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achloes
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For Company A, did profit increase by more than 10%? Updated on: 06 Jul 2023, 23:50
Originally posted by achloes on 20 Jun 2023, 03:54.
Last edited by Bunuel on 06 Jul 2023, 23:50, edited 3 times in total.
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C
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65% (hard)

Question Stats:

54% (01:20) correct 46% (01:29) wrong based on 315 sessions

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For Company A, did profit increase by more than 10%?

1) This year's revenues increased by 10% compared to last year's revenues.
2) This year's costs increased by 5% compared to last year's costs.
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C
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For Company A, did profit increase by more than 10%? 01 Jul 2023, 00:16
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Both statements are clearly insufficient alone but together they are (take revenue=x and costs=y). The correct option is C.
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For Company A, did profit increase by more than 10%? Updated on: 02 Jan 2024, 09:03
Originally posted by achloes on 01 Jul 2023, 01:03.
Last edited by Bunuel on 02 Jan 2024, 09:03, edited 3 times in total.
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Video solution by ReedArnoldMPREP:

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For Company A, did profit increase by more than 10%? 01 Jul 2023, 16:33
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achloes
For Company A, did profit increase by more than 10%?

1) This year's revenues increased by 10% compared to last year's revenues.
2) This year's costs increased by 5% compared to last year's costs.

Answer here is actually E, I believe, as explained in the video. We would need to know the relationship between revenue and cost.

If they are close (let's say both $100), then the answer would be no, as the increases from both statements would result in an increase in profit of only 5%.
If they are far (let's say rev $100,000, and cost $10), then the answer would be yes, increase in profit is slightly greater than 10%.

Therefore, E.
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For Company A, did profit increase by more than 10%? 06 Jul 2023, 20:30
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The correct answer, according to the video solution, is C.

If both revenue AND costs increase by 10%, then we know that profit will also increase by 10% (for further info, check this question and video solution: https://gmatclub.com/forum/for-company- ... 14095.html)

But in this question, we are given that revenue increased by 10% while costs increased by only 5%. Therefore, because the relative difference (i.e. profit) between revenue and costs is more than the difference in the previous scenario, profit will have increased by more than 10%. Put in simple terms, the company was able to increase its revenue significantly while increasing its costs only a little, therefore its profit increased more than before.
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For Company A, did profit increase by more than 10%? 02 Jan 2024, 09:02
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achloes
For Company A, did profit increase by more than 10%?

1) This year's revenues increased by 10% compared to last year's revenues.
2) This year's costs increased by 5% compared to last year's costs.

Answer here is actually E, I believe, as explained in the video. We would need to know the relationship between revenue and cost.

If they are close (let's say both $100), then the answer would be no, as the increases from both statements would result in an increase in profit of only 5%.
If they are far (let's say rev $100,000, and cost $10), then the answer would be yes, increase in profit is slightly greater than 10%.

Therefore, E.

I am with you. anyone can explain our falacy?
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For Company A, did profit increase by more than 10%? 02 Jan 2024, 09:13
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lecremeglace
achloes
For Company A, did profit increase by more than 10%?

1) This year's revenues increased by 10% compared to last year's revenues.
2) This year's costs increased by 5% compared to last year's costs.

Answer here is actually E, I believe, as explained in the video. We would need to know the relationship between revenue and cost.

If they are close (let's say both $100), then the answer would be no, as the increases from both statements would result in an increase in profit of only 5%.
If they are far (let's say rev $100,000, and cost $10), then the answer would be yes, increase in profit is slightly greater than 10%.

Therefore, E.

I am with you. anyone can explain our falacy?

The red part is not correct. If both revenue and the cost are $100, then the profit last year was $0, and this year's profit is $5. So, the profit increased by more than 10%.

Last year's revenue = x;
Last year's cost = y;
Last year's profit = x - y.

This year's revenue = 1.1x;
This year's cost = 1.05y;
This year's profit = 1.1x - 1.05y.

The question is:
Is 1.1x - 1.05y > 1.1(x - y)?
Is 1.1x - 1.05y > 1.1x - 1.1y?
Is y > 0?

The answer to this is yes.
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For Company A, did profit increase by more than 10%? 23 Feb 2024, 10:57
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­Bunuel: I don't understand this part: 
The question is:
Is 1.1x - 1.05y > 1.1(x - y)?
Is 1.1x - 1.05y > 1.1x - 1.1y?
Is y > 0?

Can you please explain??
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For Company A, did profit increase by more than 10%? 23 Feb 2024, 11:03
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asmba
­Bunuel: I don't understand this part: 
The question is:
Is 1.1x - 1.05y > 1.1(x - y)?
Is 1.1x - 1.05y > 1.1x - 1.1y?
Is y > 0?

Can you please explain??
­
    Is 1.1x - 1.05y > 1.1x - 1.1y?

Above, 1.1x cancels out, and we get:

    Is -1.05y > -1.1y?

Rearrange: 

    Is 1.1y - 1.05y > 0?

    Is 0.05y > 0?

Reducing by 0.05 yields:

    Is y > 0?

Hope it's clear.­
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For Company A, did profit increase by more than 10%? 05 Jun 2025, 03:50
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