Financier wrote:
On Monday, Daisy’s Lemonade Stand sold lemonade at 20 cents per cup. The Lemon Shack sold lemonade at 30 cents per cup. At the end of the day, Daisy’s Lemonade Stand and the Lemon Shack reported identical revenues and identical profits.
The statements above best support which of the following assertions?
Argument - Cost of D lemonade = 20 cents/cup. Cost of LS lemonade = 30 cents / cup/
End of the day - same revenue and same profits.
(A) On Monday, Daisy’s Lemonade Stand sold fewer cups of lemonade than did the Lemon Shack.
- This is opposite to actual scenario. If revenue is same, the number of cups sold must have been higher for the lower priced product. Hence, the D lemonade should have sold higher number of cups than LS lemonade
- Wrong
(B) The Lemon Shack sells higher quality lemonade than does Daisy’s Lemonade Stand.
- The argument is discussing about a single day phenomenon. We cannot judge the quality based on this. May be, the lemonade was simply hyped, and the customers realized the quality difference that day and switched to D lemonade later on.
- Wrong
(C) On Monday, Daisy’s Lemonade Stand and the Lemon Shack incurred identical costs to run their businesses.
- Profits are same. Revenue is same. Costs = Revenue - profits. Hence, costs are also same
- Correct
(D) In general, lemonade consumers prefer the lemonade at Daisy’s Lemonade Stand to the Lemonade at the Lemon Shack.
- May be, the D lemonade was open for only 2 hours and was closed for the rest of the day. Hence, people had to drink LS lemonade. But had the D lemonade shack been open people would have preferred D than LS. - We do not know
- Wrong
(E) The Lemon Shack would not increase its revenues by lowering its prices.
- The future projection is out of scope of this argument
- Wrong