER than suburban prices
(2) City prices will NOT be lower than suburban prices (perhaps same price, OR higher)


If (1), this means lower profit margin. The profit margin gained through tax breaks in the city is offset. No change in profit margin potentially -- weakens argument
If (2), city prices are at least the same or higher. If the same, then profit margin will be higher (strengthens argument). If city prices higher, then profit margin even higher (strengthens argument).

Using the gmatpill cr framework approach for evaluate questions, we found a critical variable where in one state it weakens the argument, in the other it strengthens. This it's "useful to know" to help us evaluate the argument.

Got my gmat tomorrow , but lets give this a try .
For the purposes of evaluating the argument, it would be most useful to know whether

(A) More fish wholesalers are located within the city than in the surrounding suburbs - So wat ? does it tell if the profit of shop keeper within the city inc. ? NOPE
(B) Any people who currently own seafood stores in the suburbs surrounding Eastville will relocate their businesses nearer to the city - So wat ? does it tell if the profit of shop keeper within the city inc. ? NOPE
(C) The wholesale price of fish is likely to fall in the future - So wat ? does it tell if the profit of shop keeper within the city inc. ? NOPE
(D) Fish has always cost about the same at seafood stores throughout Eastville and its surrounding suburbs - So wat ? does it tell if the profit of shop keeper within the city inc. at the present time ? NOPE, this is a restated premise.
(E) Seafood stores within the city will in the future set prices that are lower than those at suburban seafood stores - PERFECT. if the shop keepers decide to dec the SP then the profit = CP-SP will remain equal.
** I am no expert but a piece of advice, CR is basically logical thinking. So dont think too much about wheather its a OFS or iSWAT. Just focus on the conclusion "Conclusion is the king":P

I'll try to explain why E is the most useful answer:

First, the argument conclude that because of a new tax policy, profit margin will be higher in seafood store within the city than outside, and keep in mind that we want the most USEFUL answer - the answer give us the most relevant information to evaluate the argument

(A): Option A tell us there are more store within the city rather than outside, this only tell us it's likely that total profit of store within the city will be higher, but it gives us no information about the profit margin

(B): Option B offer us similar information like option A, give us only the indication of number of stores within and outside the city, if the number of store inside the city after relocation is higher than outside the city, it's basically information of option A again, so this definitely cannot be the answer.

(C): Option C tell us price of fish will fall, but since both type of store get fish from the same source, they will be affected similarly, so we can't determine anything using this information

(D): Option D is basically information from the passage, so it's not relevant

(E): Option E tell us that price will be different, combine with the difference in tax policy, now we got 2 elements to work with (difference in selling price and difference in tax), therefore option E will be MOST USEFUL

Hope it helps

Fish currently costs about the same at seafood stores throughout Eastville and its surrounding suburbs. Seafood stores buy fish from the same wholesalers and at the same prices, and other business expenses have also been about the same. But new tax breaks will substantially lower the cost of doing business within the city. Therefore, in the future, profit margins will be higher at seafood stores within the city than at suburban seafood stores.

For the purposes of evaluating the argument, it would be most useful to know whether

(A) More fish wholesalers are located within the city than in the surrounding suburbs --Argument is about profit margin

(B) Any people who currently own seafood stores in the suburbs surrounding Eastville will relocate their businesses nearer to the city --Argument is about profit margin

(C) The wholesale price of fish is likely to fall in the future --Argument is about profit margin

(D) Fish has always cost about the same at seafood stores throughout Eastville and its surrounding suburbs --we already know this from the argument

(E) Seafood stores within the city will in the future set prices that are lower than those at suburban seafood stores --Correct. If the stores reduce prices to accommodate lower taxes then the profit will be same through out the region; but if, they don't reduce then the profit will increase.

Why is it not (D)? Will these type of questions appear in GMAT?

Hi Anant

Let us analyze the argument presented in the stimulus:

Conclusion: In the future, profit margins will be higher at seafood stores within the city than at suburban seafood stores.

Why:

1) Seafood stores buy fish from the same wholesalers and at the same prices.
2) Other business expenses have also been about the same.
3) New tax breaks will substantially lower the cost of doing business within the city.

Therefore, tax expense for doing business within the city will reduce, thereby improving profits and profit margins.

To evaluate the argument, it would help to get any information about either revenue (sales) of seafood stores or costs (since the conclusion is about the profit margins).

Option (D) states: Fish has always cost about the same at seafood stores throughout Eastville and its surrounding suburbs.

This is a backward looking statement whereas the conclusion is about profit margins going forward. (D) therefore does not provide us with any information that could help in evaluating the conclusion.

I am unsure about what you mean by "these type of questions". This is a typical evaluate the argument question within the GMAT.

Hope this helps.

The issue with D is that it talks about the past. The time frame in concern for the evaluation here is the future, after the tax break is instituted in the city. It is particularly important in CR questions to be sure about the period which the passage and the option talk about. It is an often used trap!

Arathy