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# During a single hour of a pledge drive for a public radio

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During a single hour of a pledge drive for a public radio [#permalink]

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11 Apr 2010, 11:14
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During a single hour of a pledge drive for a public radio station, anyone making a pledge of a stated amount was given a free gift. Pledges were encouraged by the announcement that the retail cost of the gift was equal to the amount of the pledge. Yet, at the end of the hour, the total money raised from pledges accounted for a larger dollar amount than the amount organizers had paid for all the free gifts.

Which of the following, if true, is the best explanation for the fact that funds raised from pledges during the hour accounted for more money than the cost of the free gifts?

A)The cost of postage was included in the total cost assigned to the gifts, making them seem more expensive to potential donors.

B)Organizers underestimated the amount of money that would be raised during the hour and were surprised by the actual total of pledges.

C)Organizers overestimated the number of donors who would respond to the offer and were forced to offer gifts at half price when there were fewer pledges than expected.

D)Free gifts were donated by a sponsor, eliminating the need to subtract the cost of them from the total money raised through pledges.

E)More money was raised during this hour than during the previous three hours, driving down the average out-of-pocket cost of the free gifts.

Last edited by RaviChandra on 11 Apr 2010, 21:51, edited 1 time in total.

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12 Apr 2010, 14:19
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Hey All,

I got a request to weigh in on this one, but to be honest, I'm unsure where the confusion is. People keep saying that the answer goes against a written premise. It doesn't in the slightest:

During a single hour of a pledge drive for a public radio station, anyone making a pledge of a stated amount was given a free gift. Pledges were encouraged by the announcement that the retail cost of the gift was equal to the amount of the pledge. Yet, at the end of the hour, the total money raised from pledges accounted for a larger dollar amount than the amount organizers had paid for all the free gifts.

This is an "Explain the Discrepancy" question, so all we need to do is write it in our own words.

Discrepancy: Station gives away gift that retails for the same amount as associated pledge, yet station makes profit. How?

Explanation: Pretty obvious that the gifts were donated. This is how the majority of charity auctions are run.

A)The cost of postage was included in the total cost assigned to the gifts, making them seem more expensive to potential donors.
PROBLEM: This doesn't address the issue. Even if cost of postage is included, the station's outlay = pledges if they had to buy the gifts.

B)Organizers underestimated the amount of money that would be raised during the hour and were surprised by the actual total of pledges.

C)Organizers overestimated the number of donors who would respond to the offer and were forced to offer gifts at half price when there were fewer pledges than expected.
PROBLEM: This wouldn't help at all. In fact, it looks like it would hurt the discrepancy.

D)Free gifts were donated by a sponsor, eliminating the need to subtract the cost of them from the total money raised through pledges.
ANSWER: People keep saying this goes against the premise. But the premise never says the gifts were bought. It says "total money raised from pledges accounted for a larger dollar amount than the amount organizers had paid for all the free gifts." That does not imply that they bought them at all. It just says they made more money than they paid. Even if the amount they paid was \$0, this would remain a true premise. I see no contradiction. : )

E)More money was raised during this hour than during the previous three hours, driving down the average out-of-pocket cost of the free gifts.
PROBLEM: Same problem as B.

Hope that helps!

-t
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12 Apr 2010, 19:35
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Thanks TommyWallach,
Now its very clear

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During a single hour of a pledge drive for a public radio [#permalink]

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30 Jul 2015, 10:02
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kanigmat011 wrote:
can somebody explain option E
I was unable to understand the wording

E) More money was raised during this hour than during the previous three hours, driving down the average out-of-pocket cost of the free gifts.

We take E as true, which means average cost must drop.

Average cost: Total C/Q
Each item is \$1; every donor pledges only \$1
Each item is matched with a gift of equal value, which essentially means that the pledge drive stops as soon the gifts are gone (and not that there is an infinite quantity of gifts on hand, though the organizers can simply go out and buy more gifts after receiving the pledges, thereby prolonging the pledge drive for as long as possible with an "unlimited" quantity).

