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Because of an economic downturn in Laconia

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Because of an economic downturn in Laconia  [#permalink]

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New post 16 Aug 2016, 04:36
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Question Stats:

65% (01:29) correct 35% (02:28) wrong based on 519 sessions

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Because of an economic downturn in Laconia, annual sales of computer companies decreased by roughly 8 percent over the last two years. Computer manufacturers that supply Laconian computer companies have noticed that the proportion of credit given to computer companies operating in Laconia and not paid off on time sharply increased over the first year of the crisis but returned to its normal level during the second year.
Which of the following, if true, best helps explain why the proportion of credit not paid off on time returned to its normal level during the second year of the economic downturn?

(A) Sales of computer companies specializing in repairing and selling used computers did not decrease during the first year of economic downturn.
(B) During the second year of the economic downturn, many computer companies tried to increase their sales by launching advertising campaigns.
(C) Most computer companies that experienced financial difficulties before the economic downturn closed during its first year.
(D) During the second year of the economic downturn, many computer manufacturers increased the total amount of credit extended to computer companies in Laconia.
(E) At the beginning of the second year, the government of Laconia increased the tax rates for computer companies.

Source: OptimusPrep
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Re: Because of an economic downturn in Laconia  [#permalink]

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New post 16 Aug 2016, 09:03
Stn wrote:
Because of an economic downturn in Laconia, annual sales of computer companies decreased by roughly 8 percent over the last two years. Computer manufacturers that supply Laconian computer companies have noticed that the proportion of credit given to computer companies operating in Laconia and not paid off on time sharply increased over the first year of the crisis but returned to its normal level during the second year.
Which of the following, if true, best helps explain why the proportion of credit not paid off on time returned to its normal level during the second year of the economic downturn?

(A) Sales of computer companies specializing in repairing and selling used computers did not decrease during the first year of economic downturn.
(B) During the second year of the economic downturn, many computer companies tried to increase their sales by launching advertising campaigns.
(C) Most computer companies that experienced financial difficulties before the economic downturn closed during its first year.
(D) During the second year of the economic downturn, many computer manufacturers increased the total amount of credit extended to computer companies in Laconia.
(E) At the beginning of the second year, the government of Laconia increased the tax rates for computer companies.

Source: OptimusPrep


During Last 2 Years : Sales decreased by 2%

Non repayment of credit on time

1st Year = Sharp Rise
2nd Year = Return to Normal


PRETHINKING Helps.... :beat :sleep :sleeping: :agrue: :stupid :hammer :writer

The reason can be something like : Retailers reduced Credit Purchase / Inventory Level...


Check Carefully only (C) matches...

If Manufacturers plan to close their unit , they will reduce their inventory level ( Close match to our PRE THINKING )

Hence Answer will be (C)

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Thanks and Regards

Abhishek....

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Re: Because of an economic downturn in Laconia  [#permalink]

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New post 04 Dec 2016, 05:44
Abhishek009 wrote:
Stn wrote:
Because of an economic downturn in Laconia, annual sales of computer companies decreased by roughly 8 percent over the last two years. Computer manufacturers that supply Laconian computer companies have noticed that the proportion of credit given to computer companies operating in Laconia and not paid off on time sharply increased over the first year of the crisis but returned to its normal level during the second year.
Which of the following, if true, best helps explain why the proportion of credit not paid off on time returned to its normal level during the second year of the economic downturn?

(A) Sales of computer companies specializing in repairing and selling used computers did not decrease during the first year of economic downturn.
(B) During the second year of the economic downturn, many computer companies tried to increase their sales by launching advertising campaigns.
(C) Most computer companies that experienced financial difficulties before the economic downturn closed during its first year.
(D) During the second year of the economic downturn, many computer manufacturers increased the total amount of credit extended to computer companies in Laconia.
(E) At the beginning of the second year, the government of Laconia increased the tax rates for computer companies.

Source: OptimusPrep




During Last 2 Years : Sales decreased by 2%

Non repayment of credit on time

1st Year = Sharp Rise
2nd Year = Return to Normal


PRETHINKING Helps.... :beat :sleep :sleeping: :agrue: :stupid :hammer :writer

The reason can be something like : Retailers reduced Credit Purchase / Inventory Level...


Check Carefully only (C) matches...

