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# Fish currently costs about the same at seafood stores

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VP
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27 May 2008, 19:09
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Fish currently costs about the same at seafood stores throughout Eastville and its surrounding suburbs. Seafood stores buy fish from the same wholesalers and at the same prices, and other business expenses have also been about the same. But new tax breaks will substantially lower the cost of doing business within the city. Therefore, in the future, profit margins will be higher at seafood stores within the city than at suburban seafood stores.

For the purposes of evaluating the argument, it would be most useful to know whether

(A) More fish wholesalers are located within the city than in the surrounding suburbs
(B) Any people who currently own seafood stores in the suburbs surrounding Eastville will relocate their businesses nearer to the city
(C) The wholesale price of fish is likely to fall in the future
(D) Fish has always cost about the same at seafood stores throughout Eastville and its surrounding suburbs
(E) Seafood stores within the city will in the future set prices that are lower than those at suburban seafood stores
[Reveal] Spoiler: OA

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27 May 2008, 19:51
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E for me. Profit margins would be dictated by price set minus the wholesale price. So the missing link would have to do with the price set.

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10 Jun 2011, 08:13
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zest4mba wrote:
I don't get how E is the answer

Lets say cost in Eastville was 10\$ and also in suburbs

Due to lower taxes cost became 9 \$ for the city and remained 10\$ for suburbs

Now profit =Selling Price-Cost Price

For city if Selling Price=20 then Profit would be 20-9=11
FOr suburbs Selling Price =20 then Profit would be 20-10=10

Hence Profit for city is higher even if the Selling Price is the same as suburbs

Now if I decrease the Selling Price in the city

Lets say is 19 then profit would be 19-9=10 so the profit will decrease

Am i missing a point here ??

There is nothing wrong with your interpretation. Let's see what question is trying to ask:

Question is asking which option will help us weigh the authenticity of author's conclusion.

Author's conclusion:
Because the city's fish sellers will have to pay lower taxes than sub-urban fish sellers, doing business in the city will be more profitable.

E says: Let me check the validity of the conclusion:

Evaluation:
Whether the city sellers will be forced/obliged to set a price much lower than the sub-urban sellers' price?

Ans: Yes!! Really, the conclusion is baseless then because I know I won't make profit if I set up my business in the city, for I will have to sell my fishes at a much lower price. Even though I will pay lower taxes, what's the use if I make less profit on sale.

Ans: No!! Wow, that's wonderful. I will surely set up my shop in the city because the conclusion was indeed true. Now, I can sell the fishes at the same price as sub-urban sellers do. Plus, I pay less taxes than them. Surely, I will make more profits.

You saw how the evaluation question proposed in the statement E helped us validate author's conclusion.

E is the best answer choice.
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30 Nov 2014, 21:01
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Got my gmat tomorrow , but lets give this a try .
For the purposes of evaluating the argument, it would be most useful to know whether

(A) More fish wholesalers are located within the city than in the surrounding suburbs - So wat ? does it tell if the profit of shop keeper within the city inc. ? NOPE
(B) Any people who currently own seafood stores in the suburbs surrounding Eastville will relocate their businesses nearer to the city - So wat ? does it tell if the profit of shop keeper within the city inc. ? NOPE
(C) The wholesale price of fish is likely to fall in the future - So wat ? does it tell if the profit of shop keeper within the city inc. ? NOPE
(D) Fish has always cost about the same at seafood stores throughout Eastville and its surrounding suburbs - So wat ? does it tell if the profit of shop keeper within the city inc. at the present time ? NOPE, this is a restated premise.
(E) Seafood stores within the city will in the future set prices that are lower than those at suburban seafood stores - PERFECT. if the shop keepers decide to dec the SP then the profit = CP-SP will remain equal.
** I am no expert but a piece of advice, CR is basically logical thinking. So dont think too much about wheather its a OFS or iSWAT. Just focus on the conclusion "Conclusion is the king":P

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28 May 2008, 22:24
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Dont worry I do it all the time

