WillGetIt wrote:
Coffee shop owner: A large number of customers will pay at least the fair market value for a cup of coffee, even if there is no formal charge. Some will pay more than this out of appreciation of the trust that is placed in them. And our total number of customers is likely to increase. We could therefore improve our net cash flow by implementing an honor system in which customers pay what they wish for coffee by depositing money in a can.
Manager: We're likely to lose money on this plan. Many customers would cheat the system, paying a very small sum or nothing at all.
Which of the following, if true, would best support the owner’s plan, in light of the manager’s concern?
(A) The new system if implemented, would increase the number of customers.
(B) By roasting its own coffee, the shop has managed to reduce the difficulties and cost of maintaining an inventory of freshly roasted coffee.
(C) Many customers stay in the cafe for long stretches of time.
(D) The shop makes a substantial profit from pastries and other food bought by the coffee drinkers.
(E) No other coffee shop in the area has such a system.
Honor System
Step 1: Identify the Question
The phrasing best support the owner’s plan indicates that this is a Strengthen the Argument question.
Step 2: Deconstruct the Argument
Owner:
Many ppl will pay market value for coffee
Some ppl will pay > market value
# of customers will ↑
© honor system → more $
Manager:
Many ppl will cheat→ © less $
Step 3: Pause and State the Goal
The question asks you to find an answer that supports the owner’s plan, in light of the manager’s concern. The owner’s conclusion is that implementing an honor system will increase cash flow. The manager’s objection is that many customers will cheat the system, and that this will reduce cash flow. The right answer will show that the honor system actually may increase cash flow, or at least that it may not decrease cash flow. Specifically, the answer should address the manager’s concern about cheating: possibly by explaining why cheating will not be a problem or by providing a reason the plan could be profitable even if cheating does occur.
Step 4: Work from Wrong to Right
(A) This is already stated as a premise of the owner’s argument. Stating it again does not provide additional support for the argument. Also, it does not take into account the manager’s concern about cheating. It’s possible that a large number of the new customers would cost the coffee shop money by cheating, rather than bringing in more money.
(B) The owner’s conclusion deals specifically with the results of implementing an honor system, not with whether the coffee shop is successful in general. There’s no way to know whether the coffee shop’s practice of roasting its own coffee will change after the honor system is implemented. Also, this answer does not address the manager’s concern about cheating in any way.
(C) Customers who stay in the cafe for a long time might bring in more income or less income, depending on their behavior. They might purchase more coffee, and if they do so at a fair price, the owner’s plan will work. They might also cheat the honor system, then stay in the cafe for a long time, tying up space that could be used by paying customers.
(D) CORRECT. The honor system only applies to coffee, not to pastries and other food. If the shop currently makes a profit from food purchased by the coffee drinkers, then attracting more coffee drinkers will probably increase the profit from food purchases. Even if many of those coffee drinkers don’t pay a fair amount for their coffee, it’s possible that the increased profit on food will compensate for the decreased profit on coffee.
(E) If no other coffee shop in the area has such a system, the plan could either be successful or unsuccessful. Perhaps if the honor system is seen as a novelty, more new customers will be attracted to the coffee shop. On the other hand, if customers are not familiar with the honor system, they may be more likely to cheat.
This is the conclusion by the owner:
if they change the payment method for only the coffee drinks, not other products
from the regular one- paying bills through cashier-
to - putting the charge customers wish in small cans- So, they will improve the net cash flow.
Below is the reply from the manager:
This plan will fail, as some people will pay for example 10 cents instead of 1USD (original price), considering that no one will catch them!!
So, we need an answer choice that even if some customers cheated, the profit margin will not effect!
(A) The new system if implemented, would increase the number of customers. --
No tie to the profit, if it will increase or decrease!
(B) By roasting its own coffee, the shop has managed to reduce the difficulties and cost of maintaining an inventory of freshly roasted coffee. --
No tie to the profit, if it will increase or decrease! (C) Many customers stay in the cafe for long stretches of time. --
No tie to the profit, if it will increase or decrease! (D) The shop makes a substantial profit from pastries and other food bought by the coffee drinkers.
Here, the coffee shop made their profit from other products other than coffer, thus, even if some customers cheat and not pay, this will not effect the profit.
(E) No other coffee shop in the area has such a system.
No tie to the profit, if it will increase or decrease!
close
Updated on: 18 Jul 2021, 13:02
20%
(01:58)
wrong 
