So let’s take apart the argument.

Denoma (D.), a consumer-electronic maker, has seen a decrease in sales in the past year. However, D. provides products to retailers, which saw an increase in the sale of D.’s products. How to account for this?

Well, maybe D.’s profits are not solely determined by the number of its products users are able to sell. Maybe, D. creates parts for products that do not have the D. label on them.

For example, let’s say retailers sold D.s new line of home stereos. Units flew off the shelf. However, D. makes a number of parts for many televisions, which do not have the D. label (let’s say for Sony, Panasonic and the rest) If most of D.’s profits are determined by the sale of televisions, then if televisions had a bad year, D.’s profits will decline. This is the case, even with retailers selling plenty of D’s stereos.

The only answer choice that captures this logic is (C).

Let me know that if that helped!
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the argument talks about an consumer electronics maker Denoma,which had a sizeable decline in sales revenue for that particular year. this result comes as a surprise to everyone because according to retailers of electronic goods( the people who sell electronics), although there was a decline in overall sales of electronic goods but the goods manufactured by denoma had increased sales revenue compared to last year. this was largely due to innovation and popularity of newly introduced models of denoma.

so what we have from the argument is basically
-increase in sales revenue from the models manufactured by denoma.
-overall decline in sales of electronic goods.
-overall decline in sales revenue for Denoma.
how can one explain this effect?
if we can assume denoma is also into manufacturing of parts for other electronic goods manufacturers and the revenue from these parts is is much more significant compared to revenue from denoma models, then the above three effects can be explained.

I was caught between C and E.

I chose E, because I considered the following assumptions:

1. Retailers made sizeble purchases of Denoma's products last year.
2. Only one product was sold full price by retailers the previous year.
3. As Retailers wanted to rid themselves of the non selling stock, they offered a deep discount.
4. Retailers sold all of their Denoma's Stock, and therefore made more Revenues of Denoma's products than previous year.

Nevertheless, after reading the stimulus again, I realized that E can not be, as the sales that retailers report grew largely thanks to some innovative and popular models that Denoma Introduced.

C it is... I guess the next time I get caught between 2 options I will look back again to the stimulus to find some scope narrowing wording.

Keep walking!!

We're not looking for a "no-brainer answer." We are selecting the answer choice that does most to explain the apparently surprising result.

This doesn't require us to confirm specific assumptions, as you've been trying to do in your analysis. We only need to identify the choice that does the most to make this surprising result logically believable.

The prompt tells us Denoma had a sizeable decline in sales revenue for its most recent fiscal year.. This is quite a broad statement by definition, so it covers anything that Denoma has sold to the "overall market," as you put it — including the sales of components to the consumer-electronics market. I'm not sure if this is what you meant when comparing the scope of (C) to the scope of the prompt, but in any case, it would be a mistake to assume that this decline in sales revenue only applies to specific product verticals.

Taking one more look at choice (E):


You're right that this is a very concrete story. But is it the story we care about?

Remember, we want the choice that does the most to raise logically valid possibilities for a sizable decline in sales revenue.

Putting (C) and (E) head to head, here's what we've got:

• (C) confirms that there's an entirely different and significant portion of Denoma's sales portfolio (comopnents), which isn't even covered by the prompt. This raises the logical possibility that a decline in component sales accounts for the decline in overall sales. Sure, we don't have proof that this happened, but the scale of sales decline suggested in this choice matches the scale of the paradox we're trying to explain. That makes the paradox more logically believable.
• (E) confirms that some portion of back stock of outdated models were sold at a discount alongside their innovative and popular models. This only tells us that... retailers sold off some old models at a cheaper price in addition to Denoma's great new models. Could this alone can explain why Denoma saw a sizable decline in overall sales revenue? Maaaaybe, but compared to the possible swing in revenue suggested in (C), this is weak sauce. It's a narrow data point covering what seems like a small proportion of sales — which does very little to make Denoma's overall decline in sales revenue more logically believable.

I hope this helps!
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This is a good question which means you need to read it closely to get to the answer but the answer will be unambiguous.

- Denoma, an electronics manufacturer, had a sizeable decline in sales revenue
- Electronics retailers report that although their overall sales were lower, their sales revenue from Denoma models actually grew because of new good models of Denoma.

