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First-time computer buyers buying PXC home computers

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First-time computer buyers buying PXC home computers [#permalink]

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14 Apr 2015, 05:59
First-time computer buyers buying PXC home computers typically buy models that cost much less and have a smaller profit margin per computer than do PXC computers bought by people replacing their computers with more powerful models. Last year PXC's profits from computer sales were substantially higher than the previous year, although about the same number of PXC computers were sold and the prices and profit margins for each computer model that PXC sells remained unchanged.

If the statements above are true, which of the following is most strongly supported by them?

(A) PXC's competitors raised the prices on their computers last year, making PXC computers more attractive to first-time computer buyers. PXC's competitors raised the prices – out of scope
(B) The number of people buying PXC computers who also bought PXC computer-related products, such as printers, was larger last year than the previous year. PXC's profits from computer sales out of scope
(C) Among computer buyers who bought a PXC computer to replace their existing computer, the proportion who were replacing a computer made by a competitor of PXC was greater last year than the previous year. Competitors out of scope
(D) The proportion of PXC computers bought by first-time computer buyers was smaller last year than the previous year. Correct answer. For example, if PXC had sold 100 computers in total during previous year for the price \$100 for smaller computers (60 units) and \$200 for powerful computers (40 units) the profit had been:
60*\$100+40*\$200=\$6000+\$8000=\$14000 for previous year; However, if PXC sold 100 computers in total during last year for the price \$100 for smaller computers (40 units) and \$200 for powerful computers (60 units) the profit was: 40*\$100+60*\$200=\$4000+\$12000=\$16000

(E) PXC's production costs for its computers were lower last year than they had been the previous year. production costs- out of scope

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Re: First-time computer buyers buying PXC home computers [#permalink]

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12 May 2015, 00:01
The proportion of PXC computers bought by first-time computer buyers was smaller last year than the previous year

Verbiage is a bit confusing "last year and previous year" they are actually comparing sales of current and previous year

Corret me if I m wrong.

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Re: First-time computer buyers buying PXC home computers [#permalink]

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21 May 2015, 11:00
Hi kanigmat011,

I think the question talks about the last year's and last to last year's sales. All other things same.

~Binit.

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Re: First-time computer buyers buying PXC [#permalink]

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09 Jan 2016, 22:08
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Re: First-time computer buyers buying PXC [#permalink]

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21 Jan 2016, 09:28
D. no other option is close enough to qualify for a valid conclusion.
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Re: First-time computer buyers buying PXC [#permalink]

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30 Jan 2016, 03:48
souvik101990, could you please include the OA please?

souvik101990 wrote:
First-time computer buyers buying PXC home computers typically buy models that cost much less and have a smaller profit margin per computer than do PXC computers bought by people replacing their computers with more powerful models. Last year PXC's profits from computer sales were substantially higher than the previous year, although about the same number of PXC computers were sold and the prices and profit margins for each computer model that PXC sells remained unchanged. If the statements above are true, which of the following is most strongly supported by them?

A. PXC's competitors raised the prices on their computers last year, making PXC computers more attractive to first time computer buyers.
B. The number of people buying PXC computers who also bought PXC computer-related products, such as printers, was larger last year than the previous year.
C. Among computer buyers who bought a PXC computer to replace their existing computer, the proportion who were replacing a computer made by a competitor of PXC was greater last year than the previous year.
D. The proportion of PXC computers bought by first-time computer buyers was smaller last year than the previous year.
E. PXC's production costs for its computers were lower last year than they had been the previous year.

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Re: First-time computer buyers buying PXC home computers [#permalink]

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27 May 2016, 09:21
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Re: First-time computer buyers buying PXC home computers [#permalink]

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22 Sep 2016, 19:18
First-time computer buyers buying PXC home computers typically buy models that cost much less and have a smaller profit margin per computer than do PXC computers bought by people replacing their computers with more powerful models. Last year PXC's profits from computer sales were substantially higher than the previous year, although about the same number of PXC computers were sold and the prices and profit margins for each computer model that PXC sells remained unchanged.

Type :Inference
- First-time computer buyers buying PXC buy models that cost much less and have a smaller profit margin per computer
- Last year PXC's profits from computer sales were substantially higher , although about the same number of PXC computers were sold and margins were constant

Pre-thinking:
Total profit = (number of models of cheaper model * profit margin per unit of cheaper model)+ (number of models of expensive model * profit margin per unit of expensive model)
If the margins and total number of PCs is constant , the only way profit can increase is if the proportion of expensive models sold increases.

(A) PXC's competitors raised the prices on their computers last year, making PXC computers more attractive to first-time computer buyers. Out of scope
(B) The number of people buying PXC computers who also bought PXC computer-related products, such as printers, was larger last year than the previous year.
May or may not be true
(C) Among computer buyers who bought a PXC computer to replace their existing computer, the proportion who were replacing a computer made by a competitor of PXC was greater last year than the previous year. Out of scope
(D) The proportion of PXC computers bought by first-time computer buyers was smaller last year than the previous year. Correct answer
(E) PXC's production costs for its computers were lower last year than they had been the previous year. May or may not be true

Answer D
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Re: First-time computer buyers buying PXC home computers [#permalink]

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02 Apr 2017, 23:30
I got the answer D but I have a doubt that are we assuming that since the sales of first time computers is less so the sales of replacement computers should have been more?

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First-time computer buyers buying PXC home computers [#permalink]

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11 Apr 2017, 06:02
A. Incorrect. Brings new information to the argument which is not allowed for Must be true types.
B. Incorrect. Brings new information about computer related items that were purchased.
C. Incorrect. Again new and absolutely irrelevant information is brought regarding competitors.
D. Correct. Reasonable inference which goes in line with Must be True type logic.
E. Incorrect. Attacks the premise presented by the argument which tells that prices and profit margin remained the same which implies that there was no costs decrease.

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Re: First-time computer buyers buying PXC home computers [#permalink]

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13 Aug 2017, 06:09
Why cant it be C? Even that gives a reason right?

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Re: First-time computer buyers buying PXC home computers [#permalink]

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15 Aug 2017, 22:18
Merged topics. Please, search before posting questions!
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Re: First-time computer buyers buying PXC home computers [#permalink]

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14 Nov 2017, 22:20
Hello Moderators,

This is a good GMATPrep question. Do you think this question needs to be tagged with 'Resolve the Paradox' as well? Doing this will help fellow members when they do targeted practice using the tagging feature.

Thanks in advance!
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First-time computer buyers buying PXC home computers [#permalink]

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15 Nov 2017, 03:51
AMsac123 wrote:
Why cant it be C? Even that gives a reason right?

The buyers who are buying PXC computers to replace competitor's computers are none but the first time buyers of PXC computers. So, this option is actually increasing the sales from first time buyers whereas the goal is maximize the sales of non-first time buyers. The 'replaced' word has intentionally been used to confuse readers.
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First-time computer buyers buying PXC home computers   [#permalink] 15 Nov 2017, 03:51

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