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Because postage rates are rising, Home Decorator magazine

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Because postage rates are rising, Home Decorator magazine [#permalink]

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Official Guide for GMAT Verbal Review, 2nd Edition

Practice Question
Question No.: 71
Page: 145
Difficulty:


Because postage rates are rising, Home Decorator magazine plans to maximize its profits by reducing by one half the number of issues it publishes each year. The quality of articles, the number of articles published per year, and the subscription price will not change. Market research shows that neither subscribers nor advertisers will be lost if the magazine's plan is instituted.

Which of the following, if true, provides the strongest evidence that the magazine's profits are likely to decline if the plan is instituted?

(A) With the new postage rates, a typical issue under the proposed plan would cost about one-third more to mail than a typical current issue would.
(B) The majority of the magazine's subscribers are less concerned about a possible reduction in the quantity of the magazine's articles than about a possible loss of the current high quality of its articles.
(C) Many of the magazine's long-time subscribers would continue their subscriptions even if the subscription price were increased.
(D) Most of the advertisers that purchase advertising space in the magazine will continue to spend the same amount on advertising per issue as they have in the past.
(E) Production costs for the magazine are expected to remain stable
[Reveal] Spoiler: OA

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 [#permalink]

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New post 13 Aug 2006, 19:46
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InDeed.

Direct impact on the profits of the mag.

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New post 13 Aug 2006, 21:43
Will go with D.

Number of issue decreases, also advertisers will maintain the current level of advertising which is based on the number of issues published.

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New post 14 Aug 2006, 06:49
(D). Less advertisement revenue means reduced overall profits.

2:32

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Because postage rates are rising, Home Decorator magazine [#permalink]

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New post 14 Mar 2008, 11:57
Because postage rates are rising, Home Decorator magazine plans to maximize its profits by reducing by one half the number of issues it publishes each year. The quality of articles, the number of articles published per year, and the subscription price will not change. Market research shows that neither subscribers nor advertisers will be lost if the magazine’s plan is instituted.

Which of the following, if true, provides the strongest evidence that the magazine’s profits are likely to decline if the plan is instituted?

(A) With the new postage rates, a typical issue under the proposed plan would cost about one-third more to mail than a typical current issue would.
(B) The majority of the magazine’s subscribers are less concerned about a possible reduction in the quantity of the magazine’s articles than about a possible loss of the current high quality of its articles.
(C) Many of the magazine’s long-time subscribers would continue their subscriptions even if the subscription price were increased.
(D) Most of the advertisers that purchase advertising space in the magazine will continue to spend the same amount on advertising per issue as they have in the past.
(E) Production costs for the magazine are expected to remain stable.

Last edited by WaterFlowsUp on 13 Oct 2013, 23:03, edited 1 time in total.
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Re: Postage Rates [#permalink]

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New post 14 Mar 2008, 12:41
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...Home Decorator magazine plans to maximize its profits by reducing by one half the number of issues it publishes each year. .....

(D) Most of the advertisers that purchase advertising space in the magazine will continue to spend the same amount on advertising per issue as they have in the past.

Therefore, annual revenue from advertisement will halve.
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Re: CR Postage Rates [#permalink]

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New post 14 Mar 2008, 22:33
Neochronic wrote:
Because postage rates are rising, Home Decorator magazine plans to maximize its profits by reducing by one half the number of issues it publishes each year. The quality of articles, the number of articles published per year, and the subscription price will not change. Market research shows that neither subscribers nor advertisers will be lost if the magazine’s plan is instituted.Which of the following, if true, provides the strongest evidence that the magazine’s profits are likely to decline if the plan is instituted?

(A) With the new postage rates, a typical issue under the proposed plan would cost about one-third more to mail than a typical current issue would.
(B) The majority of the magazine’s subscribers are less concerned about a possible reduction in the quantity of the magazine’s articles than about a possible loss of the current high quality of its articles.
(C) Many of the magazine’s long-time subscribers would continue their subscriptions even if the subscription price were increased.
(D) Most of the advertisers that purchase advertising space in the magazine will continue to spend the same amount on advertising per issue as they have in the past.
(E) Production costs for the magazine are expected to remain stable.
D. its like a verbal math-type question.
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Re: CR Postage Rates [#permalink]

