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A product that represents a clear technological advance over competing

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A product that represents a clear technological advance over competing  [#permalink]

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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 maximum possible price for such a product. But large profits on the new product will give competitors a strong incentive to quickly match the new product'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 a consideration raised to argue that a certain strategy is counterproductive; the second presents that strategy.

(B) The first is a consideration raised to support the strategy that the argument recommends; the second presents that strategy.

(C) The first is a consideration raised to help explain the popularity of a certain strategy; the second presents that strategy.

(D) The first is an assumption, rejected by the argument, that has been used to justify a course of action; the second presents that course of action.

(E) The first is a consideration that has been used to justify adopting a certain strategy; the second presents the intended outcome of that strategy.


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There are many versions of this question on the forum but I could not find this exact one.

My doubt here
A. I chose this one (A) as I thought the first Bold face statement is the one reason that is used by the companies to charge the maximum price that is highlighted in the second bold face statement.

Can you please let me know where I am going wrong.

Originally posted by pavan2185 on 13 Aug 2013, 13:37.
Last edited by Bunuel on 12 Oct 2018, 03:41, edited 5 times in total.
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Re: A product that represents a clear technological advance over competing  [#permalink]

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New post 13 Mar 2018, 04:30
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The question tempts us to jump straight into the answer choices without first understanding the argument. But let’s focus first on the argument’s conclusion: “The strategy to maximize overall profit from a new product is to charge less than the greatest possible price.”

Now let’s break down the argument -- and this one is pretty long and complicated. Ignore the boldface for now, because if we don’t understand how the argument works, we’ll have a hard time explaining the role of each portion:

  • A new product with advanced technology can generally be sold for a high price.
  • Many companies will charge the highest possible price, because (a) advanced tech tends to be surpassed quickly and (b) companies want to make large profits while they still can.
    • Knowing that whatever technological advantage you have will soon be surpassed, you charge the highest possible price to maximize your immediate profits.
  • When competitors see a company making large profits on a new product, they’ll want to quickly match that product’s tech.
    • By maximizing your own profits, you are giving competing companies an incentive to quickly "catch up" and make a product with similar capabilities.
    • If, instead, you DON'T charge the highest possible price and DON’T maximize your immediate profits, competitors will be less quick to match the product.
    • Without a glaringly high price tag, the technologically advanced product has more time to earn profits for your company.
  • Therefore, according to the author, if a company wants to maximize overall profit from a new product, it should charge less than the highest possible price.

In this argument, the author lays out the reasoning for two strategies: charge the max price or charge less than the max price. According to the author, companies can maximize overall profit by charging LESS than the max price. Now let’s focus on the two statements in bold:

Quote:
Because technological advances tend to be quickly surpassed and companies want to make large profits while they still can, many companies charge the maximum possible price for such a product.
  • Many companies charge the maximum possible price for such a product.” - Many companies pursue the strategy of charging the max price. This is NOT the strategy recommended by the author.
  • technological advances tend to be quickly surpassed” - This is one of the two reasons why companies like to pursue the max-price strategy. The second reason is that “companies want to make large profits while they still can.”

Now that we have a very concrete breakdown of the passage, we can analyze the abstract-sounding answer choices without our eyeballs dissolving. Note that the choices are each broken into two halves, so if we reject either half, then we can reject the entire choice.

Quote:
(A) The first is a consideration raised to argue that a certain strategy is counterproductive; the second presents that strategy.

We know that statement 1 explains why companies like to charge the max. However, choice (A) claims that statement 1 explains why charging the max is counterproductive. That’s not what the “many companies” in this sentence believe, so let’s eliminate choice (A).

Quote:
(B) The first is a consideration raised to support the strategy that the argument recommends; the second presents that strategy.

Choice (B) claims that statement 1 is supporting the author’s preferred strategy (don’t charge the max). But statement 1 actually explains why many companies do the opposite (charge the max).

Also, statement 2 presents the strategy employed by many companies, not the strategy that the author recommends. Eliminate choice (B).

Quote:
(C) The first is a consideration raised to help explain the popularity of a certain strategy; the second presents that strategy.

Choice (C) matches our analysis precisely. Statement 2 lays out the strategy pursued by many companies (charging the max). Statement 1 states one of the two reasons why many companies decide to charge the max. Let’s keep this wonderfully straightforward answer choice and see if we can eliminate the rest.

Quote:
(D) The first is an assumption, rejected by the argument, that has been used to justify a course of action; the second presents that course of action.

