Is this a support question or conclusion question?
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I think this is an Inference question.

A. Delta will find it difficult to create a substantial market for its latest product even if it lowers its profit margins. - This is the only thing that can be inferred, the prompt is ripe with info explaining why D may have a hard time selling this new product.
B. Delta earns high profits because of its high profit margins per unit even though the sales volume is moderate.- We know nothing about current sales volume and how margins are. B is out.
C. Delta’s pricing policies have so far been healthy for the company’s growth and a slight dip in the price of the new software will not hamper its future prospects.- We know nothing about how current pricing policies have fared for the company. C is out.
D. Delta’s high prices are often a reason behind people buying its products since many believe in the idea “costlier is better”.- Out of focus, customers may buy from D because its products are superior or for some other reason. We don't know. D is out.
E. Delta’s reputation for overpricing its products can be changed if it lowers its profit margins on the new software. - We don't know if its reputation can be changed if this one product is priced more cheaply. E is out.

A is our correct answer.

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VeritasKarishma,

Can you please help me with this question? I am confused between A and B.

- Delta has developed a software much more expensive to make than its other products.
- Experts predict that Delta will need to charge lower profit margin than usual to sell since clients cannot afford such an expensive product.
- Delta is infamous for its tendency to overprice all its products,
- This tendency has restricted its client base in the past.

We need an inference.

A. Delta will find it difficult to create a substantial market for its latest product even if it lowers its profit margins.

Correct. The product is very expensive to make. So to sell, Delta will need to reduce its profit margin. Even if it does, Delta is infamous for overpricing its products so people don't buy its products much. Hence, it is likely that people will still believe that Delta is overcharging for this software too and hence, not buy. So Delta will find it difficult to create a market for this software.

B. Delta earns high profits because of its high profit margins per unit even though the sales volume is moderate.

We do not know that Delta earns high profits. We only know that it is infamous for its tendency to overprice. Does it really overprice, we don't know. Even if it does charge high profit margin, since the sale is moderate, the fixed cost may eat up into profit margins to give low profits. We don't know. Hence, we cannot infer this.

C. Delta’s pricing policies have so far been healthy for the company’s growth and a slight dip in the price of the new software will not hamper its future prospects.

Have Delta's pricing policies been healthy? We don't know. Perhaps it will do better if it increases sales by reducing profit margin and improving its reputation.

D. Delta’s high prices are often a reason behind people buying its products since many believe in the idea “costlier is better”.

Not correct. We know people don't buy Delta's products because they find them overpriced.

E. Delta’s reputation for overpricing its products can be changed if it lowers its profit margins on the new software.

We don't know whether Delta's reputation can be changed.

Answer (A)
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