SriTamDas wrote:
A park’s user fees are employed to maintain the park. When fewer people use the park, it suffers less wear. Thus raising user fees improves park maintenance even if the number of people who stop using the park because of higher fees is great enough to reduce the revenues devoted to maintenance.
Which one of the following conforms most closely to the principle illustrated by the statements above?
(A) To increase its market share, a car company improves the service warranty it provides to those who purchase a new car. Making good on the warranties proves expensive enough that the company’s profits decrease even though its market share increases.
(B) A grocery store’s overall revenues increase even though it no longer remains open 24 hours daily. The manager theorizes that customers find the store more pleasant because it can be cleaned well during the hours it is closed.
(C) Road taxes are raised to encourage more people to use mass transit. But since the fee paid by each commuter does not equal the cost of providing transit for that commuter, a mass transit service will deteriorate even as it takes in more money.
(D) By spending more on zoo maintenance, a city increases the number of zoo patrons. The extra revenue generated by the sale of memorabilia more than makes up for the extra costs of maintenance.
(E) Library fees have been increased to raise money for book repair. Since the library now has fewer patrons, the books are in better repair even though the number of library patrons has decreased to such an extent that the money available for book repair has decreased.
Per unit price * no. of units = Revenue(constant) is the principle. More revenue can be possible by either increasing the no. of units or per unit price or both(not related to this passage). To improve the quality of units, per unit price is increased that leads to decreased revenue.
However, in the passage F is increased which leads to decrease in P that eventually leads to less park wear even if it means PV decreases. The economics(constant) changes but park improves. Most importantly there are only two parameters that change leading to desired result(third parameter).
A. Market shares increase, improved service warranty, less profits
B. Grocery store's revenue increases, lesser time of operations, pleasant store environment
C. Road taxes increase, More people to use mass transit, transit fee ≠ cost of transit, mass transit service deteriorate
D. More spending on zoo maintenance, zoo patrons increase, sale of memorabilia revenue = amount by which maintenance costs increase
E. Increased library fees * fewer patrons = constant which decreases because of fewer patrons. However, desired result(book repair) is achieved
Answer E.