Hour 1: \$1 raised
Average cost after 1 hour: \$10/1 = \$10.00 per item
Hour 2: \$5 raised
Average cost after 2 hours: \$10/6 = \$1.67 per item

It doesn't give us any information that we don't already know. That is, we already know that at the end of the day, average cost will be \$1 in the example above , since all pledges are matched with an equivalent retail value. The total quantity could be 6 with an average cost that's \$1.67 with \$6 raised, which would still lead to an average cost of \$1 at the end of the pledge drive. Or, it could be \$100 in initial cost with \$100 raised in pledges with an average cost of \$1 after just the first hour. The total cost is equivalent to the total pledge amount in all cases.

If you think about it, it doesn't make sense to hold a pledge drive by spending the same amount of money on gifts as the amount you will receive from pledges - there are other costs to consider, too, such as shipping, utilities, etc... but that's an aside.

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11 Apr 2010, 20:02
it's D. If oraganizer does not need to pay the cost of the gifts , whatever fund is raised the radio station gets to keep it. so whatever they raise , the station will always be at profit.

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11 Apr 2010, 21:58
[Reveal] Spoiler:
OA is D

During a single hour of a pledge drive for a public radio station, anyone making a pledge of a stated amount was given a free gift. Pledges were encouraged by the announcement that the retail cost of the gift was equal to the amount of the pledge. Yet, at the end of the hour, the total money raised from pledges accounted for a larger dollar amount than the amount organizers had paid for all the free gifts.

if we observe the last sentence it clearly says that the gifts are bought...
even thought option D is very convincing i eliminated D thinking they are bought and can not be gifted.....

Can some one explain this!!!!

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12 Apr 2010, 00:49
RaviChandra wrote:
[Reveal] Spoiler:
OA is D

During a single hour of a pledge drive for a public radio station, anyone making a pledge of a stated amount was given a free gift. Pledges were encouraged by the announcement that the retail cost of the gift was equal to the amount of the pledge. Yet, at the end of the hour, the total money raised from pledges accounted for a larger dollar amount than the amount organizers had paid for all the free gifts.

if we observe the last sentence it clearly says that the gifts are bought...
even thought option D is very convincing i eliminated D thinking they are bought and can not be gifted.....

Can some one explain this!!!!

Let me try..!!

AND NOW..

Organizers have to give these gifts to the pledge makers...!! And the any pledge makers will get the "free gift" equivalent to the pledge made.

SO, Let say there 10 pledge makers and each made a pledge \$ 10.. so total worth of gifts to be given by organizers shud worth \$100.

But let say organizers bought only 8 gifts themselves and 2 were offered by the sponsors..>>>> So, effectively Organizers paid less...|>> funds raised from pledges during the hour accounted for more money than the cost of the "free gifts" PAID by the organizers..

Hope it helps..

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12 Apr 2010, 07:07
We should ask NPR if the scenario is possible
I selected D, but yes it contradicts the premise. Nice attempt to explain Nverma, but I don't think that's enough. "Free gifts were donated by a sponsor" could be mean either way.

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12 Apr 2010, 08:26
Yes verma nice attempt to explain but... Im some how still not convinced with the answer

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12 Apr 2010, 12:45
very unusual option as OA.

I thought "Free gifts were donated by a sponsor" is a trap....

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07 Jul 2010, 02:31
RaviChandra wrote:
Thanks TommyWallach,
Now its very clear

 "total money raised from pledges accounted for a larger dollar amount than the amount organizers had paid for all the free gifts."

think about that they may have bought all the gifts at a discount from wholesaller.

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07 Jul 2010, 04:33
option D completely resolves the discrepancy found here.

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07 Jul 2010, 15:04
I agree, D seems to be the most probable.
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10 Jul 2010, 22:56
yup.... chose A

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11 Jul 2010, 21:44
D
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03 Aug 2010, 13:29
I was so confused among A B and D ...........finally went with B ............I wouldn't have initially agreed but tommy's explanation is good .......Thanks

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04 Aug 2010, 23:06
had paid does not equal bought ---- actually i read this and was reminded of the stupid joke some people say, when they got something for "free ninety nine" - that's how much they paid (free) not how much they bought it for...

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06 Aug 2010, 08:10
Good one . Went for D!

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06 Aug 2010, 08:31
Answer should be D, as it clearly gives details about cost of gifts = 0 and thereby proving that

cost to get gifts < amount of money from pledges.

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11 Sep 2010, 08:41
D coz organizers paid nothing
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Re: Pledge   [#permalink] 11 Sep 2010, 08:41

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