SajjadAhmad
An American manufacturer of racing bikes reported a 1996 second-quarter gross income of $18 million, compared with $11.5 million in the second quarter of 1995. This increase was realized despite a drop in U.S. sales of racing bikes in 1996 compared with 1995, which was partly attributable to the unusually high sales in 1995 as a result of the unprecedented success of an American cyclist in a high-profile international race.
Which of the following, if true, would contribute most to an explanation of the increase in the manufacturer’s gross income in 1996?
A. Foreign manufacturers of racing bikes announced increased sales of their products in Europe in 1996 compared with 1995.
B. In the first quarter of 1996, the American cyclist who won the high-profile international race in 1995 announced that he was switching to the racing bike made by the manufacturer in question.
C. In the first quarter of 1995, the manufacturer in question first began selling its top-of-the-line “Titanium Extreme” model.
D. In the second quarter of 1996, the manufacturer announced that it would begin production of skateboarding equipment in the following quarter.
E. Intense competition in the racing bike market forced a competitor of the manufacturer to go out of business in the fourth quarter of 1996.
McGraw-Hill's GMAT
These questions require you to put everything in chronological order.
First, Company X had $$$ in sales in 95. An American racer in an international race attributed to unusually high sales.
Second, Company X had $$$$$$ sales in 96, despite a broad drop in sales.
This is simply a strengthen question. We have to fill the gap that while sales were down broadly, the answer choice supports why Company X still higher higher sales than the previous year.
A. Foreign manufacturers of racing bikes announced increased sales of their products in Europe in 1996 compared with 1995.
Nowhere in the prompt does it say that what is true for European companies is true for American companies.B. In the first quarter of 1996, the American cyclist who won the high-profile international race in 1995 announced that he was switching to the racing bike made by the manufacturer in question.
The American cyclist who brought unusually high sales in 95, switched to Company X in 96. Decent choice, let's look at the others.C. In the first quarter of 1995, the manufacturer in question first began selling its top-of-the-line “Titanium Extreme” model.
The test maker wants to throw you off by using these buzz words, 'top of the line' and 'extreme.' But really, we cannot conclude anything about this release.D. In the second quarter of 1996, the manufacturer announced that it would begin production of skateboarding equipment in the following quarter.
Same as answer C. We can conclude nothing about this statement and does not help fill the gap or explain why profits were better, despite broadly lower salesE. Intense competition in the racing bike market forced a competitor of the manufacturer to go out of business in the fourth quarter of 1996.
The logic here makes sense, but we can conclude that Company X's higher sales were attributed to this? Causation vs Correlation