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Because production costs are rising, a local theater

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Because production costs are rising, a local theater  [#permalink]

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New post Updated on: 13 Jul 2018, 20:38
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Because production costs are rising, a local theater company is planning to maximize its profits by reducing by half the number of plays it stages per season. The quality of performances, their frequency, and the admission price will not change. Furthermore, neither the audience nor the sponsors, an important source of theater funding, is expected to be lost if the plan is instituted.

Which of the following, if true, provides the strongest evidence that the theater's profits are not likely to increase if the plan is instituted?

(A) The majority of theatre goers are concerned about possible loss of production quality.

(B) Most sponsors will continue to donate the same amount of money per production as they have in the past.

(C) Next year's production costs are expected to be on average 20% higher for each production.

(D) Many theater lovers would continue to attend performances regularly even if the admission fee were increased.

(E) Performers' and technical personnel's salaries will not change in the near future.

Originally posted by guerrero25 on 12 Oct 2013, 15:23.
Last edited by hazelnut on 13 Jul 2018, 20:38, edited 4 times in total.
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Re: Because production costs are rising, a local theater  [#permalink]

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New post 12 Oct 2013, 19:54
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guerrero25 wrote:
Because production costs are rising, a local theater company is planning to maximize its profits by reducing by half the number of plays it stages per season. The quality of performances, their frequency, and the admission price will not change. Furthermore, neither the audience nor the sponsors, an important source of theater funding, is expected to be lost if the plan is instituted.

Which of the following, if true, provides the strongest evidence that the theater`s profits are not likely to increase if the plan is instituted?



(A)The majority of theatergoers are concerned about possible loss of production quality.

(B)Most sponsors will continue to donate the same amount of money per production as they have in the past.

(C)Next year`s production costs are expected to be on average 20% higher for each production.

(D)Many theater lovers would continue to attend performances regularly even if the admission fee were increased.

(E)Performers` and technical personnel`s salaries will not change in the near future.

OA to follow


IMO (B)



(A)The majority of theatergoers are concerned about possible loss of production quality.-Out of scope

(B)Most sponsors will continue to donate the same amount of money per production as they have in the past.-Correct-If the sponsors pay the same amount of money..profit will remain the same

(C)Next year`s production costs are expected to be on average 20% higher for each production.- If production cost is increased and admission fee remains same...the profit will decrease..We don't have to prove that profits will decrease..instead it should not increase (means it can remain the same-narrow scope)-Wrong

(D)Many theater lovers would continue to attend performances regularly even if the admission fee were increased.-If this would have been the case-Increase in admission fee would have resulted in increase in profit... so this actually strengthens the argument

(E)Performers` and technical personnel`s salaries will not change in the near future.-out of scope
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Re: Because production costs are rising, a local theater  [#permalink]

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New post 13 Oct 2013, 09:20
B, If most sponsors contribute the same amount of money per production you have a loss of revenue and possibly profits :-)
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Re: Because production costs are rising, a local theater  [#permalink]

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New post 14 Oct 2013, 21:12
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(A)The majority of theatergoers are concerned about possible loss of production quality.--- Incorrect because The argument mentions that there will be no compromise in the quality.

(B)Most sponsors will continue to donate the same amount of money per production as they have in the past.---- CORRECT, because the sponsors pay per production. For example, if Sponsor A is paying $100 per play and the theater company was conducting 6 plays = $600. But now the number is reduced to half. 3 plays and $100 per play = $300. Reduction in money earned which will result in profit decreasing.

(C)Next year`s production costs are expected to be on average 20% higher for each production.--- Out of scope. What happens to the production costs next year is none of our business.

(D)Many theater lovers would continue to attend performances regularly even if the admission fee were increased. Out of scope. Just gives additional information on what the theater lovers would do even if the admission fees were increased.