How do we explain this paradox?
The revenue for Denoma decreased but for retailers it increased from Denoma products.

(A) Because of the need to educate the public about its new models’ capabilities, Denoma’s advertising spending was higher than normal over the period.

We are only talking about revenue, not profit so cost is irrelevant.

(B) For the period at issue, Denoma’s major competitors reported declines in revenue that were, in percentage terms, greater than Denoma’s.

We know that Denoma's competitors most likely reported declines (because retailers reported declines on other manufacturer products). Doesn't help tell us why Denoma reported declines.

(C) A significant proportion of Denoma’s revenue comes from making components for other consumer-electronics manufacturers.

So Denoma's revenue depends on two things (at least) - its own products and making components for others. Its own product sold well, but others' products did not and hence that revenue would have decreased for Denoma. So overall, it saw a decrease in revenue though retailers sold Denoma products well.
Explains the paradox.

(D) Unlike some of its major competitors, Denoma has no lines of business outside consumer electronics to provide revenue when retail sales of consumer electronics are weak.

Irrelevant. Denoma's electronics sales was not weak. We want to explain why the retailers saw increase in revenue from Denoma electronics products but Denoma saw an overall decrease in revenue.

(E) During the period, consumer-electronics retailers sold remaining units of Denoma’s superseded models at prices that were deeply discounted from those models’ original prices.

Retailers, though they sold some units are deep discounts, still saw an increase in revenue from Denoma. Why did Denoma not see an increase in revenue too? This option does not explain it.

Answer (C)
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+1 C

C is right.

Given argument tells that, in spite of increase in sell of Denoma products, the overall revenue decreased. So we should look for answer choice which gives answer of this surprising result.

A. Because of the need to educate the public about its new models’ capabilities, Denoma’s advertising spending was higher than normal over the period. - this could reason the increased sale but not the decreased revenue, hence wrong.

B. For the period at issue, Denoma’s major competitors reported declines in revenue that were, in percentage terms, greater than Denoma’s. - out of scope, wrong

C. A significant proportion of Denoma’s revenue comes from making components for other consumer-electronics manufacturers. - correct. the significant potrion of revenue is not related to sale of Denoma brand goods.

D. Unlike some of its major competitors, Denoma has no lines of business outside consumer electronics to provide revenue when retail sales of consumer electronics are weak. - neutral choice.

E. During the period, consumer-electronics retailers sold remaining units of Denoma’s superseded models at prices that were deeply discounted from those models’ original prices. - [color=#FF0000]- out of scope, wrong[/color

Denoma, a major consumer-electronics maker, had a sizeable decline in sales revenue for its most recent fiscal year. This result appears surprising, because electronics retailers report that although their overall sales were considerably lower than in the previous year, their sales revenue from Denoma models actually grew, largely thanks to some innovative and popular models that Denoma introduced.
Which of the following, if true, does most to explain the apparently surprising result?

A. Because of the need to educate the public about its new models’ capabilities, Denoma’s advertising spending was higher than normal over the period.
advertising spends is irrelevant
B. For the period at issue, Denoma’s major competitors reported declines in revenue that were, in percentage terms, greater than Denoma’s.
retailers have not reported a positive growth for Denoma as comapred to competitors but a growth in Denoma models as compared to past year Denoma sales .
C. A significant proportion of Denoma’s revenue comes from making components for other consumer-electronics manufacturers.
Only plausible option for increment in Denoma's sales .
D. Unlike some of its major competitors, Denoma has no lines of business outside consumer electronics to provide revenue when retail sales of consumer electronics are weak.
does not support statement that Denoma sales increased
E. During the period, consumer-electronics retailers sold remaining units of Denoma’s superseded models at prices that were deeply discounted from those models’ original prices
The retailers report sales of innovative models which have been recently introduced

Ofcourse C

Let's keep it short and simple, the argument states that:
-Overall revenue of company has declined BUT
-The retail sales has done good business
It means that, the overall decremented revenue is not directly related to the retail sales ONLY.Something else is responsible for the overall sales/revenue decline.

Only C states that a substantial revenue is dependent on something else too ( "A significant proportion of Denoma’s revenue comes from making components for other consumer-electronics manufacturers.")

pikolo2510, let's break the argument down.