We know that the author rejects the “charge-the-max” strategy followed by many companies. But does the author reject the fact that technological advances are quickly surpassed? No. The author believes this fact and recommends an alternate strategy with that knowledge. Eliminate choice (D).

Quote:
(E) The first is a consideration that has been used to justify adopting a certain strategy; the second presents the intended outcome of that strategy.

The first half of choice (E) is fair enough. Considering that tech advantages don’t last long and that companies like profits, we can understand why many companies charge the max. However, does statement 2 (“many companies charge the maximum possible price for such a product”) present an intended outcome? No. The outcome of earning large profits is implied, but statement 2 simply states the strategy itself, not the intended outcome. Thus, the second half is definitely inaccurate, and we can eliminate choice (E).

The correct answer is (C).
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Re: A product that represents a clear technological advance over competing  [#permalink]

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New post 13 Aug 2013, 19:20
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Hi Pavan.

The signal word "because", so the first bold part is the REASON to support the second bold part - a strategy (the maximum possible price).

You understand option A like: The first is a reason used to support that a certain strategy. <== It's correct. But It is NOT what option A says:

Option A says: The first is a reason used to show that a certain strategy is counterproductive. ==> It means "the first used to weaken the second part". But the first part does not oppose the second bold part. In fact, the first supports the second. Hence, A is wrong.

Hope it helps.
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Re: A product that represents a clear technological advance over competing  [#permalink]

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New post 15 Aug 2013, 20:50
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pavan2185 wrote:
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 maximum possible price for such a product. But large profits on the new product will give competitors a strong incentive to quickly match the new product'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 a consideration raised to argue that a certain strategy is counterproductive; the second presents that strategy.
(B) The first is a consideration raised to support the strategy that the argument recommends; the second presents that strategy.
(C) The first is a consideration raised to help explain the popularity of a certain strategy; the second presents that strategy.
(D) The first is an assumption, rejected by the argument, that has been used to justify a course of action; the second presents that course of action.
(E) The first is a consideration that has been used to justify adopting a certain strategy; the second presents the intended outcome of that strategy.

There are many versions of this question on the forum but I could not find this exact one.
My doubt here

A. I chose this one (A) as I thought the first Bold face statement is the one reason that is used by the companies to charge the maximum price that is highlighted in the second bold face statement.

Can you please let me know where I am going wrong.


Hi Pavan,

pqhai has very aptly responded to your question. I just want to add one thing.

To do any question wrong on GMAT, you must commit two errors:
1. Accept an incorrect choice for wrong reason - the way you did in option A.
2. Reject a correct choice for wrong reasons - the way you did in option C.

Now, my question to you is that have you learnt from both the errors in this question? Besides learning why you chose incorrect option A, have you also learnt why you incorrectly rejected option C? If the answer is yes, then good job. Otherwise, think why did you reject option C and how would you ensure that you don't do similar errors in future questions.

Thanks,
Chiranjeev
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Re: A product that represents a clear technological advance over competing  [#permalink]

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New post 01 Mar 2015, 04:20
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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 maximum possible price for such a product. But large profits on the new product will give competitors a strong incentive to quickly match the new product's capabilities. Consequently, the strategy to maximize overall profit from a new product is to charge less than the greatest possible price.

To simplify the question:

In this question, the strategy is to charge the maximum price possible. Why should they charge the maximum price? Because technological advances tend to be quickly surpassed. However, what does this strategy do? It causes the competitors to jump in as fast as possible. So, the author's opinion is: the strategy should be to charge less than the greatest possible price.

Now, with this understanding:

(A) The first is a consideration raised to argue that a certain strategy is counterproductive; the second presents that strategy. - The 1st part is incorrect as the 1st part gives are reason for the strategy and does not state that it is counterproductive; 2nd part is correct
(8) The first is a consideration raised to support the strategy that the argument recommends; the second presents that strategy. - Again, the 1st part is incorrect as the 1st statement supports the strategy and not what the argument recommends. The argument recommends a different strategy
(C) The first is a consideration raised to help explain the popularity of a certain strategy; the second presents that strategy. - This is correct since the 1st part gives a reason for the strategy being used (popularity)
(D) The first is an assumption, rejected by the argument, that has been used to justify a course of action; the second presents that course of action. - The word 'assumption' is incorrect. This is not an assumption. It is clearly stated.
(E) The first is a consideration that has been used to justify adopting a certain strategy; the second presents the intended outcome of that strategy. - The part is incorrect since the 2nd statement is not the outcome but the strategy itself.

