I will admit that I am not a fan of some of the answers because there is evidence to the contrary for some questions. Please kudos if you agree and chime in.
1. The author mentions each of the following as a cause of excess inventory EXCEPT
(A) production of too much merchandise X
(B) inaccurate forecasting of buyers’ preferences X
(C) unrealistic pricing policies Correct
(D) products’ rapid obsolescence X
(E) availability of a better product X
2. The passage suggests that which of the following is a kind of product that a liquidator who sells to discount stores would be unlikely to wish to acquire?
(A) Furniture X
(B) Computers X
I find the thinking behind this is fallacious. With respect to GMATNinja, the claim is that discounter retailers would avoid taking on computers because the manufacturers are already struggling to liquidate even at large discounts. We have to assume however that these computers would be sold at an even deeper discount by the purchasers. In reality, would you not pick up a computer that costs next to nothing? Take the extreme example, say, a computer that costs a dollar. Without question you best believe that those computers would be sold. (C) Kitchen equipment X
(D) Baby-care products Correct
I bounced back and forth between D and E and couldn't make up my mind. I am not sure these other choices are entirely convincing, but disagree about B.
(E) Children’s clothing X
3. The passage provides information that supports which of the following statements?
(A) Excess inventory results most often from insufficient market analysis by the manufacturer. Correct
It's baffling that A is not the right answer. The entire first paragraph cites such lack of analysis as the reason why excess inventory results. This one bothers me the most. IN FACT, question 1 explicitly indicates that this is one of the reasons why there is excess inventory: "inaccurate forecasting of buyers’ preferences" <---This is code for poor market analysis.(B) Products with slight manufacturing defects may contribute to excess inventory.
(C) Few manufacturers have taken advantage of the changes in the federal tax laws.
(D) Manufacturers who dump their excess inventory are often caught and exposed by the news media.
(E) Most products available in discount stores have come from manufacturers’ excess-inventory stock.
4. The author cites the examples in lines 25-29 [Parents of young children are barely getting by and QPS Company dumps 1,000 cases of disposable diapers because they have slight imperfections.] most probably in order to illustrate
(A) the fiscal irresponsibility of dumping as a policy for dealing with excess inventory
(B) the waste-management problems that dumping new products creates
(C) the advantages to the manufacturer of dumping as a policy
(D) alternatives to dumping explored by different companies
(E) how the news media could portray dumping to the detriment of the manufacturer’s reputation Correct
5. By asserting that manufacturers “are simply unaware” (line 31), the author suggests which of the following?
(A) Manufacturers might donate excess inventory to charity rather than dump it if they knew about the provision in the federal tax code.
(B) The federal government has failed to provide sufficient encouragement to manufacturers to make use of advantageous tax policies.
Correct. This is a walking tight rope between A and B. I think I can see why A is correct and the better choice.
(C) Manufacturers who choose to dump excess inventory are not aware of the possible effects on their reputation of media coverage of such dumping.
(D) The manufacturers of products disposed of by dumping are unaware of the needs of those people who would find the products useful.
(E) The manufacturers who dump their excess inventory are not familiar with the employment of liquidators to dispose of overstock.
6. The information in the passage suggests that which of the following, if true, would make donating excess inventory to charity less attractive to manufacturers than dumping?
(A) The costs of getting the inventory to the charitable destination are greater than the above-cost tax deduction. Correct
(B) The news media give manufacturers’ charitable contributions the same amount of coverage that they give dumping.
(C) No straight-cost tax benefit can be claimed for items that are dumped.
(D) The fair-market value of an item in excess inventory is 1.5 times its cost.
(E) Items end up as excess inventory because of a change in the public’s preferences.
7. Information in the passage suggests that one reason manufacturers might take advantage of the tax provision mentioned in the last paragraph is that
(A) there are many kinds of products that cannot be legally dumped in a landfill
(B) liquidators often refuse to handle products with slight imperfections
(C) the law allows a deduction in excess of the cost of manufacturing the product Correct
(D) media coverage of contributions of excess-inventory products to charity is widespread and favorable
(E) no tax deduction is available for products dumped or sold to a liquidator
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