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# A product that represents a clear technological advance over

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Manager
Joined: 16 Oct 2006
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01 Nov 2006, 09:20
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A product that represents a clear technological advance over competing products can generally command a high price. Because technological advances tend to be quickly surpassed and companies want to make large profits while they still can, many companies charge the greatest price the market will bear when they have such a product. But large profits on the mew product will give competitors a strong incentive to quickly match the mew productâ€™s capabilities. Consequently, the strategy to maximize overall profit from a new product is to charge less than the greatest possible price.

In the argument above, the two portions in boldface play which of the following roles?

A. The first is an assumption that forms the basis for a course of action that the argument criticizes; the second presents the course of action endorsed by the argument.
B. The first is a consideration raised to explain the appeal of a certain strategy; the second is a consideration raised to call into question the wisdom of adopting that strategy.
C. The first is an assumption that has been used to justify a certain strategy; the second is a consideration that is used to cast doubt on that assumption.
D. The first is a consideration raised in support of a strategy the argument endorses; the second presents grounds in support of that consideration.
E. The first is a consideration raised to show that adopting a certain strategy is unlikely to achieve the intended effect; the second is presented to explain the appeal of that strategy.

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VP
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Schools: Wharton (R2 - submitted); HBS (R2 - submitted); IIMA (admitted for 1 year PGPX)

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01 Nov 2006, 10:22
Going with B

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Director
Joined: 17 Jul 2006
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01 Nov 2006, 12:02
Yes I agree it's B

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Manager
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01 Nov 2006, 13:23
Agree with B

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Manager
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02 Nov 2006, 19:59
Boldfaces always kill me. Can someone please explain why B

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Director
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02 Nov 2006, 20:41
Bold face CRs test the understanding of the structure of the argument and therefore are much difficult to handle.

Now the explanation :

Startegy : making as much money as possible as long as a company has technological edge.

This strategy is appealing because of the following consideration :
technological advances tend to be quickly surpassed.

But there is another counter consideration which calls into the question the widom of the strategy :
large profits on the new product will give competitors a strong incentive to quickly match the new productâ€™s capabilities.

So if a tech advantage doesn't demand extra-ordinary premium few companies will invest in R&D to achive the same tech advantage. Therefore a company which actually invented the new tech can reap the benefits for a longer time without any competition.

_________________

"Education is what remains when one has forgotten everything he learned in school."

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03 Nov 2006, 01:09
B 2

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03 Nov 2006, 16:26
Swagatalakshmi wrote:
Bold face CRs test the understanding of the structure of the argument and therefore are much difficult to handle.

Now the explanation :

Startegy : making as much money as possible as long as a company has technological edge.

This strategy is appealing because of the following consideration :
technological advances tend to be quickly surpassed.

But there is another counter consideration which calls into the question the widom of the strategy :
large profits on the new product will give competitors a strong incentive to quickly match the new productâ€™s capabilities.

So if a tech advantage doesn't demand extra-ordinary premium few companies will invest in R&D to achive the same tech advantage. Therefore a company which actually invented the new tech can reap the benefits for a longer time without any competition.

Thanks for the nice explanation
_________________

The path is long, but self-surrender makes it short;
the way is difficult, but perfect trust makes it easy.

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03 Nov 2006, 16:26
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# A product that represents a clear technological advance over

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