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29 May 2008, 03:58
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goalsnr wrote:
Fish currently costs about the same at seafood stores throughout Eastville and its
surrounding suburbs. Seafood stores buy fish from the same wholesalers and at the
same prices, and other business expenses have also been about the same. But new tax
breaks will substantially lower the cost of doing business within the city. Therefore, in
the future, profit margins will be higher at seafood stores within the city than at
suburban seafood stores.
For the purposes of evaluating the argument, it would be most useful to know
whether.
(A)more fish wholesalers are located within the city than in the surrounding suburbs.
>> out of scope
(B) Any people who currently own seafood stores in the suburbs surrounding Eastville
will relocate their businesses nearer to the city
>> irrelevant
(C) The wholesale price of fish is likely to fall in the future
>> this would effect suburbian stores also.
(D)Fish has always cost about the same at seafood stores throughout Eastville and its
surrounding suburbs.
>> we are already given this information.
(E) Seafood stores within the city will in the future set prices that are lower than those
at suburban seafood stores

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08 Jun 2010, 06:00
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nice!
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27 May 2008, 19:25
D for me!
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27 May 2008, 23:07
Another E, for reasons mentioned above. Good question +1.

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27 May 2008, 23:10
IMO E too.

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27 May 2008, 23:21
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E,
if they will lower the price, they might end up with same profit margin as before.

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27 May 2008, 23:23
D for me

If the retail prices were the same in the city and the suburb, then the new tax break would help city stores. And D tells you definitively that the prices has always been the same for city and suburb.

In E, what if the price in the city is already lower than in the suburb?

Or that the price in the city is already higher than the suburb? In this case, the profit margin is already higher, not just will be higher.

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28 May 2008, 20:15
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gmatnub wrote:
D for me

If the retail prices were the same in the city and the suburb, then the new tax break would help city stores. And D tells you definitively that the prices has always been the same for city and suburb.

In E, what if the price in the city is already lower than in the suburb?

Or that the price in the city is already higher than the suburb? In this case, the profit margin is already higher, not just will be higher.

Conclusion:
Therefore, in the future, profit margins will be higher at seafood stores within the city than at
suburban seafood stores.

>>>We can come to teh conclusion when we know about the prices set at the stores within the city and the surban stores.

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28 May 2008, 20:16
OA is E

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28 May 2008, 21:04
I disagree with the supposed E OA

Here is an example:

let say the current cost of a fish is \$5 including tax

suburbs sell for \$10, current profit \$5

cities sell for \$8, current profit is \$3

After \$1 tax break

it costs suburbs \$5 a fish, but only cost cities \$4 a fish

suburbs sell for \$10, suburbs profit will continue to be \$5

cities sell for \$8, but cities profit will increase to \$4 (still lower profit than suburbs)

BUT if cities sells for \$9.50, cities profit will increase to \$5.50 (higher profit than suburbs, BUT still lower selling price)

So the lower selling price of the city stores can still generate higher profit than suburb stores. The relative prices of city to suburb stores don't necessary correlate to the actual profit comparison.

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28 May 2008, 22:03
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"Fish currently costs about the same at seafood stores throughout Eastville and its
surrounding suburbs. Seafood stores buy fish from the same wholesalers and at the
same prices, and other business expenses have also been about the same"

This means currently the profits are identical.

gmatnub wrote:
I disagree with the supposed E OA

Here is an example:

let say the current cost of a fish is \$5 including tax

suburbs sell for \$10, current profit \$5

cities sell for \$8, current profit is \$3

After \$1 tax break

it costs suburbs \$5 a fish, but only cost cities \$4 a fish

suburbs sell for \$10, suburbs profit will continue to be \$5

cities sell for \$8, but cities profit will increase to \$4 (still lower profit than suburbs)

BUT if cities sells for \$9.50, cities profit will increase to \$5.50 (higher profit than suburbs, BUT still lower selling price)

So the lower selling price of the city stores can still generate higher profit than suburb stores. The relative prices of city to suburb stores don't necessary correlate to the actual profit comparison.

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28 May 2008, 22:22
bsd_lover wrote:

"Fish currently costs about the same at seafood stores throughout Eastville and its
surrounding suburbs. Seafood stores buy fish from the same wholesalers and at the
same prices, and other business expenses have also been about the same"

Thanks, I somehow missed the first sentence. You are right.

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28 May 2008, 22:27
bsd_lover wrote:
Dont worry I do it all the time

Yes that is true, but you are the only person who explained my overlook.

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07 Jun 2010, 10:20
E for me too....
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08 Jun 2010, 05:51
E for me too

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Re: CR-Fish stores   [#permalink] 08 Jun 2010, 05:51

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