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# Benito's Pizzeria has been losing money for the last three

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Manager
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Benito's Pizzeria has been losing money for the last three [#permalink]

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04 Jun 2010, 03:51
2
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Question Stats:

34% (00:35) correct 66% (01:11) wrong based on 34 sessions

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Benito's Pizzeria has been losing money for the last three months. Benito's mother has advised him to cut prices in order to increase the number of customers to the pizzeria. Benito, however, has decided to increase prices instead.
Which of the following, if true, provides the strongest evidence that Benito's plan has a better chance of making the pizzeria profitable than his mother's plan?
A Benito could expand his customer base by opening a second location and advertising heavily.
B The pizzeria is already producing as many pizzas as its ovens can handle.
C Benito has kept essentially the same items on his menu for ten years.
D Benito's business has suffered ever since a low-priced national chain moved in next door.
E Benito's top-selling item, the large pepperoni pizza, sells for \$8.99.

The Oa is
[Reveal] Spoiler:
b

Pleae explain why OA is not A but ...

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Manager
Joined: 04 Apr 2010
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04 Jun 2010, 12:26
Plan A might increase the customer base and thus the revenue, but they might not be profitable customers. If the costs to expand and acquire the new customers is too high, they may actually be unprofitable customers!

B says that even if he lowers prices and increases demand, Benito won't be able to increase his supply. Hence B.
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Intern
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04 Jun 2010, 16:03
A -This choice has absolutely nothing to do with helping Benitos argument. It is completely irrelevant info and should be discarded immediately -

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VP
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13 Jul 2010, 23:35
interesting q

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Manager
Joined: 09 Jul 2010
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15 Jul 2010, 05:56
1
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gmatcracker2010 wrote:
Benito's Pizzeria has been losing money for the last three months. Benito's mother has advised him to cut prices in order to increase the number of customers to the pizzeria. Benito, however, has decided to increase prices instead.
Which of the following, if true, provides the strongest evidence that Benito's plan has a better chance of making the pizzeria profitable than his mother's plan?
A Benito could expand his customer base by opening a second location and advertising heavily.
B The pizzeria is already producing as many pizzas as its ovens can handle.
C Benito has kept essentially the same items on his menu for ten years.
D Benito's business has suffered ever since a low-priced national chain moved in next door.
E Benito's top-selling item, the large pepperoni pizza, sells for \$8.99.

Pleae explain why OA is not A but ...

very simple
B states that pizzeria is already producing as many pizzas as its ovens can handle.--means that Benito's Pizzeria was producing and is still producing..let say sufficient Pizzas. However, it is losing money due to some odd reason. Therefore an increase in price(rather than decrease) will lead to more revenue. Assuming that the no. of customers if remain same. Optiions A,C,D,E are just absurd and are incompetent to fit as an assumption.

Premise 1: Benito's Pizzeria has been losing money for the last three months.
Premise 2: Benito's mother has advised him to cut prices in order to increase the number of customers to the pizzeria.
Premise 3: The pizzeria is already producing as many pizzas as its ovens can handle.
Conclusion: Benito, however, has decided to increase prices instead.

try 2 fit in every other option..the con will fall apart.
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Manager
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27 Jul 2010, 06:57
great to hear that's called a 700 level question.
Her mom wants to lower the price of product coz she's looking to increase the sales volume, whereas the store is already producing the maximum amount so that won't make any difference.

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Intern
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27 Jul 2010, 07:19
B is for me.

Option C,D,E seem not relevant to the issue. Option A implies that Benito's customers are not many enough to make the store profitable. Customer problem could be caused by lots of reasons, such as location, pizza flavor, price and so on. If option A is true, Benito's plan could not be helpful.

For option B, if it is true, Benito's plan could be helpful.

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VP
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27 Jul 2010, 10:24
good question. I picked C but agree with B.

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Senior Manager
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27 Jul 2010, 10:55
b for me .. I wish all the questions were that simple ..

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Senior Manager
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27 Jul 2010, 11:15
I was b/w B and C.

I picked the wrong
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GGG (Gym / GMAT / Girl) -- Be Serious

Its your duty to post OA afterwards; some one must be waiting for that...

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Manager
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27 Jul 2010, 11:45
B......too easy ..Id oubt weather we ll get this kind of questions at 700-800 level .........

Not A because it is out of scope...because its introducing "another store & advertise" while main concern is between price rice vs customers....

As he is selling all he can as in B......there's nothing he would do by getting more no. of customers ....so better rise price

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Senior Manager
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27 Jul 2010, 22:32
B it is for the reasons cited by many!

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Manager
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28 Jul 2010, 12:51
Will go with B.

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Senior Manager
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16 Aug 2010, 10:43
Its got to be B

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Director
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16 Aug 2010, 22:12
B prevents an alternate explanation for the rise in profits. Hence the answer. The argument is 1000% causal.

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Manager
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18 Aug 2010, 02:22
B FOR ME

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Senior Manager
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07 Sep 2010, 03:11
Good one!!
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08 Sep 2010, 09:30
B for me as well.
Certainly if you can't meet the demand already there's no point to reduce the price as it will even reduce down your revenue.
With maximum capacity then the only way to increase revenue is by increasing the price.

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Manager
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08 Sep 2010, 09:39
gmatcracker2010 wrote:
Benito's Pizzeria has been losing money for the last three months. Benito's mother has advised him to cut prices in order to increase the number of customers to the pizzeria. Benito, however, has decided to increase prices instead.
You have been asked to reason why should raising the price of the pizza work better than reducing the prices
Which of the following, if true, provides the strongest evidence that Benito's plan has a better chance of making the pizzeria profitable than his mother's plan?
A Benito could expand his customer base by opening a second location and advertising heavily.Customers can be attracted by opening a second location but the question focuses on the current store -- OOS
B The pizzeria is already producing as many pizzas as its ovens can handle. POE is one way to get to this. On the other hand if my oven is working to full capacity and I reduce prices I am going at a loss. So this disproves mom's suggestion. It my not strengthen Benito's too much but disproving mom here indirectly makes Benito's a better option
C Benito has kept essentially the same items on his menu for ten years. Ha nothing to do with price argument
D Benito's business has suffered ever since a low-priced national chain moved in next door. So I need to lower my prices. THis supports mom's argument
E Benito's top-selling item, the large pepperoni pizza, sells for \$8.99. Ha nothing to do with this information. A trick to make you compare it with outside pizza prices

I would go with B hands down

The Oa is
[Reveal] Spoiler:
b

Pleae explain why OA is not A but ...

I would go with B hands down

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Manager
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08 Sep 2010, 09:41
This was quite simple. Not sure this would feature higher up the score board on the GMAT..

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Re: pizzaria   [#permalink] 08 Sep 2010, 09:41

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