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25 Apr 2022, 01:30
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D
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
55%
(hard)
Question Stats:
66% (02:09) correct
34%
(02:13)
wrong
based on 177
sessions
History
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Not Attempted Yet
Each year, company X signs a contract with shipping firm Y, stating that shipping firm Y will do all the company's international shipping. Shipping firm Y has a policy called "natural increases," which raises the price for the service that it provides to company X each year by an inflation-commensurate percentage of the previous year's shipping rates. This new price then becomes the baseline for the next year's increases; this policy is intended to let shipping firm Y make profits that keep pace with inflation.
Which of the following statements, if true, is the best basis for a criticism of "natural increases" as an economically sound practice for company X as it exists as part of the international shipping contract?
A. Company X's stockholders believe that Company X regularly spends more than it should on shipping costs.
B. This practice may cause company X to spend an increasingly large proportion of their profits on shipping as company Y's costs rise.
C. The rate of inflation has varied significantly over the past decade.
D. If shipping firm Y overcharged company X in the past, then company X will continue to overpay for shipping services.
E. The pricing method based on "natural increases" may discourage initiatives for company Y to develop and utilize new shipping routes.
Which of the following statements, if true, is the best basis for a criticism of "natural increases" as an economically sound practice for company X as it exists as part of the international shipping contract?
A. Company X's stockholders believe that Company X regularly spends more than it should on shipping costs.
B. This practice may cause company X to spend an increasingly large proportion of their profits on shipping as company Y's costs rise.
C. The rate of inflation has varied significantly over the past decade.
D. If shipping firm Y overcharged company X in the past, then company X will continue to overpay for shipping services.
E. The pricing method based on "natural increases" may discourage initiatives for company Y to develop and utilize new shipping routes.
25 Apr 2022, 23:24
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Meaning Analysis:-
1. There is a contract between company X and Company Y. Company Y is the shipping company.
2.There is policy of Company Y called "Natural Increases" which raises the shipping rates to let shipping firm Y make profits that keep pace with inflation.
Question Stem:-
To find the answer choice to show that the policy of Company Y -"Natural Increases" is not economical for the company X
Answer Choice Analysis:-
Choice A
Incorrect
So what if the stockholders believe that Company X spends more than it should on shipping costs. How does it help us to criticize Natural Increases ?
Choice B
Incorrect
This choice is showing the consequences of "Natural Increases" . Also Large Proportion of profits ?
Choice C
Incorrect
Information related to Inflation has been given. Not relevant. Out of Scope.
Choice D
Correct
If in past Company Y overcharged Company X then as per policy "Natural Increases" -inflation will be adjusted on this overcharged price which is not the true representation . Consequently Company Y will be charging more than what it should be every year.
Choice E
Incorrect
This option is talking about routes but we are concerned with shipping rates.
Thanks.
Feedback Appreciated
1. There is a contract between company X and Company Y. Company Y is the shipping company.
2.There is policy of Company Y called "Natural Increases" which raises the shipping rates to let shipping firm Y make profits that keep pace with inflation.
Question Stem:-
To find the answer choice to show that the policy of Company Y -"Natural Increases" is not economical for the company X
Answer Choice Analysis:-
Choice A
Incorrect
So what if the stockholders believe that Company X spends more than it should on shipping costs. How does it help us to criticize Natural Increases ?
Choice B
Incorrect
This choice is showing the consequences of "Natural Increases" . Also Large Proportion of profits ?
Choice C
Incorrect
Information related to Inflation has been given. Not relevant. Out of Scope.
Choice D
Correct
If in past Company Y overcharged Company X then as per policy "Natural Increases" -inflation will be adjusted on this overcharged price which is not the true representation . Consequently Company Y will be charging more than what it should be every year.
Choice E
Incorrect
This option is talking about routes but we are concerned with shipping rates.
Thanks.
Feedback Appreciated
26 Apr 2022, 00:06
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Ans:D
A. Company X's stockholders believe that Company X regularly spends more than it should on shipping costs. out of scope.
B. This practice may cause company X to spend an increasingly large proportion of their profits on shipping as company Y's costs rise.
C. The rate of inflation has varied significantly over the past decade.
D. If shipping firm Y overcharged company X in the past, then company X will continue to overpay for shipping services.correct
E. The pricing method based on "natural increases" may discourage initiatives for company Y to develop and utilize new shipping routes.
A. Company X's stockholders believe that Company X regularly spends more than it should on shipping costs. out of scope.
B. This practice may cause company X to spend an increasingly large proportion of their profits on shipping as company Y's costs rise.
C. The rate of inflation has varied significantly over the past decade.
D. If shipping firm Y overcharged company X in the past, then company X will continue to overpay for shipping services.correct
E. The pricing method based on "natural increases" may discourage initiatives for company Y to develop and utilize new shipping routes.
