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The fee a certain plumber charges for service is based on a

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The fee a certain plumber charges for service is based on a [#permalink] New post 31 Jul 2012, 20:15
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The fee a certain plumber charges for service is based on a "cost-plus" pricing method. The plumber charges for all items used in the work, and adds a set percentage.

Which of the following statements, if true, would be the best basis for a criticism of "cost-plus" pricing as an economically advantageous method for customers of the plumber's service?

A.It is in the economic interest of the plumber to use expensive items, even if their use is not warranted by the circumstances.
B.The percentage added to the cost of an item has decreased over the past several years.
C.The plumber does not charge for labor costs, despite the extensive time requirements of some repair jobs.
D.Some past clients have criticized the quality of the plumber's work.
E.The "cost-plus" pricing method has been used by other plumbers in the region.
[Reveal] Spoiler: OA
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Re: The fee a certain plumber charges for service is based on a [#permalink] New post 31 Jul 2012, 20:37
bhavinshah5685 wrote:
The fee a certain plumber charges for service is based on a "cost-plus" pricing method. The plumber charges for all items used in the work, and adds a set percentage.

Which of the following statements, if true, would be the best basis for a criticism of "cost-plus" pricing as an economically advantageous method for customers of the plumber's service?

A.It is in the economic interest of the plumber to use expensive items, even if their use is not warranted by the circumstances.
B.The percentage added to the cost of an item has decreased over the past several years.
C.The plumber does not charge for labor costs, despite the extensive time requirements of some repair jobs.
D.Some past clients have criticized the quality of the plumber's work.
E.The "cost-plus" pricing method has been used by other plumbers in the region.




what is your question in the above..
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Re: The fee a certain plumber charges for service is based on a [#permalink] New post 31 Jul 2012, 20:49
bhavinshah5685 wrote:
The fee a certain plumber charges for service is based on a "cost-plus" pricing method. The plumber charges for all items used in the work, and adds a set percentage.

Which of the following statements, if true, would be the best basis for a criticism of "cost-plus" pricing as an economically advantageous method for customers of the plumber's service?

A.It is in the economic interest of the plumber to use expensive items, even if their use is not warranted by the circumstances.
B.The percentage added to the cost of an item has decreased over the past several years.
C.The plumber does not charge for labor costs, despite the extensive time requirements of some repair jobs.
D.Some past clients have criticized the quality of the plumber's work.
E.The "cost-plus" pricing method has been used by other plumbers in the region.


As per my understadning, OA should be C. Questions ask us that how the cost-plus method is advantageous to customers because as per C, plumbers are not adding labour cost. I f hey add labour cost also then,it will be very costly for customers,Thus, not adding labour cost is advantageous for customers for plumbers service.

Where am I wrong?
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Re: The fee a certain plumber charges for service is based on a [#permalink] New post 31 Jul 2012, 23:04
bhavinshah5685 wrote:
bhavinshah5685 wrote:
The fee a certain plumber charges for service is based on a "cost-plus" pricing method. The plumber charges for all items used in the work, and adds a set percentage.

Which of the following statements, if true, would be the best basis for a criticism of "cost-plus" pricing as an economically advantageous method for customers of the plumber's service?

A.It is in the economic interest of the plumber to use expensive items, even if their use is not warranted by the circumstances.
B.The percentage added to the cost of an item has decreased over the past several years.
C.The plumber does not charge for labor costs, despite the extensive time requirements of some repair jobs.
D.Some past clients have criticized the quality of the plumber's work.
E.The "cost-plus" pricing method has been used by other plumbers in the region.


As per my understadning, OA should be C. Questions ask us that how the cost-plus method is advantageous to customers because as per C, plumbers are not adding labour cost. I f hey add labour cost also then,it will be very costly for customers,Thus, not adding labour cost is advantageous for customers for plumbers service.

Where am I wrong?


The stem reads "Which of the following statements, if true, would be the best basis for a criticism of "cost-plus" pricing as an economically advantageous method for customers of the plumber's service?

So u need to give a reason criticizing the cost-plus method as economical advantage for customers.

C is strengthening the advantage, not criticizing the economic adv of customers. Hence A
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Re: The fee a certain plumber charges for service is based on a [#permalink] New post 01 Aug 2012, 11:37
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Re: The fee a certain plumber charges for service is based on a [#permalink] New post 01 Aug 2012, 15:59
The stem is pretty confusing for this question. Nevertheless, A is my answer.

A.It is in the economic interest of the plumber to use expensive items, even if their use is not warranted by the circumstances.
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Re: The fee a certain plumber charges for service is based on a [#permalink] New post 01 Aug 2012, 18:41
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Capricorn369 wrote:
The stem is pretty confusing for this question. Nevertheless, A is my answer.

A.It is in the economic interest of the plumber to use expensive items, even if their use is not warranted by the circumstances.


I think is good as a question with a simple premise and conclusion. it has all the elements to be used for the purpose
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Re: The fee a certain plumber charges for service is based on a [#permalink] New post 03 Aug 2012, 12:21
bhavinshah5685 wrote:
The fee a certain plumber charges for service is based on a "cost-plus" pricing method. The plumber charges for all items used in the work, and adds a set percentage.

Which of the following statements, if true, would be the best basis for a criticism of "cost-plus" pricing as an economically advantageous method for customers of the plumber's service?

A.It is in the economic interest of the plumber to use expensive items, even if their use is not warranted by the circumstances.
B.The percentage added to the cost of an item has decreased over the past several years.
C.The plumber does not charge for labor costs, despite the extensive time requirements of some repair jobs.
D.Some past clients have criticized the quality of the plumber's work.
E.The "cost-plus" pricing method has been used by other plumbers in the region.


+A
The only criticism of cost-plus pricing as an economically helpful method...
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Re: The fee a certain plumber charges for service is based on a [#permalink] New post 28 Nov 2013, 20:16
Here is the official explanation from Kaplan

Answer A The actual question here is particularly complicated. We're asked for a criticism of the economic advantage of this method of pricing from the customer's point of view. In other words, how could the plumber cheat the customer? The method is that the plumber charges the customer a set price for the items used for the work and adds a set percentage. Thus, a project using high-priced items is economically advantageous for the plumber; a project using low-priced items is advantageous for the customer. Since the plumber chooses the tools (items) necessary for the job, it's advantageous to choose the highest-priced items, which will also increase the percentage received. Choice (A) gives the disadvantage of this plan for the customer—an unscrupulous plumber could choose the highest-costing items, whether they are necessary or not. Choice (A) is the correct answer.

Choice (B) is a 180; a decrease in the percentage would be advantageous for the customer, not the plumber.

Choice (C) is out of scope—we already know the cost is based solely on the items used and a set percentage, not labor. Moreover, it would be to the customer's advantage not to have to pay for labor if a job takes a long time.

Choice (D) is out of scope; the quality of work is not an issue, only the method of pricing is.

Choice (E) is also out of scope; the number of plumbers using the method is not the issue, only its economic advantageousness. Moreover, if anything, this would strengthen the argument, since it implies that customers in the region are satisfied enough with the method not to avoid plumbers who use it.

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Re: The fee a certain plumber charges for service is based on a   [#permalink] 28 Nov 2013, 20:16
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