Hope this helps :)
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Re: A product that represents a clear technological advance over competing  [#permalink]

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New post 10 Nov 2016, 15:55
Can someone please explain why (C) is the correct answer?

I don't understand where "popularity" is explained in the argument.
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Re: A product that represents a clear technological advance over competing  [#permalink]

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New post 10 Nov 2016, 16:29
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manhasnoname wrote:
Can someone please explain why (C) is the correct answer?

I don't understand where "popularity" is explained in the argument.


Hi! There,

Lemme try explaining you with my though process. Let's understand the argument while we are reading it.

A product that represents a clear technological advance over competing products can generally command a high price (Looks like a general principle that is present in the market). Because technological advances tend to be quickly surpassed (It is commenting on the general principle. We can think that there is always a competition among many players for producing high-tech products) and companies want to make large profits (As mentioned in the first sentence. Advanced technology= Higher price command) while they still can, many companies charge the maximum possible price for such a product (Companies charge maximum money in the initial phases when none of the player has introduced advanced product) (Basically, it is company's strategy to charge more till the time no new competitor comes into the market) . But large profits on the new product will give competitors a strong incentive to quickly match the new product's capabilities (It says that high profits drive more companies to manufacture more high-tech product. Obviously, what is hot in the market raises competition). Consequently, the strategy to maximize overall profit from a new product is to charge less than the greatest possible price (This is the suggested strategy by the author that if a company has same thing to offer on less price than what others are offering, consumers will buy that more, increasing the profits).

Notice that the strategy suggested by the author is different from the strategy currently practiced.

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

(A) The first is a consideration raised to argue that a certain strategy is counterproductive (Nowhere in the argument it is mentioned that any strategy is counterproductive. Only alternate strategy is introduced by the author); the second presents that strategy.
(8) The first is a consideration raised to support the strategy that the argument recommends ; the second presents that strategy ('that' here refers to the recommended strategy, and 2nd BF is certainly not the recommended strategy by the author).
(C) The first is a consideration raised to help explain the popularity of a certain strategy ('Popularity' here refers to 'Reason'. The reason that companies charge more in the initial phase is that they probably have small window to do so, until other competitors come in the picture); the second presents that strategy (Yes, second is that strategy- charge high).
(D) The first is an assumption (Not an assumption. It is 'Actual practice'), rejected by the argument, that has been used to justify a course of action; the second presents that course of action.
(E) The first is a consideration that has been used to justify adopting a certain strategy; the second presents the intended outcome (It is not intended outcome. It is the actual outcome) of that strategy.


Hope it is helpful.

Kudos won't hurt for this explanation :)
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Re: A product that represents a clear technological advance over competing  [#permalink]

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New post 16 Oct 2017, 02:43
can someone explain what is the conclusion here?
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Re: A product that represents a clear technological advance over competing  [#permalink]

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New post 21 Oct 2017, 10:07
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santro789 wrote:
can someone explain what is the conclusion here?


Here goes the conclusion:

Consequently, the strategy to maximize overall profit from a new product is to charge less than the greatest possible price.

Adding my thought process as well.

The author here is of the view that the strategy to maximize the overall profit from a new product is to charge less than the greatest possible price, i.e. the author doesn't agree with the strategy applied by companies which produce technologically advanced products.
Lets go through the answer choices:

(A) The first is a consideration raised to argue that a certain strategy is counterproductive; the second presents that strategy.
The second boldface is indeed a strategy that the author considers is counterproductive, but the first boldface is not a consideration raised to support that the idea conveyed by the second boldface is counterproductive. The following sentence is the consideration that suggests that the idea conveyed by the second boldface is counterproductive
But large profits on the new product will give competitors a strong incentive to quickly match the new product's capabilities


(B) The first is a consideration raised to support the strategy that the argument recommends; the second presents that strategy.

The argument does not recommend the idea in the second boldface, in fact the argument says that the profits can be maximized from new products by charging less than the greatest possible price. The first boldface on the other hand is indeed a consideration raised to support the idea conveyed in the second boldface.
Many companies charge maximum possible price for a product for 2 reasons which are : technological advances tend to be quickly surpassed and companies want to make large profits while they still can.
Thus the first boldface does indeed support the idea conveyed in the second boldface

(C) The first is a consideration raised to help explain the popularity of a certain strategy; the second presents that strategy.
The second boldface is indeed a popular strategy employed by companies (which produce technologically advanced products). The first boldface is indeed a consideration raised to help explain the idea conveyed by the second boldface. The first boldface gives a reason as to why many companies charge the maximum possible price for a technologically advanced product. This is the CORRECT answer

(D) The first is an assumption, rejected by the argument, that has been used to justify a course of action; the second presents that course of action.

