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

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Manager
Joined: 15 May 2006
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The value of a product is determined by the ratio of its [#permalink]  18 Jun 2006, 20:20
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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.

VP
Joined: 07 Nov 2005
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Location: India
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Should be E.

A-----> The passgae states that either increase the quality or decrease the price. Hence it is wrong.
B----->Weakens the argument.
C----->Out of scope.
D----->No support offered and seems out of scope.
VP
Joined: 25 Nov 2004
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go with E too.
GMAT Club Legend
Joined: 07 Jul 2004
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Location: Singapore
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Kudos [?]: 165 [0], given: 0

E is the best choice. It says that a customer is able to gauge the value of a product himself and can make a reasoned decision whether to acquire the product or not.

B,C,D --> weakens
A --> irrelevant
Director
Joined: 28 Dec 2005
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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.

I got E too, but here is how I solved it:

Fact 1:. V is proportional to Q/P.
Fact 2. Comp. Pos is proportional to V, therefore proportional to Q/P
Conclusion: CC is proportional to V

E proves that costumer's perception is proportional to Q, so it does support the conclusion.

Interestingly although E is the best choice, it is still not the ideal supporting statement. The argument is that if V is increased, the customer will prefer this product. It does not say that V must be increased by increase in Q. Therefore if V is increased by a decrease in P, even statement E has no effect of strengthening the conclusion
Director
Joined: 06 May 2006
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Agree with E.

But only because the others are pretty far off the mark...
CEO
Joined: 20 Nov 2005
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Schools: Completed at SAID BUSINESS SCHOOL, OXFORD - Class of 2008
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E is the unstated assumption and assumptions may also support the conclusions.

BTW its my 1000th post.
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SAID BUSINESS SCHOOL, OXFORD - MBA CLASS OF 2008

VP
Joined: 02 Jun 2006
Posts: 1267
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(E) Consumersâ€™ perceptions of the quality of a product are based on the actual quality of the product.

Direct relation to the quality metric outlined above.
Senior Manager
Joined: 07 Jul 2005
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One more for (E)..
Director
Joined: 16 Aug 2005
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Location: France
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Hmmm...thats interesting no one picked A
I think that one is a good contender.
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I believe its yogurt!

Director
Joined: 16 Aug 2005
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whats the OA and OE here?
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I believe its yogurt!

Manager
Joined: 11 Oct 2005
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E for me - higher quality = better competitive advantage
Intern
Joined: 11 Apr 2005
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A. It states that increasing both, Q and P, can keep CP same supporting the argument.

E is not good enough as it does not mention P, therefore cannot strengthen the conclusion well.
VP
Joined: 14 May 2006
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Kudos [?]: 50 [0], given: 0

gmatmba wrote:
Hmmm...thats interesting no one picked A
I think that one is a good contender.

IMHO, A is incorrect, because the statement may or may not be true....

first of all... how do you judge the quality and increase it by the same amount as price, so ratio stays the same?

second, if you could have the value to quality, then statement may or may not be true, meaning that you would have to increase the quality and price by the same amount so that ratio of value itself doesn't change... as it is stated in A

on the only issue from this seems like... how do you judge the quality, which is answered in E

(B) certain segments... don't need to read further... we care about all consumers
(C) again same as B
(D) completely out of scope

hope this helps and makes sense
Director
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u2lover wrote:
gmatmba wrote:
Hmmm...thats interesting no one picked A
I think that one is a good contender.

IMHO, A is incorrect, because the statement may or may not be true....

first of all... how do you judge the quality and increase it by the same amount as price, so ratio stays the same?

second, if you could have the value to quality, then statement may or may not be true, meaning that you would have to increase the quality and price by the same amount so that ratio of value itself doesn't change... as it is stated in A

on the only issue from this seems like... how do you judge the quality, which is answered in E

(B) certain segments... don't need to read further... we care about all consumers
(C) again same as B
(D) completely out of scope

hope this helps and makes sense

that line in bold above makes it very clear...E remains as the only option!
_________________

I believe its yogurt!

VP
Joined: 14 May 2006
Posts: 1418
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gmatmba wrote:
u2lover wrote:
gmatmba wrote:
Hmmm...thats interesting no one picked A
I think that one is a good contender.

IMHO, A is incorrect, because the statement may or may not be true....

first of all... how do you judge the quality and increase it by the same amount as price, so ratio stays the same?

second, if you increase the quality and price, then statement may or may not be true, meaning that you would have to increase the quality and price by the same amount so that ratio of value itself doesn't change... as it is stated in A

on the only issue from this seems like... how do you judge the quality, which is answered in E

(B) certain segments... don't need to read further... we care about all consumers
(C) again same as B
(D) completely out of scope

hope this helps and makes sense

that line in bold above makes it very clear...E remains as the only option!

sorry read it again and realized that didn't finish the thought
Manager
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sorry for the delayed post, OA is E
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