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08 May 2022, 05:23
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AndrewN,
I want you to share your reasoning for my amended option E.
Profit margins and prices remain unchanged. So can we say that production costs remained same too?
Am just asking for my understanding purposes.
I want you to share your reasoning for my amended option E.
Quote:
Can we then conclude the amended statement?
Profit margins and prices remain unchanged. So can we say that production costs remained same too?
Am just asking for my understanding purposes.
08 May 2022, 05:43
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lexis
First we'll look at the data of the statements made in the argument. The paragraph states that first-time computer buyers select models with a lower profit margin, and last year the profit was much higher than the previous year. We should look for any option that mentions consumers buying higher profit margin models to support why last year profits were much higher.
A, and C are out of scope since they mention competitors. We'll eliminate these options. We're looking for something that supports what is in the statements.
B is tempting, but the statements don't mention anything about the other products. Eliminate B.
E is also tempting, but again nothing is mentioned in the statements about lowering production costs to increase profit margin.
D remains and addresses the shift in consumer purchasing habits from "first-time" to higher profit models.
08 May 2022, 06:45
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Yeah, but as long as we are talking about computer buyers who bought a PXC computer to replace their existing computer, would it really matter whether the PXC computer that they bought was to replace a PXC computer or to replace a computer made by a competitor of PXC?
For example, with C, following scenario is possible:
Last year:
Computer buyers who bought a PXC computer to replace their existing computer = 100
Out of these,
Compt. of PXC->PXC = 60
PXC->PXC = 40
Previous year:
computer buyers who bought a PXC computer to replace their existing computer = 100
Out of these,
Compt. of PXC->PXC = 30
PXC->PXC = 70
Notice that in the scenario mentioned above, the profit of PXC computer will not change (from previous year to last year), since the total number of computer buyers who bought a PXC computer to replace their existing computer, remained the same in last year and previous year.
For example, with C, following scenario is possible:
Last year:
Computer buyers who bought a PXC computer to replace their existing computer = 100
Out of these,
Compt. of PXC->PXC = 60
PXC->PXC = 40
Previous year:
computer buyers who bought a PXC computer to replace their existing computer = 100
Out of these,
Compt. of PXC->PXC = 30
PXC->PXC = 70
Notice that in the scenario mentioned above, the profit of PXC computer will not change (from previous year to last year), since the total number of computer buyers who bought a PXC computer to replace their existing computer, remained the same in last year and previous year.
