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Difficulty:
5%
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Question Stats:
90% (01:19) correct
10%
(01:45)
wrong
based on 1985
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Business Analyst: National Motors began selling the Luxora—its new model of sedan—in June. Last week, National released sales figures for the summer months of June, July, and August that showed that by the end of August only 80,000 Luxoras had been sold. Therefore, National will probably not meet its target of selling 500,000 Luxoras in the model’s first twelve months.
Which of the following would be most useful to establish in order to evaluate the analyst’s prediction?
A. Whether new-car sales are typically lower in the summer months than at any other time of the year
B. Whether National Motors currently produces more cars than any other automaker
C. Whether the Luxora is significantly more expensive than other models produced by National Motors
D. Whether National Motors has introduced a new model in June in any previous year
E. Whether National Motors will suffer serious financial losses if it fails to meet its sales goal for the Luxora
Which of the following would be most useful to establish in order to evaluate the analyst’s prediction?
A. Whether new-car sales are typically lower in the summer months than at any other time of the year
B. Whether National Motors currently produces more cars than any other automaker
C. Whether the Luxora is significantly more expensive than other models produced by National Motors
D. Whether National Motors has introduced a new model in June in any previous year
E. Whether National Motors will suffer serious financial losses if it fails to meet its sales goal for the Luxora
23 Jun 2022, 09:58
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rashmig
The analyst's argument is based solely on the data for June-August: if 80,000 Luxoras were sold in that 3-month time period, then we would expect a total of 4x80,000 to sell in the model’s first twelve months (80,000 per quarter) -- that's only 320,000, which is far short of the 500,000 target.
Notice that price doesn't have any bearing on this argument. Whether Luxoras are more expensive or less expensive doesn't change the data. In other words, regardless of where the Luxora's price falls on National's spectrum, the analyst will make the same exact argument.
But (A) points to a possible wrench in that argument. If new-car sales are typically lower in the summer months than at any other time of the year, that means that National will probably sell MORE than 80,000 in the other three quarters. And that means that total sales will likely be higher than 320,000 and will perhaps break the 500,000 level.
Knowing the answer to (A) wouldn't definitively tell us whether the analysts' prediction will come true, but it would certainly help us to evaluate the reasoning behind that prediction.
I hope that helps!
General Discussion
04 Jun 2007, 11:27
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A. because what if those sales are really high for that time of year, what if sales in September usually spike? Seeing how many cars are typically sold during a certain time of year is the best way to forcast future sales.