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New post 14 Mar 2008, 22:53
This is a clear D
(A) With the new postage rates, a typical issue under the proposed plan would cost about one-third more to mail than a typical current issue would.-> irrelevant, eliminate it
(B) The majority of the magazine’s subscribers are less concerned about a possible reduction in the quantity of the magazine’s articles than about a possible loss of the current high quality of its articles.-> quality of articles would remain same so this is not an issue,eliminate it

(C) Many of the magazine’s long-time subscribers would continue their subscriptions even if the subscription price were increased.-> this would actually increase the profits, however increase of price is not the questions, thus irrelevant, eliminate it

(D) Most of the advertisers that purchase advertising space in the magazine will continue to spend the same amount on advertising per issue as they have in the past.->Thus if the company reduces the # of magazines per year to 1/2 then the company clearly loosed 1/2 of the revenue generated on the advertising,

(E) Production costs for the magazine are expected to remain stable.-> irrelevant, eliminate it
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Re: CR-profits [#permalink]

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New post 08 Aug 2008, 11:46
IMO D. If advertisers still spend same amount per issue, then advertising revenue will go down.

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Re: CR-profits [#permalink]

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New post 08 Aug 2008, 19:33
abhijit_sen wrote:
IMO D. If advertisers still spend same amount per issue, then advertising revenue will go down.

Why not A ,since A also affects the profit?
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Re: CR-profits [#permalink]

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spriya wrote:
abhijit_sen wrote:
IMO D. If advertisers still spend same amount per issue, then advertising revenue will go down.

Why not A ,since A also affects the profit?


Because of increase in postal rates company has devised the plan to reduce issues into half. So this part is already covered.

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Re: 13Q/Test14/1000CR [#permalink]

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New post 02 Apr 2010, 13:20
IMO D

D: Ads/issue.. if the number of issues are reduced to half, so is the revenue from ads

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Re: 13Q/Test14/1000CR [#permalink]

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New post 04 Apr 2010, 07:47
Good question.
D should be the answer.
If you don't read well enough you might miss the ad revenue/issue, and then A looks a good choice.

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Re: Matter of selecting whats the main point [#permalink]

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New post 12 Jun 2011, 19:18
Clear D.

If new no of issues = Half the number of old issues and the money spent by advertizers is anything less than twice as before, there will be loss of advertisizing revenue. Hence D

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Re: Matter of selecting whats the main point [#permalink]

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New post 12 Jun 2011, 20:22
since advertising dollars are per issue in D, the right answer is D

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Re: Matter of selecting whats the main point [#permalink]

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New post 13 Jun 2011, 02:28
D shows that advertising revenues will decrease.
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Re: Because postage rates are rising Home Decorator magazine [#permalink]

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New post 22 Nov 2011, 20:53
D is correct one. Advertiser spend money based on the number of issues published. If the number of issues decrease, the profits will definitely decrease.
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Re: Because postage rates are rising Home Decorator magazine [#permalink]

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New post 08 Dec 2011, 07:50
Damn sure this should be D.
Any how nice post sharing by you i really appreciate to you about this post.
Thanks man

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Last edited by bluee on 10 Dec 2011, 07:44, edited 1 time in total.

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Re: Because postage rates are rising Home Decorator magazine [#permalink]

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New post 08 Dec 2011, 23:50
Didn't read the answer choices that carefully. But now that it's mentioned D seems like the correct answer.

If issues go down and ad goes down with it. lower revenue.
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Re: Because postage rates are rising Home Decorator magazine [#permalink]

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New post 25 Mar 2012, 10:15
The answer to this question is D:

The question stem is a little tricky because it is actually a weaken question, but the initial wording may appear to be a strengthen question.

A. If postage rates only increased by 1/3 and the number of issues is reduced by 1/2, this means that the company will still have cost savings. Therefore, this will not lead to a decrease in profits.

B. This is irrelevant. Whether individuals are concerned about quantity or quality of the magazine does not appear to affect the profits of the company.

C. This presents only a hypothetical situation. Therefore, we are not sure how this would actually affect the profits at all.

D. This is the correct answer. The reason is because if the advertising amount is the same per issue and the number of issues has decreased by 1/2, then the company is losing 1/2 the advertising revenue. This could result in decreased profits.

E. If production costs are stable, and the subscription price has not changed, there is no reason to believe that profits will change at all.

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Re: Because postage rates are rising Home Decorator magazine   [#permalink] 25 Mar 2012, 10:15

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