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# The retail price of decaffeinated coffee is considerably

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Manager
Joined: 16 Feb 2011
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Schools: ABCD
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The retail price of decaffeinated coffee is considerably [#permalink]  31 Jul 2012, 05:33
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Difficulty:

35% (medium)

Question Stats:

69% (02:21) correct 31% (01:40) wrong based on 344 sessions
The retail price of decaffeinated coffee is considerably higher than that of regular coffee. However, the process by which coffee beans are decaffeinated is fairly simple and not very costly. Therefore, the price difference cannot be accounted for by the greater cost of providing decaffeinated coffee to consumer.

The argument relies on assuming which one of the following?

A. Process regular coffee costs more than processing decaffeinated coffee.
B. Price differences between products can generally be accounted for by such factors as supply and demand, not by differences in production costs.
C. There is little competition among companies that process decaffeinated coffee.
D. Retail coffee-sellers do not expect that consumers are content to pay more for decaffeinated coffee than for regular coffee.
E. The beans used for producing decaffeinated coffee do not cost much more before processing than the beans used for producing regular coffee.

There is no doubt about OA.

(Got this from a forum) - The book says that D is a weakener. Can you please explain why? In my opinion, D has no effect because it denies the 'possibility' (shopkeepers think) of supply-demand influencing the prices. Essentially, it's a mild strengthener - similar to those EXCEPT questions.
Thoughts?
[Reveal] Spoiler: OA
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Re: The retail price of decaffeinated coffee is considerably [#permalink]  27 Mar 2013, 20:37
3
KUDOS
Expert's post
Archit143 wrote:
Cannot understand why is B not a correct answer. Its defender model as far as i understand.
Retail Cost of X is higher, that does not Cost in providing will be higher.
B says Higher retail cost is because of y,z but not because of cost providing

Pls help me
Archit

Premises:
The retail price of decaffeinated coffee is considerably higher than that of regular coffee.
However, the process by which coffee beans are decaffeinated is fairly simple and not very costly.

Conclusion: The price difference cannot be accounted for by the greater cost of providing decaffeinated coffee to consumer.

Understand here what the conclusion is. It is that greater cost of providing decaf coffee does not lead to the price difference.
This means the author wants to say that there is another factor at play because of which price of decaf is high. That 'other factor' could be anything other than cost of providing decaf coffee.
Option (b) tells you that 'supply and demand' forces set the prices, not the cost of providing the product. This strengthens the author's argument. It is one of the 'other factors'. The option is telling you that yes, there is an 'other factor' which accounts for the greater price of decaf.

Now, what could be the assumption here? What do we need to be true to say that 'cost of providing decaffeinated coffee' is not higher?
The argument already tells us that the process of decaf is simple and not expensive. But it doesn't say anything about raw material cost. When the author says 'cost of providing decaffeinated coffee', it includes both raw material and process cost. He only tells us that process cost is not high. He is assuming that the raw material cost is also not high. Only then can he say that 'cost of providing decaffeinated coffee' is not high and that some other factor is at play which sets the price of decaf coffee high.

