A product that represents a clear technological advance over competing

Question

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 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.

Similar Question  :  LINK1  &  LINK2

GMATNinja · Accepted Answer

With any BF question, start with the conclusion, if possible: "the strategy to maximize overall profit from a new product is to charge less than the greatest possible price."

Now let's look at the argument WITHOUT worrying about the BF:

"A product that represents a clear technological advance over competing products can generally command a high price." - If your company comes up with a technologically advanced product, you can charge 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." - You can charge a high price because your product has a technological advantage over competing products. You assume that whatever technological advantage you have will soon be surpassed. Until that happens, you want to charge as much as possible to  immediately  maximize your profits. 
 "But large profits on the new product will give competitors a strong incentive to quickly match the new product's capabilities." - If you charge the maximum possible price to maximize your profits, competing companies will see how much money you are making and say, "Wow, we should do something like that too!" By maximizing your own profits, you are giving competing companies an incentive to quickly "catch up" and make a product with similar capabilities. 
 This implies that if, instead, you DON'T try to maximize profits and DON'T charge the highest possible price, competing companies will have less incentive to copy you. That will allow you to enjoy your technological advantage for a longer period of time and, according to the author, maximize your profits in the long run.

So most companies tend to try to maximize profits immediately by charging the highest possible price. According to the author, they would make more money in the long run by charging  less  than the greatest possible price.

Once you understand the argument, you can look back at the BF portions:

This is the reason why companies tend to charge the highest possible price. In other words, this explains the appeal of a certain strategy (the strategy of charging the highest possible price). But the author does NOT endorse that strategy. The author argues that companies should charge LESS than the greatest possible price.

Looking at choice (D), the first BF portion is "a consideration raised in support of a strategy", but it is not a strategy that the argument  endorses . (D) must be eliminated.

Choice (B) accurately describes the first BF portion as "a consideration raised to explain the appeal of a certain strategy"--not the strategy endorsed by the author, but the strategy that many companies employ (charging the highest possible price).

This explains how the strategy that many companies employ (charging the highest possible price) could backfire. So the first BF explains the  appeal  of the highest-price strategy, and the second BF portion explains why adopting that strategy might be a bad idea. In other words, the second BF portion "is a consideration raised to call into question the wisdom of adopting that strategy." Again, choice (B) is spot on.

As for choice (D), the "consideration" is the first BF portion. The second BF portion does not  support  the first BF portion, so (D) doesn't work.

(B) is the best answer.

GMATNinja · Answer

The first part of (C) isn't terrible... I like the wording of (B) a bit better (the first BF portion is more of a  consideration  than an  assumption , and it is used more to  explain  the strategy than to  justify  the strategy). But I wouldn't eliminate it right away.

But the second part of (C) is definitely wrong. The second BF portion is not mean to CAST DOUBT on the idea that 1) technological advances tend to be quickly surpassed or that 2) companies want to make large profits while they still can. The author doesn't doubt the validity of those two things themselves. Rather, the author doubts the wisdom of the  strategy  that can be explained by those two things.

The author is not trying to make us doubt the claims made in the first BF. Instead, the author argues that, in spite of those things, an alternative strategy would maximize overall profits.

I hope that helps!

rashminet84 · Answer

B imo

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. (it is actually based 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.

mallya12 · Answer

Can You please explain why OptioN C is wrong? Isn't the author using the BF1 to prove a startegy (i.e Because technological). And BF2 weakens the strategy.

kornn · Answer

Dear  AjiteshArun ,

I have 1 question on choice C.:

(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.

By the definition of an assumption, it is an UNSTATED premise. Therefore, can I quickly reject choice C. on the basis that an assumption cannot even appear in the passage, not to mention in bold face portion?

Thank you in advance Sir!
Varot

AjiteshArun · Answer

Hi varotkorn , I wouldn't do that. However, this is not to say that you are looking at this incorrectly. It's just that I'm very wary of "quick" ways to reject options, especially those that are very exam-focused ("tricks"). I'd like the bar for an "absolute" to stay very high. I'm not sure how much sense I'm making this early in the morning, but here's an example of what I mean.

Vivek1707 · Answer

Hi can you please explain why option E is wrong. I feel the first part can be used to justify an adopted strategy i.e commanding high prices, and the second boldface talks about the outcome i.e the companies charging maximum possible price.

CrackverbalGMAT · Answer

Hi Vivek

Let me try to address your query.

Let us consider what answer option (E) states about each bold face part.

About the first bold face : ...is a consideration raised to show that adopting a certain strategy is unlikely to achieve the intended effect.

Now, the first bold face part (that technological advances are quickly surpassed) is a statement that provides a reason for why companies charge the maximum possible price for a technologically superior products. While the rest of the argument does oppose this strategy, the first bold face portion plays no role in this opposition. As per option (E), however, the first bold face portion shows that this strategy is unlikely to be effective, which is not true.

About the second bold face : ...to explain the appeal of that strategy.

"that strategy" here refers to the strategy referred to in the first part of option (E) ie; the strategy that is unlikely to be effective ie; charging maximum possible price for technologically superior products. As you can see, the second bold face portion actually is in opposition to that strategy, and does not explain the appeal (ie; be in favour of) that strategy. Hence this portion is also incorrect.

Hope this helps.

Gmat4321prep · Answer

Hi I have a small doubt here..
How do we know which 'strategy' the question is referring to..
for instance in (b) it says 'first boldface is a consideration raised to explain the appeal of a certain strategy' i rejected it because the arguments final 'strategy' is to charge less than the greatest price. and as (b) says it explains the appeal of it. i rejected it..
how do we know if the question is referring to a subconclusion(in this case the startegy of maximum price) or the main conclusion (in this case strategy of lower than the highest price)

Thank you

GMATNinja · Answer

The best way to approach critical reasoning questions is to evaluate the words on the page without adding in extra assumptions.

When looking at (B), just ask yourself: does the first BF raise a consideration about the appeal of "a certain strategy?"

Yup! It discusses a point in favor of the strategy of charging "the maximum possible price" for certain products.

The second part of (B) now talks about " that  strategy." Because we've now locked in on the "maximum possible price" strategy, we know that the second part of (B) is ALSO talking about the same strategy.

So, does the second BF raise a consideration that "call  into question the wisdom" of adopting the "maximum possible price" strategy?

Yes, it does! It shows why the "maximum possible price" strategy might not maximize overall profit.

Overall, there are no rules dictating that a BF can apply to only a main conclusion. Instead, just take each answer choice at face value and evaluate whether it captures the role of each piece in the passage.

I hope that helps!

emcheeks · Answer

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 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.

The second does not describe the course of action endorsed by the argument. Instead, it is the conclusion that describes that course of action.

(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.

Yep.

(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.

The second did cast doubt but not on the assumption but on the clause after the first BF, or the strategy. The first BF is a premise and is not cast doubt on.

(D) The first is a consideration raised in support of a strategy the argument endorses; the second presents grounds in support of that consideration.

The argument did not endorse but oppose the first.

(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.

The first and second are on opposing sides, so it is impossible to say that the second is explaining the strategy in the first.

VerbalBot · Answer

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A product that represents a clear technological advance over competing

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