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# Computer sales.JPG

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Manager
Joined: 23 Sep 2009
Posts: 151
Followers: 1

Kudos [?]: 99 [1] , given: 37

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22 Sep 2010, 22:42
1
KUDOS
00:00

Difficulty:

35% (medium)

Question Stats:

86% (02:55) correct 14% (00:00) wrong based on 7 sessions

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Computer sales.JPG [ 120.83 KiB | Viewed 1284 times ]
[Reveal] Spoiler: OA

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Manager
Status: Keep fighting!
Joined: 31 Jul 2010
Posts: 233
WE 1: 2+ years - Programming
WE 2: 3+ years - Product developement,
WE 3: 2+ years - Program management
Followers: 5

Kudos [?]: 449 [0], given: 104

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23 Sep 2010, 05:40
Vignesh,
thank you for the post. Kudos to you for that. Next time around if you could hide the selected and the correct answer choices, it would be awesome. (You can use paint to erase off the radiobuttons for all the options, or just cut the radio button column off). That way you would get a lot of unbiased reasoning for each option.

As for this question:
a) Is not correct as the info says "no. of PCs sold didn't change much".
b) Is out of scope as the question is about computer sales only.
c) This actually is opposite of what is being said. If more ppl were buying stuff from competitors then the profits would actually go down given that number of PCs sold and prices were stable.
d)Yup. the answer. Since the proportion of first time buyers was smaller last year than the previous year, and given that the number of PC's sold were higher, it means that PXC sold more high profit PCs last year than the previous year. That explains.
e) We cannot say this for sure. No info abt production costs is given.

Thanks.
Senior Manager
Status: Upset about the verbal score - SC, CR and RC are going to be my friend
Joined: 30 Jun 2010
Posts: 318
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Kudos [?]: 22 [0], given: 6

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23 Sep 2010, 06:55
Stimulus says

PXC has two models one has cost less and smaller profit margin and another cost more with higher profit margin. Comparing last year's and this year's profits. If number of computers sold and profit margin remain the same then the only the profit can be different if by having variations in the number computers sold between the smaller profit margin model and higher profit margin model

Option 1) which says more number of higher profit margin models is sold this year than last year
Option 2) lesser number of small profit margin model sold this year than last year

We find option 2 in D. the rest is not relevant.
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Senior Manager
Joined: 06 Jun 2009
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Location: USA
WE 1: Engineering
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23 Sep 2010, 07:39
D
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Joined: 17 Feb 2010
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23 Sep 2010, 08:55
Can someone explain why C is incorrect here.

The argument says PXC computers bought by people replacing their computer with powerful models have a higher profit margin. C says that the proprotion of people who replaced their computer is higher last year than the previous year.

D says that the proportion of first time buyers was smaller last year than trhe previous year.

Both looks same to me. What am i missing here?
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Joined: 06 Jun 2009
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23 Sep 2010, 09:04
seekmba wrote:
Can someone explain why C is incorrect here.

The argument says PXC computers bought by people replacing their computer with powerful models have a higher profit margin. C says that the proprotion of people who replaced their computer is higher last year than the previous year.

D says that the proportion of first time buyers was smaller last year than trhe previous year.

Both looks same to me. What am i missing here?

It does not really make a difference if you are replacing a computer made by another company or by PXC. In either case the cost of replacement is same. Plus, even if your original was from PXC, the profit of the original has already been taken into account in that year.

On the contrary, look at choice D

Total computers sold same. First time buyers are smallest. Therefore, in order to keep the total number of computers sold same, replacement computer buyers have to go up and the profit margin on replacement computers is higher. Hence, with the same number of PC sale, the over \$ profit amount goes up.
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24 Sep 2010, 19:15
I missed this one in GMAT Prep as well. Thanks for the explanations.
Re: Computer sales   [#permalink] 24 Sep 2010, 19:15
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