(E)Performers` and technical personnel`s salaries will not change in the near future. Out of scope, the salaries will not change does not explain why there will a reduction in profits.
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Re: Because production costs are rising, a local theater  [#permalink]

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New post 17 Jun 2014, 01:23
say there are 100 sponsors and 99 of them continue pay the same there is a chance that the one sponsor may not even pay. This all depends on the amout each sponsor pays.
straight B sponsors
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Re: Because production costs are rising, a local theater  [#permalink]

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New post 23 Feb 2017, 23:35
the answer must be B , as the no. of plays has decreased per person then the donation by sponsor will also decline so instead of rising the profit will decline ultimately, option C is tempting but we are not concerned about the future cost rising as it is already stated that production cost is rising .
hence answer is B
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Re: Because production costs are rising, a local theater  [#permalink]

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New post 05 Mar 2017, 21:53
My Reasoning:

(A) The majority of theater goers are concerned about possible loss of production quality. -- Not related to profit

(B) Most sponsors will continue to donate the same amount of money per production as they have in the past. -- Correct. Since it is per production and not bulk amount hence there is no increase in profit even after plays are cut down.

(C)Next year's production costs are expected to be on average 20% higher for each production. -- Does nothing for profit

(D)Many theater lovers would continue to attend performances regularly even if the admission fee were increased. -- That would show that given rest of the parameters remain same, profit will increase. Hence discard.

(E)Performers' and technical personnel's salaries will not change in the near future. -- Need to assume too many things for this option to make an impact

(E)Performers' and technical personnel's salaries will not change in the near future.
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Re: Because production costs are rising, a local theater  [#permalink]

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New post 08 May 2018, 15:52
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(B) Most sponsors will continue to donate the same amount of money per production as they have in the past.
If this is true , they are gng to get less sponsorship. yes this means less profit.
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Re: Because production costs are rising, a local theater  [#permalink]

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New post 15 Sep 2018, 07:49
Key word in the answer choice is "per production"
hence if there are less number of plays than the previous year than we will have less amount of money from sponsors

hence option B is the answer
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Because production costs are rising, a local theater  [#permalink]

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New post 18 Sep 2018, 04:22
I have a question regarding E, though answer choice B sounds perfect.

E)Performers` and technical personnel`s salaries will not change in the near future.- Consider theaters get some profit out of this, but salaries of performers and personnel remain the same. This will drop down the profit again. Hence this sounds like a weakener.
Correct me if i am wrong.
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Re: Because production costs are rising, a local theater  [#permalink]

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New post 19 Sep 2018, 10:02
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pritaminamdar wrote:
I have a question regarding E, though answer choice B sounds perfect.

E)Performers` and technical personnel`s salaries will not change in the near future.- Consider theaters get some profit out of this, but salaries of performers and personnel remain the same. This will drop down the profit again. Hence this sounds like a weakener.
Correct me if i am wrong.


Even if one assumes that 'theaters would profit out of personnel's salaries' one has to also assume that by decreasing the production cost profit gain would be less than the profit lost in salaries in order to decrease overall profit. And that is a very big assumption to make. Remember the question asks us that in what situation the decrease in production cost would most likely not result in increase in profits. So, option E is not at all a weakener.

Hope this helps!
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Re: Because production costs are rising, a local theater  [#permalink]

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New post 09 Nov 2018, 06:07
I do not understand how B is better than C. C states production cost increases by 20%, thus the profits must plummet.
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Re: Because production costs are rising, a local theater  [#permalink]

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New post 09 Nov 2018, 07:28
tarunanandani wrote:
pritaminamdar wrote:
I have a question regarding E, though answer choice B sounds perfect.

E)Performers` and technical personnel`s salaries will not change in the near future.- Consider theaters get some profit out of this, but salaries of performers and personnel remain the same. This will drop down the profit again. Hence this sounds like a weakener.
Correct me if i am wrong.


Even if one assumes that 'theaters would profit out of personnel's salaries' one has to also assume that by decreasing the production cost profit gain would be less than the profit lost in salaries in order to decrease overall profit. And that is a very big assumption to make. Remember the question asks us that in what situation the decrease in production cost would most likely not result in increase in profits. So, option E is not at all a weakener.

Hope this helps!


Thanks got your point.



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Re: Because production costs are rising, a local theater &nbs [#permalink] 09 Nov 2018, 07:28
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