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# Experts:Plz take time out to Rate this !!!!

Author Message
Director
Joined: 03 Aug 2012
Posts: 899

Kudos [?]: 885 [0], given: 322

Concentration: General Management, General Management
GMAT 1: 630 Q47 V29
GMAT 2: 680 Q50 V32
GPA: 3.7
WE: Information Technology (Investment Banking)
Experts:Plz take time out to Rate this !!!! [#permalink]

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01 Jan 2013, 20:59
Group #2: Analysis of Argument
Davis Technologies, a computer-chip maker, could solve its problem of declining sales by dropping its prices. This would make Davis better able to compete in the highly competitive computer chip market. The sales of chips would increase and this would substantially boost Davis' market share.

Describe how well reasoned you find this argument. In the discussion be sure to analyze the line of reasoning and the use of evidence in the argument. For example, you may need to consider what questionable assumptions underlie the thinking and what alternative explanations or counterexamples might weaken the argument's conclusion. You may also address possible changes in the argument that would make it more logically sound, and what, if anything, would help you better evaluate its conclusion.

The argument claims that Davis Technologies,a compute -chip maker,could
solve the problem of declining sales by dropping its prices.Also this would
make Davis better able to compete in the highly competitive compute-chip
market.Thereby,the sales of chips would increase and this would substantially
boost market share of Davis.Stated in this way the argument fails to mention
several key factors,on the basis of which the argument could be evaluated.The
conclusion relies upon assumptions,for which there are no clear
evidences.The argument assumes correlation as causation and thereby the
argument is weak,unconvincing,and has several flaws.

First,the argument readily assumes that the challenge of decreased sales
could only be met by decrease in prices.This statement is a stretch and an
unsubstantiated one.For instance,there could be some other contributing
factors because of which sales could be increased such as the quality of
computer chips,advertising,market analysis of computer-chips can be further
used in amending the designs of chips as per consumer needs.Just by
considering the factor of price of computer chips,author concludes that sales
could be increased.Although price is just one aspect on which sales depends
there are other factors also that are discussed above.By stating this
factor,author fails to give examples based on which author claims the full
dependency of sales on price of computer chips.

Second,argument claims that by dropping its prices, Davis would better be
able to compete in the highly competitive market.Clearly,this statement is an
exaggerated one as the competitors could use same strategy of dropping
prices.Furthermore,there could be increase in quality of computer-chips by
other manufacturers ,thereby decreasing sales of Davis.By stating this , author
generalizes that competition is merely due to price of a product,however there
could be some other key factors influencing the competition.

Finally,the argument concludes that the sales of chips would increase and
would substantially boost Davis' market share.The argument fails in
considering a mere correlation as a causation.In the first place by dropping
prices sales could decrease also if the same strategy is applied by the
manufacturer's who have higher market share,so the argument assumes that
sales could increase by dropping of prices.There could be some other factors
influencing sales that are not discussed.Argument also assumes that the
there would be a boost in Davis' market share that could not be true because
of reasons explained above.The argument could have been made more sound
had author would have given several examples of the causal effect of prices on
sales and market share.

Implicitly,the argument is weak in not considering all contributing factors for
increase in sales.The reasoning given in the argument doesn't identify key
factors based on which a sound argument could have been made.The
argument could be strengthened if author provided ample examples for the
stated causal relation of price and sales.In drawing a conclusion all
contributing factors should be given importance.

Rgds,
Saurabh
_________________

Rgds,
TGC!
_____________________________________________________________________
I Assisted You => KUDOS Please
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Kudos [?]: 885 [0], given: 322

Moderator
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Re: Experts:Plz take time out to Rate this !!!! [#permalink]

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02 Jan 2013, 06:29
1
KUDOS
basically is good. Perhaps use some clear example to explain the situation at end.

it is fairly good. Nice work.
_________________

Kudos [?]: 9047 [1], given: 1153

Manager
Joined: 12 Jan 2013
Posts: 57

Kudos [?]: 73 [0], given: 13

Location: United States (NY)
GMAT 1: 780 Q51 V47
GPA: 3.89
Re: Experts:Plz take time out to Rate this !!!! [#permalink]

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13 Jan 2013, 12:36
"First,the argument readily assumes that the challenge of decreased sales could only be met by decrease in prices." --- not at all! The argument only says that the problem of declining sales could be solved by dropping prices. It never assumes that this is the only possible solution. I do like all the other suggestions given such as marketing, amended design, etc. However, these suggestions have nothing to do with analyzing the original argument.

"By stating this , author generalizes that competition is merely due to price of a product,however there could be some other key factors influencing the competition." --- this is a good point. However, it should be developed in order to become relevant. You can say, for example, that dropping prices always comes at a cost, and that the money can be instead spent in a different way. Conversely, you could say that competitors don't have to drop their prices in response, but can instead invest more money into e.g. producing high-quality chips or marketing their chips as high quality.

"The argument assumes correlation as causation" --- I fail to see where the argument assumes correlation as causation.

"By stating this factor,author fails to give examples based on which author claims the full dependency of sales on price of computer chips." --- I don't understand what this sentence means. I suggest it should be reworded or eliminated.

"Second,argument claims that by dropping its prices, Davis would better be able to compete in the highly competitive market.Clearly,this statement is an
exaggerated one as the competitors could use same strategy of dropping prices" --- Good! Here we have one valid point. (Note, however, that the word "exaggerated" is not suitable in this context. You can say "this statement is a stretch".) Yet there is more to be said. Even though the competitors could use the same strategy in dropping prices, Davis may still become more competitive if its cost of producing computer chips is lower. Conversely, if Davis has high costs of producing computer chips, then dropping prices may actually make it less competitive, since it will soon go out of business.

"The argument could have been made more sound had author would have given several examples of the causal effect of prices on sales and market share." --- excellent point!

I am also not sure about the connection between sales and the market share. Do we measure the market share in sold chips or in dollars? If we are using dollar market share, then with more units sold for a cheaper price Davis may or may not increase its dollar market share.

"Implicitly,the argument is weak in not considering all contributing factors for increase in sales." - you are using the wrong template The increase in sales has not yet happened. We do not even know if it is possible. Thus, it is somewhat illogical to discuss "contributing factors for increase in sales" at this point.

"The argument could be strengthened if author provided ample examples for the stated causal relation of price and sales." --- yes!

-----------------------------------

Overall the reasoning is pretty good. There are some relevant ideas such as that price is not the only way to compete, that competitors can also drop the prices, that it would be nice to have some examples of the causal connection between the price and the sales. The way this reasoning is expressed is confusing. It seems to me that too much emphasis was put on following the template which, apparently, does not quite fit this particular question.

Keep it up!
_________________

Sergey Orshanskiy, Ph.D.
I tutor in NYC: http://www.wyzant.com/Tutors/NY/New-York/7948121/#ref=1RKFOZ

Kudos [?]: 73 [0], given: 13

Re: Experts:Plz take time out to Rate this !!!!   [#permalink] 13 Jan 2013, 12:36
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