So (E) is the assumption.
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Get started with Veritas Prep GMAT On Demand for $199 Veritas Prep Reviews Manhattan GMAT Instructor Joined: 08 May 2012 Posts: 51 Location: United States GMAT 1: 770 Q50 V47 Followers: 208 Kudos [?]: 188 [1] , given: 4 Re: The retail price of decaffeinated coffee is considerably h [#permalink] 31 Jul 2012, 10:19 1 This post received KUDOS Expert's post voodoochild wrote: The retail price of decaffeinated coffee is considerably higher than that of regular coffee. However, the process by which coffee beans are decaffeinated is fairly simple and not very costly. Therefore, the price difference cannot be accounted for by the greater cost of providing decaffeinated coffee to consumer. The argument relies on assuming which one of the following? A. Process regular coffee costs more than processing decaffeinated coffee. B. Price differences between products can generally be accounted for by such factors as supply and demand, not by differences in production costs. C. There is little competition among companies that process decaffeinated coffee. D. Retail coffee-sellers do not expect that consumers are content to pay more for decaffeinated coffee than for regular coffee. E. The beans used for producing decaffeinated coffee do not cost much more before processing than the beans used for producing regular coffee. There is no doubt about OA. (Got this from a forum) - The book says that D) is a weakener. Can you please explain why? In my opinion, D) has no effect because it denies the 'possibility' (shopkeepers think) of supply-demand influencing the prices. Essentially, it's a mild strengthener - similar to those EXCEPT questions. Thoughts? Here's a useful trick for testing whether a statement weakens or strengthens – look at the opposite statement! Sometimes the relevance of the opposite (or negation) of a statement is easier to discern. In this case, we have (not D) Retail coffee-sellers do expect that consumers are content to pay more for decaf... Well if that's the case, then retailers can get away with charging more and it has nothing to do with the cost of decaffeinating the coffee. So, (not D) is definitely relevant and definitely strengthens the argument. It must be the case that (D) then weakens. Hope that helps! _________________ Mark Sullivan | Manhattan GMAT Instructor | Seattle, WA Manhattan GMAT Discount | Manhattan GMAT Course Reviews | View Instructor Profile Manhattan GMAT Instructor Joined: 08 May 2012 Posts: 51 Location: United States GMAT 1: 770 Q50 V47 Followers: 208 Kudos [?]: 188 [1] , given: 4 Re: The retail price of decaffeinated coffee is considerably h [#permalink] 31 Jul 2012, 10:21 1 This post received KUDOS Expert's post Follow-up note to my previous comment: Negating a statement can sometimes be confusing and always time-consuming, so this is a technique you should only use when you are down to just a couple choices and really can't make a decision. But, in those scenarios I find it pretty useful. Cheers, Mark _________________ Mark Sullivan | Manhattan GMAT Instructor | Seattle, WA Manhattan GMAT Discount | Manhattan GMAT Course Reviews | View Instructor Profile MBA Section Director Joined: 19 Mar 2012 Posts: 2592 Location: India GPA: 3.8 WE: Marketing (Energy and Utilities) Followers: 912 Kudos [?]: 5052 [0], given: 1351 Re: The retail price of decaffeinated coffee is considerably h [#permalink] 31 Jul 2012, 07:22 Expert's post Retail coffee-sellers do not expect that consumers are content to pay more for decaffeinated coffee than for regular coffee. I think if retailers thought consumers wont agree to pay higher prices, it would charge less for decaf though this option is waaay out of scope. _________________ Manager Joined: 16 Feb 2011 Posts: 197 Schools: ABCD Followers: 1 Kudos [?]: 73 [0], given: 78 Re: The retail price of decaffeinated coffee is considerably h [#permalink] 02 Aug 2012, 19:46 MarkSullivan wrote: Follow-up note to my previous comment: Negating a statement can sometimes be confusing and always time-consuming, so this is a technique you should only use when you are down to just a couple choices and really can't make a decision. But, in those scenarios I find it pretty useful. Cheers, Mark Mark, Thanks for your reply. However, I am not sure how retailers' expectation has got anything to do with the prices! For instance, a gas station could *expect* customers to pay$5K/gallon. However, that's not how the real prices are assigned. There is an economics to it. I, as a customer, could expect to pay only $0.01/gallon for the gas. What effect does it have on the gas prices? Nothing. Am I correct? Appreciate your thoughts. Thanks Manager Joined: 16 Oct 2011 Posts: 135 Location: United States Followers: 0 Kudos [?]: 13 [0], given: 5 Re: The retail price of decaffeinated coffee is considerably [#permalink] 03 Aug 2012, 12:33 voodoochild wrote: The retail price of decaffeinated coffee is considerably higher than that of regular coffee. However, the process by which coffee beans are decaffeinated is fairly simple and not very costly. Therefore, the price difference cannot be accounted for by the greater cost of providing decaffeinated coffee to consumer. The argument relies on assuming which one of the following? A. Process regular coffee costs more than processing decaffeinated coffee. B. Price differences between products can generally be accounted for by such factors as supply and demand, not by differences in production costs. C. There is little competition among companies that process decaffeinated coffee. D. Retail coffee-sellers do not expect that consumers are content to pay more for decaffeinated coffee than for regular coffee. E. The beans used for producing decaffeinated coffee do not cost much more before processing than the beans used for producing regular coffee. There is no doubt about OA. (Got this from a forum) - The book says that D) is a