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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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New post Updated on: 12 Oct 2018, 02:49
2
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A
B
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D
E

Difficulty:

  55% (hard)

Question Stats:

62% (01:27) correct 38% (01:11) wrong based on 1439 sessions

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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 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

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Originally posted by sondenso on 06 Jun 2008, 01:44.
Last edited by Bunuel on 12 Oct 2018, 02:49, edited 7 times in total.
Renamed the topic and edited the question.
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Re: A product that represents a clear technological advance over competing  [#permalink]

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New post Updated on: 23 Aug 2009, 01:22
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Whenever you see a boldface question you should start finding the premises, subconclusions and conclusion of the argument and asking yourself, do the premises support the conclusion?, does this premise support the author conclusion or a subconclusion that the author rejects?, and so on.

Premise: A product that represents a clear technological advance over competing products can generally command a high price.

Premise: Because technological advances tend to be quickly surpassed and companies want to make large profits while they still can,

subconclusion: many companies charge the greatest price for such a product

Counterpremise: But large profits on the new product will give competitors a strong incentive to quickly match the mew product’s capabilities

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

Before going to the answer choices, you may want to rephrase what could be the role of the bold-face portions.

technological advances tend to be quickly surpassed is used to support the subconclusion that many companies charge the greatest price for such a product. However, the author seems to not agree with this policy and recommends that a company charge less than the greatest possible price.

So a rephrase could be. The first is evidence to support a strategy contrary to the author conclusion.

A) This could sound OK with the rephrase. However, the strategy is not counterproductive because technological advances tend to be quickly surpassed but because large profits on the new product will give competitors a strong incentive to quickly match the new product’s capabilities
So A is out.

B) the subconclusion is contrary to the argument, so we can eliminate B.

C) this is close to the rephrase but for the part talking about the rejection. The first part supports the second part (subconclusion)
This is the correct answer choice.

D) the author does not reject the first bold face part.
D is out

E) here you should have clear that the goal of the author is to maximize the profits, as is stated in the conclusion "the strategy to maximize overall profit".

So the argument does not reject the goal that the boldfaces parts seek to achieve.

Originally posted by mikeCoolBoy on 23 Aug 2009, 00:38.
Last edited by mikeCoolBoy on 23 Aug 2009, 01:22, edited 1 time in total.
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Re: A product that represents a clear technological advance over competing  [#permalink]

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New post 10 Jul 2009, 08:00
2
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.
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Re: A product that represents a clear technological advance over competing  [#permalink]

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New post 20 Feb 2018, 10:41
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Quote:
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.

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:

Quote:
Because technological advances tend to be quickly surpassed and companies want to make large profits while they still can...

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).

Quote:
But large profits on the new product will give competitors a strong incentive to quickly match the new product's capabilities.

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.
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Re: A product that represents a clear technological advance over competing &nbs [#permalink] 20 Feb 2018, 10:41
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