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

It is currently 26 May 2013, 00:58
Customize  |  Hide

The Calex Telecommunications Company is planning to

  Question banks Downloads My Bookmarks Reviews  
Author Message
TAGS:
Senior Manager
Senior Manager
Joined: 24 Mar 2010
Posts: 347
Followers: 7

Kudos [?]: 41 [0], given: 4

GMAT Tests User
The Calex Telecommunications Company is planning to [#permalink] New post 14 Sep 2012, 23:51
00:00

Question Stats:

81% (02:06) correct 18% (01:00) wrong based on 2 sessions
The Calex Telecommunications Company is planning to introduce cellular telephone service into isolated coastal areas of Caladia, a move which will require considerable investment. However, the only significant economic activity in these areas is small-scale coffee farming, and none of the coffee farmers make enough money to afford the monthly service fees that Calex would have to charge to make a profit. Nevertheless, Calex contends that making the service available to these farmers will be profitable.

Which of the following, if true, provides the strongest support for Calex's contention?

(A) Currently, Caladian coffee farmers are forced to sell their coffee to local buyers at whatever price those buyers choose to pay because the farmers are unable to remain in contact with outside buyers who generally offer higher prices.
(B) In the coastal areas of Caladia where Calex proposes to introduce cellular telephone service, there is currently no fixed-line telephone service because fixed-line companies do not believe that they could recoup their investment.
(C) A cellular telephone company can break even with a considerably smaller number of subscribers than a fixed-line company can, even in areas such as the Caladian coast, where there is no difficult terrain to drive up the costs of installing fixed lines.
(D) Calex bases its monthly fees for cellular telephone service in a given region partly on the cost of installing the necessary equipment to provide the service there.
(E) Calex has for years made a profit on cellular telephone service in Caladia's capital city, which is not far from the coastal region.
[Reveal] Spoiler: OA
Manager
Manager
User avatar
Joined: 23 Aug 2011
Posts: 83
Followers: 3

Kudos [?]: 19 [0], given: 13

Re: The Calex Telecommunications [#permalink] New post 15 Sep 2012, 04:26
Arbitrageur wrote:
The Calex Telecommunications Company is planning to introduce cellular telephone service into isolated coastal areas of Caladia, a move which will require considerable investment. However, the only significant economic activity in these areas is small-scale coffee farming, and none of the coffee farmers make enough money to afford the monthly service fees that Calex would have to charge to make a profit. Nevertheless, Calex contends that making the service available to these farmers will be profitable.

Which of the following, if true, provides the strongest support for Calex's contention?

(A) Currently, Caladian coffee farmers are forced to sell their coffee to local buyers at whatever price those buyers choose to pay because the farmers are unable to remain in contact with outside buyers who generally offer higher prices. -Strengthens
(B) In the coastal areas of Caladia where Calex proposes to introduce cellular telephone service, there is currently no fixed-line telephone service because fixed-line companies do not believe that they could recoup their investment.-Irrelevant, no relation b/w fixed line and cellular service, we cannot assume anything.
(C) A cellular telephone company can break even with a considerably smaller number of subscribers than a fixed-line company can, even in areas such as the Caladian coast, where there is no difficult terrain to drive up the costs of installing fixed lines.-- not sufficient as we are not talking about competition and we don't know whether fixed lines companies are making profits.
(D) Calex bases its monthly fees for cellular telephone service in a given region partly on the cost of installing the necessary equipment to provide the service there.--no relation with the argument.
(E) Calex has for years made a profit on cellular telephone service in Caladia's capital city, which is not far from the coastal region.-A shell game answer, and we cannot generalize.

This is a straight forward question. Answer is A.


Option a: Currently, Caladian coffee farmers are forced to sell their coffee to local buyers at whatever price those buyers choose to pay because the farmers are unable to remain in contact with outside buyers who generally offer higher prices.

Premise: The only significant economic activity in these areas is small-scale coffee farming, and none of the coffee farmers make enough money to afford the monthly service fees that Calex would have to charge to make a profit.
Option A.) It is clear from the premise and option A that ,if the cellular phone helps the Caladian coffee farmers with their profits, Calex can definitely charge these farmers appropriately to make profits.
_________________

Whatever one does in life is a repetition of what one has done several times in one's life!
If my post was worth it, then i deserve kudos :)

Re: The Calex Telecommunications   [#permalink] 15 Sep 2012, 04:26
    Similar topics Author Replies Last post
Similar
Topics:
Popular new posts A company plans to develop a prototype weeding machine that okdongdong 15 26 Jun 2005, 06:31
New posts CR : CALEX TELECOMMUNICATIONS amitdgr 5 07 Oct 2008, 21:59
New posts A pioneer in the field of telecommunications, Alexander AtifS 2 17 Mar 2010, 00:08
New posts 1 Comparison of payment plan of telephone company nifoui 5 28 Mar 2010, 08:59
Popular new posts 1 EXPERTS_POSTS_IN_THIS_TOPIC The Calex Telecommunications Company is planning to Marcab 15 26 Dec 2012, 20:59
Display posts from previous: Sort by

The Calex Telecommunications Company is planning to

  Question banks Downloads My Bookmarks Reviews  


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®.