weakener. Can you please explain why? In my opinion, D) has no effect because it denies the 'possibility' (shopkeepers think) of supply-demand influencing the prices. Essentially, it's a mild strengthener - similar to those EXCEPT questions. Thoughts? OA is fine. About D - Conclusion - Price difference is not due to the decaffeinating process, yet price is high. D says - Retailers do not expect customers to pay more for this high-priced coffee. In such a case, the retailers would not be selling the decaff. coffee at a higher rate. That means, if they do not expect customers to buy decaff. coffee at such a high rate, it implies that the retailers don't perceive decaff. coffee to be so specially sold - Rather, high-pricing of decaff. coffee is unintentional and is probably a cause of the expensive decaff. process. I cannot call this a complete weakener. The alternate cause is not clearly given in this choice. So, if its the same cause as given in the premise, it is a weakener, else, OOS. Thanks. Current Student Status: Final Lap Up!!! Affiliations: NYK Line Joined: 21 Sep 2012 Posts: 1099 Location: India GMAT 1: 410 Q35 V11 GMAT 2: 530 Q44 V20 GMAT 3: 630 Q45 V31 GPA: 3.84 WE: Engineering (Transportation) Followers: 33 Kudos [?]: 331 [0], given: 69 Re: The retail price of decaffeinated coffee is considerably [#permalink] 26 Mar 2013, 08:33 Cannot understand why is B not a correct answer. Its defender model as far as i understand. Retail Cost of X is higher, that does not Cost in providing will be higher. B says Higher retail cost is because of y,z but not because of cost providing Pls help me Archit GMAT Pill Representative Joined: 07 Nov 2012 Posts: 346 Schools: LBS '14 (A) GMAT 1: 770 Q48 V48 Followers: 162 Kudos [?]: 235 [0], given: 4 Re: The retail price of decaffeinated coffee is considerably [#permalink] 27 Mar 2013, 00:45 Hi Archit, I agree, B is a tricky one. Here is how I figured it out... The key is in looking at what the argument actually is: Therefore, the price difference cannot be accounted for by the greater cost of providing decaffeinated coffee to consumer. What does this rely on? Here is B B. Price differences between products can generally be accounted for by such factors as supply and demand, not by differences in production costs. If you look at the two bold sentences together in isolation it becomes clearer that the second one is NOT an assumption of the first. That the price difference can not be accounted for because of one factor, is not dependent on a different reason for price difference. Hope that helps.. james _________________ Former GMAT Pill student, now on staff. Used GMATPILL OG 12 and nothing else: 770 (48,48) & 6.0 ... and more Current Student Joined: 15 Mar 2012 Posts: 61 Location: United States Concentration: Marketing, Strategy Followers: 0 Kudos [?]: 11 [0], given: 19 Re: The retail price of decaffeinated coffee is considerably [#permalink] 27 Mar 2013, 09:16 Please explain why E is OA. The fact that the beans used to produce decaf do not cost much more than the beans used to produce reg coffee is irrelevant. What is relevant is the cost of both processes, not cost of beans used in the process. _________________ MV "Better to fight for something than live for nothing.” ― George S. Patton Jr GMAT Pill Representative Joined: 07 Nov 2012 Posts: 346 Schools: LBS '14 (A) GMAT 1: 770 Q48 V48 Followers: 162 Kudos [?]: 235 [0], given: 4 Re: The retail price of decaffeinated coffee is considerably [#permalink] 27 Mar 2013, 09:19 Hi, I disagree with you. If you think about producing anything, there are 2 costs that matter: 1) Raw materials 2) Cost of the process So if we know that the process costs the same the only other thing that can affect the production cost is the raw materials. So if we know that the raw materials (coffee beans) cost the same, then we can be sure that the production costs are equal for decaffinated and caffinated coffee. Hope that makes sense. james _________________ Former GMAT Pill student, now on staff. Used GMATPILL OG 12 and nothing else: 770 (48,48) & 6.0 ... and more Current Student Joined: 15 Mar 2012 Posts: 61 Location: United States Concentration: Marketing, Strategy Followers: 0 Kudos [?]: 11 [0], given: 19 Re: The retail price of decaffeinated coffee is considerably [#permalink] 27 Mar 2013, 09:27 Good point James, very well said. Posted from my mobile device _________________ MV "Better to fight for something than live for nothing.” ― George S. Patton Jr Verbal Forum Moderator Joined: 23 Jul 2010 Posts: 509 Followers: 62 Kudos [?]: 557 [0], given: 255 Re: The retail price of decaffeinated coffee is considerably [#permalink] 06 Nov 2013, 07:32 Bumping for review and further discussion*. New project from GMAT Club! Click here _________________ How to CHOOSE your Business School Thanks = Kudos. Kudos are appreciated Rules for posting on the verbal forum When you post a question Pls. Provide its source & TAG your questions Avoid posting from unreliable sources such as 1000 series. Intern Joined: 23 Dec 2014 Posts: 23 Followers: 0 Kudos [?]: 1 [0], given: 5 Re: The retail price of decaffeinated coffee is considerably [#permalink] 02 Mar 2015, 07:40 Quit tricky but I say E, because the conclusion is that the d. Coffee does not Cost more and the premise is that the process is not much more expensive. So the assumption is that everything involving d. Coffee does not cost much more than regular coffee Re: The retail price of decaffeinated coffee is considerably [#permalink] 02 Mar 2015, 07:40 Similar topics Replies Last post Similar Topics: 13 If the original price of an item in a retail store is marked 6 26 Nov 2013, 06:10 The original retail price of an appliance was 60 percent 1 11 Oct 2013, 16:28 Many retailers advertise price-matching policies, such as, 8 12 Nov 2012, 10:44 1 A retailer bought a machine at a wholesale price of$90 and 7 14 Nov 2010, 22:29
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