vineetgupta wrote:
ncprasad wrote:
surbab wrote:
The answer is A.
When the length of the call of the non peak hour increases the revenue increases.
This is a common trap in GMAT and unfortunately many of us fall for it so often.
Revenue = Duration * Rate per unit duration.
Further, duration = average length of call * no of calls.
As you can see, neither no of calls nor the length of the call by themself can account for the revenue.
Thus E and A are out. D is out because we are talking about revenues. So expenses do not matter.
Out of C and B, B is the correct answer because it satisfies our equation above and logically explains how the revenues could be higher inspite of the lower rate.
Hi ncprasad,lets go by ur choice.
Peak hour call: P
Non peak hour call : NP
Now,
let cost/min for P be 2$ and cost/min for NP be 1$.
if the no of minutes for NP is 15
and for P is 10 min
So,even if no of min for NP > P
revenue by P ie 20$ is greater than that by P ie15$
That means B is wrong.
I think its A.
Lets do plain math.
Revenue R = Total no of minutes (M) * Rate per min (P)
So we have R=M*P
Now, M = No.of calls (N) * Average Length per call (L)
So we have R=N*L*P
The revenue is a product of 3 variables. We are told that inspite of the value of P being less, R is more. This means that N*L is more.
In some cases, this can be because N was more with constant or lesser L. In other cases, this can because L was more with constant or lesser N.
But in every case, there R is greater inspite of lower P, N*L will be greater.
In some cases, R can even be less with higher N*L because the difference in P is more significant (Your example above). Note that B account for this by saying that the company billed FAR more NP hours.
I still stick to B and would wait for the OA and OE.