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 fixedline
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.

Explanations will be appreciated.
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No offense indeed but I guess you misunderstood the argument. We are supposed to show how Calex will be able to make a profit.
Given fact: The target customers are farmers, who themselves struggle to get much money. Since the farmers themselves struggle to earn more, so how will they afford the cellular service.
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Hi Marcab,

I agree with Nelz analysis.

The argument states that the reason farmers cannot afford the cellphone services is they don't make enough money. Option A states -Farmer doesn't make enough money due to unavailability of phones. It's kind of circular reasoning. If phones are available, farmers will use it as they will make profit. Thus, usage of phones will be there and the company can make profit.

Farmers can't use the cellular service in order to contact outside buyers, because they don't have enough money to cope with the high costs of cellular services. Hence there is no room for circular reasoning.
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Hi Vineet.
Trust me, but you have assumed a lot.
We have to be always within the scope of the stimulus. If it says that none of the coffee farmers make enough money to afford the monthly service fees that Calex would have to charge to make profit, then it really means that unless the farmers enough money, they will not use the cellular servive.
You don't have to go to that extent at which the farmers use credit cards or something.
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To your analogy- If I don't have a laptop and I also know without a laptop I won't be able to get a good score, then, to counter, I'll wait, save money and will get an Alienware.
There is another hole in the analogy. Given goal- to get scholarship from either of S/H/W. I might try to improve my profile, if I don't a very good score-since GMAT is just one of the several factors, the SWH considers.
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Well the point is - there are possibilities of availing the services. You can either consider the possibilities or counter the possibilities but the fact is it is not out of reach and remember that in Strengthen question, we need to provide a way which supports the conclusion not prove the conclusion. Option A does support the conclusion if not prove it.

hi marcab, hi vineet,
good discussion!

I think the answer we should be looking for must cater two things:
1. What will attract farmers
2. How Calex will earn profits

As per option A, farmers earn profit on their crops with the service from Calex. In turn Calex will earn profit.

As per option B, no fixed line available but there is no guarantee or drive for the farmers to use the phone line service

As per option C, but what will drive the farmers to get a cellular service?

As per option D, this is calex strategy but how will it ensure profits? is there any potential sale that will happen?
I think this is second best answer.

As per option E, profit in one region does not guarantee a profit in another with a different population.

Hence I would go for Answer A.
Since it will drive the farmers to use the service. In turn Calex will make profits.