nitin6305 wrote:
A car wash service has decided to discontinue its repeat customer coupons wherein customers who purchase 5 car washes get a 6th car wash for free. This is a smart move for the car wash service, because it must pay its workers for every car washed. Because the coupons forced the car wash service to give away numerous free car washes, the repeat customer coupons caused the company’s profits to decline.
Which of the following is a reason the argument is most vulnerable to criticism?
(A) The argument ignores the fact that another customer coupon initiative could take the place of this one.
(B) The author neglects to take into account whether the profit earned by the company during the coupons initiative was greater than its costs.
(C) The argument mistakenly believes the operating costs of the car wash service can be adjusted by removing the coupon program.
(D) The author fails to consider the fact that the car wash service may be exaggerating the number of free car washes it was forced to give out.
(E) The argument overlooks potential rewards from the customer coupons initiative while focusing only on its costs.
The correct answer is (E).
The conclusion here is that getting rid of the customer coupons is a “smart move.”
Why? Because the company had to “give away numerous free car washes,” and thus the profits declined.
The author fails to take into account any benefits the initiative may have had on business.
For example, patrons may have returned for their 2nd, 3rd, 4th, and 5th car washes solely based on the initiative.
It may be that without the initiative, the car wash service’s profits would have been much less than with the initiative.
Program: Buy 5, get 6th free.
This made the company give many free washes which reduced the profit.
Conclusion: It is good that the company is cancelling the program.
Which of the following is a reason the argument is most vulnerable to criticism?
Let's think about it first. Why are some initiatives brought it? To increase repeat customers. Since getting 5 washes from the same place will give 1 free, people will try to stick to the same place. The argument is saying that the 6th wash involves cost but no revenue. Hence, it is a good idea to cancel the program. But what if the 5 washes happened because of the program? What if otherwise, people might have come for 2 washes only and visited other places for the other 3 washes. If there is no incentive to repeatedly visit the same place, they may not have. In that case, the revenues and eventually the profits might have been far lower. The point is that we cannot evaluate a program based on just the cost. We need to evaluate those along with the benefits the program might be getting.
(A) The argument ignores the fact that another customer coupon initiative could take the place of this one.
Irrelevant.
(B) The author neglects to take into account whether the profit earned by the company during the coupons initiative was greater than its costs.
Profits during the coupons initiative is the profit the company earned while the program was on. How much of the profits were "normal" and how much were because of the initiative, we are not given. Also, profits cannot be compared to costs. Revenues are compared to costs to find what profits we get.
If we do compare what the option says, (cost = 100, revenue = 150 and profit = 50 OR cost = 100, revenue = 250 and profit = 150 during the initiative) what conclusion can we draw by comparing profits with cost? None.
We need to find the revenue, cost and profit without the program vs with the program.
(C) The argument mistakenly believes the operating costs of the car wash service can be adjusted by removing the coupon program.
Makes no sense.
(D) The author fails to consider the fact that the car wash service may be exaggerating the number of free car washes it was forced to give out.
Irrelevant. Even if it exaggerating, it would still be giving out some free car washes.
(E) The argument overlooks potential rewards from the customer coupons initiative while focusing only on its costs.
Correct. The argument ignores the benefit that the company may have got.
Answer (E)