Brand X designs and buils custom sneakers, one sneaker at a

Himanshu your concern is valid but if you magnify the premise , it will tell you that the Gold Standard is an exclusive item and manufactured once at a time.A significant increase in the price of raw materials used can increase the product's price even if the manufacturers have planned inventory.

Example:- A sugar cane juice seller buys 100 sugar canes for Rs 1000 so he determines the cost of juice Rs X with the cost of sugar cane and marginal profit.The seller goes back to the market and buys the sugar cane again because he can't hold more sugar cane of his own ( he will buy it from cold storage people etc, here in our question also the manufacturers are making the new Gold Standard on demand , as it is customized and can't be prepared and kept ) Now the seller has found that the price of the sugar cane has increased substantially then he will pay for the increased price but now he will do costing of juice as per the new rates and even if he has the old stock of sugar cane at lower rate because HE HAS TO GO BACK TO THE MARKET and buy sugar canes at increased rates.

Even I answered it D.
The Gold Standard", a sneaker that will cost five times more to manufacture than any other sneaker that has been ever been created.
The very fact that their is a rival,should effect the profit (Not sure of the extent).
But C gives us a much stronger reason for decrease in profit.

Probably when we come across words like Ever , Only. We blindly choose the alternate reason.

Well this like most other questions follows a simple rule .. that other options don't do the job either. !
I am myself stuck on one particular option lots of times; i just cant co relate it but the others are way more out of scope so eliminate and don't think much about why it will weaken we don't have to present a case on it.
Remember it is always the best answer not the only answer.

a) The endorsement of the The Gold Standard by a popular Celebrity. - Formula for success - will make the new product successful - Incorrect
b) The publication of a report indicating that all previous sneaker lines launched by Brand X have been profitable. - Good history will encourage consumers to buy the new product - Incorrect
c) A significant increase in the cost of the canvas used to construct the The Gold Standard - Cost of material would directly affect the company. As input cost increases so does the overall production cost. Hence the profitability decreases - Correct
d) The introduction of the another new sneaker line by a rival manufacturer. - No information on the market penetration and marketing campaign of the rival brand is known. - Neutral stand - Incorrect
e) An announcement by Brand X that the Gold Standard will be marketed as an exclusive offering, available only in limited quantities. - Sense of exclusivity drives consumers to shell money for the brand value - Incorrect

Thanks Karishma for your explanation. I'm able to see my mistake.

Brand X designs and builds custom sneakers, one sneaker at a time. It recently announced plans to sell "The Gold Standard," a sneaker that will cost five times more to manufacture than any other sneaker that has ever been created.

Which of the following, if it occurred, would cast the most serious doubt on the claim that The Gold Standard sneaker will be profitable?

(A) The endorsement of The Gold Standard by a popular celebrity

(B) The publication of a report indicating that all previous sneaker lines launched by Brand X have been profitable

(C) A significant increase in the cost of the canvas used to construct The Gold Standard

(D) The introduction of another new sneaker line by a rival manufacturer

(E) An announcement by Brand X that The Gold Standard will be marketed as an exclusive offering, available only in limited quantities

My 2 cents...

C Vs E.

(C) A significant increase in the cost of the canvas used to construct The Gold Standard
>> Profit = Revenue - Cost. cost is discussed in the option.

(E) An announcement by Brand X that The Gold Standard will be marketed as an exclusive offering, available only in limited quantities.
>> If one overthinks, it may sound as if the original exclusivity of the Brand is gone [Brand X designs and builds custom sneakers, one sneaker at a time]. Thus will hurt customer sentiments and in turn sale. But the prices are 5 times high.So may be even after poor sale, Brand may end up making more money.
Also we have made lots of new assumptions that are hard to derive from premise. So C is winner.

(A) The endorsement of The Gold Standard by a popular celebrity
Endorsement means more people will buy. Profitable.


(B) The publication of a report indicating that all previous sneaker lines launched by Brand X have been profitable
Past may or may not reflect in future. It may strengthen or weaken, can't say for sure


(C) A significant increase in the cost of the canvas used to construct The Gold Standard
This is adding cost to the already expensive sneaker. And it is "significant" not just nominal increase. This is a deal breaker, meaning if it was nominal increase then there was still chances of people who could have bought the sneaker, however, by using the word "significant" it is confirmed beyond doubt that it is out of scope of many customers.

(D) The introduction of another new sneaker line by a rival manufacturer
The introduction of new sneaker line can be a boon or a bane depending on factors like quality, availability, brand name, etc. Limited information. Can't decide if it is really a weakener.

(E) An announcement by Brand X that The Gold Standard will be marketed as an exclusive offering, available only in limited quantities
From the law of supply and demand, it is safe to assume that if a new line is marketed in limited quantities, its demand will be quite high thus attracting customers to buy the product.

Gold Standard ( Mfg Cost ) = 500
Other Sneakers ( Mfg Cost ) = 100

Which of the following, if it occurred, would cast the most serious doubt on the claim that The Gold Standard sneaker will be profitable?

(A) The endorsement of The Gold Standard by a popular celebrity

If popular celebrity advertises a product there is a higher chance of selling the product and increasing profitability

(B) The publication of a report indicating that all previous sneaker lines launched by Brand X have been profitable

Past can not reflect future , earlier products might be profitable for a variety of other reasons as well such as quality, durability , cost etc... and we know nothing except manufacturing cost of the new product in comparison to other product.

