Charlie s Chainsaw Company has reason to believe that one of : GMAT Critical Reasoning (CR)
Check GMAT Club Decision Tracker for the Latest School Decision Releases https://gmatclub.com/AppTrack

 It is currently 28 Feb 2017, 05:34

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

# Charlie s Chainsaw Company has reason to believe that one of

Author Message
TAGS:

### Hide Tags

Manager
Joined: 24 Aug 2012
Posts: 128
Followers: 2

Kudos [?]: 226 [3] , given: 2

Charlie s Chainsaw Company has reason to believe that one of [#permalink]

### Show Tags

10 Oct 2012, 14:28
3
KUDOS
4
This post was
BOOKMARKED
00:00

Difficulty:

45% (medium)

Question Stats:

60% (02:03) correct 40% (01:13) wrong based on 379 sessions

Charlie’s Chainsaw Company has reason to believe that one of its models of saw is defective. A recall of all of the saws would cost more than $5 million, and would probably result in a loss in market share over the next quarter because of bad publicity. Still, a recall is the right economic decision. Which of the following, if true, most supports the conclusion above? A. Defective chainsaws can seriously injure or even kill the people who use them. B. Charlie’s chief rival has recalled two of its products within the past year. C. Product recalls often result in a perception by customers that a given product is permanently defective, even after the defect has been remedied. D. The stocks of publicly traded companies that announce product recalls often drop upon the announcement, but they generally return to the pre-announcement level within 12 months. E. Three years ago a rival company went out of business because of large punitive damages awarded to a plaintiff who had been injured by a defective chainsaw. [Reveal] Spoiler: OA _________________ Push +1 kudos button please, if you like my post If you have any questions you can ask an expert New! Director Affiliations: SAE Joined: 11 Jul 2012 Posts: 510 Location: India Concentration: Strategy, Social Entrepreneurship GMAT 1: 710 Q49 V37 GPA: 3.5 WE: Project Management (Energy and Utilities) Followers: 43 Kudos [?]: 274 [1] , given: 269 Re: Charlie s Chainsaw Company has reason to believe that one of [#permalink] ### Show Tags 11 Oct 2012, 00:45 1 This post received KUDOS +1E Premise - Charlie’s Chainsaw Company has reason to believe that one of its models of saw is defective. A recall of all of the saws would cost more than$5 million, and would probably result in a loss in market share over the next quarter because of bad publicity

Conclusion - a recall is the right economic decision

Any option which supports the conclusion is our answer

D and E are lucrative enough.

D. The stocks of publicly traded companies that announce product recalls often drop upon the announcement, but they generally return to the pre-announcement level within 12 months. (12 months of loss is loss. We do not have anything to compare this 12 month with. Not the best you want to select)
E. Three years ago a rival company went out of business because of large punitive damages awarded to a plaintiff who had been injured by a defective chainsaw (this is our answer, a loss of 5 million $is better than going out of business) _________________ First Attempt 710 - http://gmatclub.com/forum/first-attempt-141273.html Manager Status: exam is close ... dont know if i ll hit that number Joined: 06 Jun 2011 Posts: 206 Location: India Concentration: International Business, Marketing GMAT Date: 10-09-2012 GPA: 3.2 Followers: 2 Kudos [?]: 24 [0], given: 1 Re: Charlie s Chainsaw Company has reason to believe that one of [#permalink] ### Show Tags 11 Oct 2012, 08:37 real life scenario made me go immediately with A without considering other options but its CRUEL GMAT WORLD , where author can be concerned about the profit and hence the answer E _________________ just one more month for exam... Senior Manager Joined: 22 Dec 2011 Posts: 298 Followers: 3 Kudos [?]: 244 [0], given: 32 Re: Charlie s Chainsaw Company has reason to believe that one of [#permalink] ### Show Tags 13 Oct 2012, 21:35 getgyan wrote: +1E Premise - Charlie’s Chainsaw Company has reason to believe that one of its models of saw is defective. A recall of all of the saws would cost more than$5 million, and would probably result in a loss in market share over the next quarter because of bad publicity

Conclusion - a recall is the right economic decision

Any option which supports the conclusion is our answer

D and E are lucrative enough.

D. The stocks of publicly traded companies that announce product recalls often drop upon the announcement, but they generally return to the pre-announcement level within 12 months. (12 months of loss is loss. We do not have anything to compare this 12 month with. Not the best you want to select)
E. Three years ago a rival company went out of business because of large punitive damages awarded to a plaintiff who had been injured by a defective chainsaw (this is our answer, a loss of 5 million \$ is better than going out of business)

good stuff getgyan, very nicely explained was torn between D and E...
GMAT Club Legend
Joined: 01 Oct 2013
Posts: 10640
Followers: 943

Kudos [?]: 207 [0], given: 0

Re: Charlie s Chainsaw Company has reason to believe that one of [#permalink]

### Show Tags

18 Nov 2013, 07:17
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
Current Student
Joined: 13 Aug 2009
Posts: 13
Location: United States
Concentration: Strategy, General Management
GMAT 1: 680 Q45 V38
WE: Project Management (Computer Software)
Followers: 0

Kudos [?]: 9 [0], given: 27

Re: Charlie s Chainsaw Company has reason to believe that one of [#permalink]

### Show Tags

03 Oct 2014, 13:51
IMO E

D is not even a contender here because it is OFS. Reason being, it talks about the share prices of a publicly traded company whereas the argument talks about the market share of the company. Share prices are irrelevant.

Thanks,
S
GMAT Club Legend
Joined: 01 Oct 2013
Posts: 10640
Followers: 943

Kudos [?]: 207 [0], given: 0

Re: Charlie s Chainsaw Company has reason to believe that one of [#permalink]

### Show Tags

30 May 2016, 01:46
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
Intern
Joined: 04 Aug 2013
Posts: 4
Location: United States
Concentration: Finance, Accounting
GPA: 3.38
WE: Investment Banking (Investment Banking)
Followers: 0

Kudos [?]: 5 [0], given: 0

Re: Charlie s Chainsaw Company has reason to believe that one of [#permalink]

### Show Tags

17 Sep 2016, 01:36
Only Option E is strong enough since Option D mentions the cases of publicly traded companies and there is nothing mentioned in the question stem regarding Charlie's Chainsaw Company being a publicly traded company.
Re: Charlie s Chainsaw Company has reason to believe that one of   [#permalink] 17 Sep 2016, 01:36
Similar topics Replies Last post
Similar
Topics:
4 As one who has always believed that truth is our nation s 11 29 Nov 2009, 03:28
Charlie's Chainsaw Company has reason to believe that one of 3 31 Aug 2009, 05:14
1 As one who has always believed that truth is our nations 9 16 Jul 2008, 07:35
As one who has always believed that truth is our nations 6 16 Jul 2008, 07:34
As one who has always believed that truth is our nation s 8 14 May 2007, 07:59
Display posts from previous: Sort by

# Charlie s Chainsaw Company has reason to believe that one of

 Powered by phpBB © phpBB Group and phpBB SEO Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.