Denoma, a major consumer-electronics maker, had a sizeable decline in sales revenue for its most recent fiscal year. This result appears surprising, because electronics retailers report that although their overall sales were considerably lower than in the previous year, their sales revenue from Denoma models actually grew, largely thanks to some innovative and popular models that Denoma introduced.

Which of the following, if true, does most to explain the apparently surprising result?

(A) Because of the need to educate the public about its new models’ capabilities, Denoma’s advertising spending was higher than normal over the period. -- What does the last portion mean when it says "higher than normal"? Does this mean by a penny, or by $50 billion? We cannot make this assumption and thus doesn't help our argument.

(C) A significant proportion of Denoma’s revenue comes from making components for other consumer-electronics manufacturers. -- Ah, so if their profits are deriven from something else, this would resolve the paradox.

Does this help?
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+1 C
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Denoma, a major consumer-electronics maker, had a sizeable decline in sales revenue for its most recent fiscal year. This result appears surprising, because electronics retailers report that although their overall sales were considerably lower than in the previous year, their sales revenue from Denoma models actually grew, largely thanks to some innovative and popular models that Denoma introduced. Which of the following, if true, does most to explain the apparently surprising result?

A. Because of the need to educate the public about its new models’ capabilities, Denoma’s advertising spending was higher than normal over the period.
B. For the period at issue, Denoma’s major competitors reported declines in revenue that were, in percentage terms, greater than Denoma’s.
C. A significant proportion of Denoma’s revenue comes from making components for other consumer-electronics manufacturers.
D. Unlike some of its major competitors, Denoma has no lines of business outside consumer electronics to provide revenue when retail sales of consumer electronics are weak.
E. During the period, consumer-electronics retailers sold remaining units of Denoma’s superseded models at prices that were deeply discounted from those models’ original prices.

Totally missed the innovative models part and fell for the E trap choice. Good question

We're asked which choice does the most to explain the apparently surprising result (or as you put it, the conflict). But what is the conflict we're trying to explain?

Well, the result is that Denoma had a sizeable decline in sales revenue during its most recent fiscal year. We are not looking at net profit, which is typically calculated as gross income (including sales revenue, but potentially also including other sources of income) minus the cost of goods and services.

The conflict here is that Denoma had a sizeable decline in sales revenue over the fiscal year — but in the same year, retailers saw an increase in sales revenue from Denoma models.

Choice (A) states that Denoma's advertising spend was higher than normal over the period in question. But that doesn't explain the conflict that we're concerned with:

• Again, this question is not about net profit.
• Knowing that there was higher advertising spend doesn't give us any new information on why Denoma's overall sales revenue declined.

As nightblade354 and others have explained, choice (C) more directly addresses the conflict. If a significant proportion of Denoma's revenue comes from selling components to other manufacturers, then a decline in these sales to manufacturers could result in a decline in overall sales revenue — even at the same time as sales revenue from retailers grows.

This information does more to resolve the conflict than any other answer choice.

I hope this helps!
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Sorry about he late reply. @ChrisLele and @d3thknell Thank you so much for your posts. This really makes sense now. Basically I understand partially what happened. D's overall Sales Revenue Decreased, but the Sales of certain Models increased. I understand how Choice C explains at a basic level. But I dont see how the Answer has any effect on "Sales of Certain Models Increased"

the answer should be able to sufficiently resolve the paradox given in the question.don't u agree option C does that?
it is true that C does not explain why sales of certain models increased,but that is outside the scope of question.
However the last line of the para says " their sales revenue from Denoma models actually grew, largely thanks to some innovative and popular models that Denoma introduced"

E is irrelevant.

The argument is that the sales of electronic retailers increased from INNOVATIVE and POPULAR models so the discussion superseded models is irrelevant to the argument.

But what is wrong with C.
I see that the revenue has declined, but the retail sales have increased. Now we have to fill this gap. It can be filled with the advertising costs. And also the statement clearly says "thanks to new models" . It means that there are new models which did come. However, if manufacturing of other spare parts is concerned, I think it is irrelevant. It might be it is gaining for those spare parts, charging the same amount from the companies as earlier, and the other companies, in spite of already being in loss, may be buying those parts at more prices. How can you be certain on this?

Yeah, I miss the same point. Good question.