(C) A significant increase in the cost of the canvas used to construct The Gold Standard

Increase in cost of Rawmaterials -------> Increase in manufacturing cost ------> Reduced profit margin( If price remains constant )

This looks good.

(D) The introduction of another new sneaker line by a rival manufacturer - Out of scope.

(E) An announcement by Brand X that The Gold Standard will be marketed as an exclusive offering, available only in limited quantities

This can have 2 effects -

1. Some rich and aflluent customers will always try to purchase products which are unique
2. Due to limited quantity of the product an higher price many will try not to purchhase it...

Nothing can be certainly said about the profitability ...

We can safely conclude that if cost of raw materials increases , it will lead to rise in manufacturing cost , subsequently reducing profit margin - Hence IMHO (C) will be correct answer...

pretty straight forward question. None of the answer choices seem to fit but C.

(A) The endorsement of The Gold Standard by a popular celebrity
will likely improve sales. so out.

(B) The publication of a report indicating that all previous sneaker lines
launched by Brand X have been profitable
so all other products were profitable. the conclusion that new ones will be profitable as well is more believable.

(C) A significant increase in the cost of the canvas used to construct The Gold
Standard
ok, so if costs, which are already 5x, will increase, then the profitability might be affected. hold to this one.

(D) The introduction of another new sneaker line by a rival manufacturer
well, not really a weakener, there are already competitors on the market, so not a weakener.

(E) An announcement by Brand X that The Gold Standard will be marketed as
an exclusive offering, available only in limited quantities
looks good. exclusive offering tend to be way to expensive. thus, by selling the new sneakers at incredibly high prices, the profitability will increase.
note that we are not concerned about the REVENUE, but about the profitability.

stuck with C and D.
Interestingly, both C and D are common patterns in such gmat questions.
The correct answer is D in many cases. Nevertheless, in this question, C is correct b/c of the key word "manufacture"; in other words, the higher cost is caused by a canvas, not by any profitable factors.

Brand X designs and buils custom sneakers, one sneaker at a time. It redently announced plans to sell "The Gold Standard", a sneaker that will cost five times more to manufacture than any other sneaker that has been ever been created.

Which of the following,if it occurred, would cast the most serious doubt on the claim that the The Gold Standard will be profitable?

a) The endorsement of the The Gold Standard by a popular Celebrity.
It is some kind of a strenghener
b) The publication of a report indicating that all previous sneaker lines launched by Brand X have been profitable.
It means nothing. Maybe it was relevant to other sneakes, but not to Gold standard.
c) A significant increase in the cost of the canvas used to construct the The Gold Standard
Not that Good, but the Best of all. Brand X thought that it will cost 5 times more and will make some profit anyway, but now maybe it will cost 6 times more and there will be a loss
d) The introduction of the another new sneaker line by a rival manufacturer.
A small weakener. But not enough. Brand X has to look on its own costs and profits, not on other companies
e) An announcement by Brand X that the Gold Standard will be marketed as an exclusive offering, available only in limited quantities.
It is a strenghener of some kind

Here the assumption that Profit will be increased because the Price of the item is 5 times. Now there could be two factors to make profit
1. Other expenses of the company remain same
2. People are willing to buy this new product.

Option C states one of the possible reason to cast doubt

+1 for C

Brand X designs and buils custom sneakers, one sneaker at a time. It redently announced plans to sell "The Gold Standard", a sneaker that will cost five times more to manufacture than any other sneaker that has been ever been created.

Which of the following,if it occurred, would cast the most serious doubt on the claim that the The Gold Standard will be profitable?

a) The endorsement of the The Gold Standard by a popular Celebrity.
b) The publication of a report indicating that all previous sneaker lines launched by Brand X have been profitable.
c) A significant increase in the cost of the canvas used to construct the The Gold Standard
d) The introduction of the another new sneaker line by a rival manufacturer.
e) An announcement by Brand X that the Gold Standard will be marketed as an exclusive offering, available only in limited

To cast the most serious doubt on the claim that "The Gold Standard" will be profitable, we need to identify an option that presents a significant challenge or obstacle to its profitability. Let's evaluate the given options:

A. The endorsement of The Gold Standard by a popular celebrity.
- This could actually increase the demand for "The Gold Standard" and potentially make it more profitable, as celebrity endorsements can boost sales.

B. The publication of a report indicating that all previous sneaker lines launched by Brand X have been profitable.
- This suggests a track record of profitability for Brand X's sneaker lines, which could actually support the claim that "The Gold Standard" will be profitable.

C. A significant increase in the cost of the canvas used to construct The Gold Standard.
- This option increases the production cost of "The Gold Standard," which could indeed cast doubt on its profitability. If the manufacturing cost is substantially higher, it might be challenging for Brand X to make a profit, especially if they can't pass on the increased cost to consumers.

D. The introduction of another new sneaker line by a rival manufacturer.
- While competition is a factor to consider, it doesn't directly cast serious doubt on the profitability of "The Gold Standard." The success or failure of a new sneaker line depends on various factors beyond the presence of competition.

E. An announcement by Brand X that The Gold Standard will be marketed as an exclusive offering, available only in limited quantities.
- This option might actually increase the perceived value of "The Gold Standard" and make it more desirable to customers. Limited availability can create a sense of exclusivity, potentially driving up demand and profitability.

Among the given options, option C stands out as the one that would cast the most serious doubt on the profitability of "The Gold Standard" because it directly impacts the production cost, making it challenging to achieve profitability even if the selling price is significantly higher.