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# The value of a product is determined by the ratio of its

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Manager
Joined: 10 Jan 2006
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The value of a product is determined by the ratio of its [#permalink]

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04 Apr 2006, 22:14
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The value of a product is determined by the ratio of its quality to its price. The higher the value of a product, the better will be its competitive position. Therefore, either increasing the quality or lowering the price of a given product will increase the likelihood that consumer will select that product rather than a competing one.

Which of the following, if true, would most strengthen the conclusion drawn above?
(A) It is possible to increase both the quality and the price of a product without changing its competitive position.
(B) For certain segments of the population of consumers, higher-priced brands of some product lines are preferred to the lower-priced brands.
(C) Competing products often try to appeal to different segments of the population of consumers.
(D) The competitive position of a product can be affected by such factors as advertising and brand loyalty.
(E) Consumersâ€™ perceptions of the quality of a product are based on the actual quality of the product.
Manager
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04 Apr 2006, 22:20
I'll go with E
Intern
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05 Apr 2006, 02:18

A is making the ratio of quality to price constant.
Director
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05 Apr 2006, 02:26
I will go with E.

(A) It is possible to increase both the quality and the price of a product without changing its competitive position. - In this case, the value will be a constant. But passage says that greater the value, greater the competitive position.
(B) For certain segments of the population of consumers, higher-priced brands of some product lines are preferred to the lower-priced brands. - goes against the argument
(C) Competing products often try to appeal to different segments of the population of consumers. - out of scope
(D) The competitive position of a product can be affected by such factors as advertising and brand loyalty. - out of scope.
(E) Consumersâ€™ perceptions of the quality of a product are based on the actual quality of the product. - seems okay. As quality increases, value(ratio) increases and better competitive edge.
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05 Apr 2006, 03:10
Agree with E.

Answer A does not strengthen the conclusion. On the other hand, answer E supports the conclusion that "increasing the quality ....... will increase the likelihood that consumer will select that product........".
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