The first boldface is not rejected by the argument, it is in fact used to support the second boldface which on the other hand is something the author does not agree to.
(E) The first is a consideration that has been used to justify adopting a certain strategy; the second presents the intended outcome of that strategy.

The first boldface is indeed a consideration used to justify a certain strategy, and what is that strategy ? That strategy is the idea conveyed by the second boldface. So the second boldface is not the intended outcome of the strategy but it is in fact that strategy itself.

Phew !!! That took some time, and I would love kudos if that helped.
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Re: A product that represents a clear technological advance over competing  [#permalink]

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New post 13 Mar 2018, 05:16
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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 maximum possible price for such a product. But large profits on the new product will give competitors a strong incentive to quickly match the new product'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 a consideration raised to argue that a certain strategy is counterproductive; the second presents that strategy.
First doesn't argue against second bold face.

(B) The first is a consideration raised to support the strategy that the argument recommends; the second presents that strategy.
The argument doesn't recommend the strategy supported by first bold face

(C) The first is a consideration raised to help explain the popularity of a certain strategy; the second presents that strategy.
Correct.

(D) The first is an assumption, rejected by the argument, that has been used to justify a course of action; the second presents that course of action.
First bold face is not an assumption. Additionally, second bold face is rejected by the argument -- not the first.

(E) The first is a consideration that has been used to justify adopting a certain strategy; the second presents the intended outcome of that strategy.
Second is not the outcome; it is the strategy.
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Re: A product that represents a clear technological advance over competing  [#permalink]

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Verbal Question of The Day: Day 241: Critical Reasoning


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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 maximum possible price for such a product. But large profits on the new product will give competitors a strong incentive to quickly match the new product'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 a consideration raised to argue that a certain strategy is counterproductive; the second presents that strategy.
(B) The first is a consideration raised to support the strategy that the argument recommends; the second presents that strategy.
(C) The first is a consideration raised to help explain the popularity of a certain strategy; the second presents that strategy.
(D) The first is an assumption, rejected by the argument, that has been used to justify a course of action; the second presents that course of action.
(E) The first is a consideration that has been used to justify adopting a certain strategy; the second presents the intended outcome of that strategy.

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Argument

A strategy followed by many companies: charge the maximum possible price for such a product
Supporting stmnts: technological advances tend to be quickly surpassed and companies want to make large profits while they still can

The strategy recommended by the argument: charge less than the greatest possible price.
Supporting stmnts: but large profits on the new product will give competitors a strong incentive to quickly match the new product's capabilities.


(A) The first is a consideration raised to argue that a certain strategy is counterproductive; the second presents that strategy.
The first bold statement is the supporting statement to the strategy given in the second bold statement. It does not show that the strategy is counterproductive.

(B) The first is a consideration raised to support the strategy that the argument recommends; the second presents that strategy.
The argument does not recommend the strategy is bold. It recommends the other strategy.

(C) The first is a consideration raised to help explain the popularity of a certain strategy; the second presents that strategy.
Perfect.

(D) The first is an assumption, rejected by the argument, that has been used to justify a course of action; the second presents that course of action.
The argument does not reject the the first bold statement.

(E) The first is a consideration that has been used to justify adopting a certain strategy; the second presents the intended outcome of that strategy.
The second presents the strategy, not the intended outcome of the strategy.
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Re: A product that represents a clear technological advance over competing  [#permalink]

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New post 08 Oct 2018, 08:49
(A) The first is a consideration raised to argue that a certain strategy is counterproductive; the second presents that strategy.
not counterproductive.

(B) The first is a consideration raised to support the strategy that the argument recommends; the second presents that strategy.
argument finally disagrees not recommend

(C) The first is a consideration raised to help explain the popularity of a certain strategy; the second presents that strategy.
correct

(D) The first is an assumption, rejected by the argument, that has been used to justify a course of action; the second presents that course of action.
not an assumption

(E) The first is a consideration that has been used to justify adopting a certain strategy; the second presents the intended outcome of that strategy.
2nd is the strategy. not the outcome.
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Re: A product that represents a clear technological advance over competing &nbs [#permalink] 08 Oct 2018, 08:49
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