If Manufacturers plan to close their unit , they will reduce their inventory level ( Close match to our PRE THINKING )

Hence Answer will be (C)





HI Abhishek..
Can you tell me WHAT IS THE PROBLEM WITH D?????
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Re: Because of an economic downturn in Laconia  [#permalink]

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New post 05 Dec 2016, 21:19
IMO the problem with D is the following: The fact that more credit is given to the companies does not mean that the amount of credit not paid off drops. The reasons for not repaying the credit may still remain.

In C: The companies that do not repay the credit are the reason why the rate of unpaid credit rises. If those companies vanish the reason for the risen rate vanishes and it decreases to the former level.
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Re: Because of an economic downturn in Laconia  [#permalink]

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New post 06 Dec 2016, 13:32
Abhishek009 wrote:
Stn wrote:
Because of an economic downturn in Laconia, annual sales of computer companies decreased by roughly 8 percent over the last two years. Computer manufacturers that supply Laconian computer companies have noticed that the proportion of credit given to computer companies operating in Laconia and not paid off on time sharply increased over the first year of the crisis but returned to its normal level during the second year.
Which of the following, if true, best helps explain why the proportion of credit not paid off on time returned to its normal level during the second year of the economic downturn?

(A) Sales of computer companies specializing in repairing and selling used computers did not decrease during the first year of economic downturn.
(B) During the second year of the economic downturn, many computer companies tried to increase their sales by launching advertising campaigns.
(C) Most computer companies that experienced financial difficulties before the economic downturn closed during its first year.
(D) During the second year of the economic downturn, many computer manufacturers increased the total amount of credit extended to computer companies in Laconia.
(E) At the beginning of the second year, the government of Laconia increased the tax rates for computer companies.

Source: OptimusPrep


During Last 2 Years : Sales decreased by 2%

Non repayment of credit on time

1st Year = Sharp Rise
2nd Year = Return to Normal


PRETHINKING Helps.... :beat :sleep :sleeping: :agrue: :stupid :hammer :writer

The reason can be something like : Retailers reduced Credit Purchase / Inventory Level...


Check Carefully only (C) matches...

If Manufacturers plan to close their unit , they will reduce their inventory level ( Close match to our PRE THINKING )

Hence Answer will be (C)


The answer option (C) talks about company units, and not about manufacturer's unit. Can you clarify further?
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Re: Because of an economic downturn in Laconia  [#permalink]

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New post 07 Dec 2016, 00:24
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abhishekaqsais wrote:

The answer option (C) talks about company units, and not about manufacturer's unit. Can you clarify further?


C states that the companies that were closed had been unprofitable during the first year. During the 2nd year only those companies that were profitable survived and hence were able to pay the credit taken to the banks.
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Re: Because of an economic downturn in Laconia  [#permalink]

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New post 17 Dec 2016, 06:09
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suramya26 wrote:

HI Abhishek..
Can you tell me WHAT IS THE PROBLEM WITH D?????


The occurrence that needs to be explained is:
why the proportion of credit not paid off on time returned to its normal level during the second year of the economic downturn?
In other words, why there was a decrease in the number of loan repayment default from first year to second year?

Option D states that more loans were given in the second year. Granting more loans does not help explain why there would be a decrease in the number of repayment defaults from first year to second year. Hence D is wrong.
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Re: Because of an economic downturn in Laconia  [#permalink]

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New post 22 Jul 2017, 10:43
C is the correct answer.

most of the computer companies, which were unable to pay the due amount on due date were closed down. only the financially sound companies were left at the end of the second year. hence . proportion came back to normal during the 2nd year.
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Re: Because of an economic downturn in Laconia  [#permalink]

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New post 30 Jan 2018, 10:51
sayantanc2k wrote:
suramya26 wrote:

HI Abhishek..
Can you tell me WHAT IS THE PROBLEM WITH D?????


The occurrence that needs to be explained is:
why the proportion of credit not paid off on time returned to its normal level during the second year of the economic downturn?
In other words, why there was a decrease in the number of loan repayment default from first year to second year?

Option D states that more loans were given in the second year. Granting more loans does not help explain why there would be a decrease in the number of repayment defaults from first year to second year. Hence D is wrong.


sayantanc2k Option B is incorrect because merely using advertising may be a possible reason but not a sure shot reason for a decrease in the number of repayment defaults from first year to second year. Is this reasoning accurate??
Re: Because of an economic downturn in Laconia &nbs [#permalink] 30 Jan 2018, 10:51
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