Official Explanation:
Colora, a manufacturer of specialized artists’ paint brushes that are made by hand in a time-consuming process that is unusual for the artist supplies’ industry, has always sold its products strictly within the United States. However, Colora now plans to market its products throughout North America, with the expectation that this will lead to an overall increase in profitability without a substantial increase in the number of paintbrushes it sells.
Which of the following, if true, most strongly supports Colora’s expectation?
(A) The areas outside of North America to which Colora plans to sell its products are not already aware of the company’s specialized products.
(B) North America is the dominant market in sales of specialized artist supplies.
(C) A German company that makes paint brushes that are similar to those made by Colora was not able to expand its market share when it marketed its products to North American countries other than the United States.
(D) Because of new tools that have been designed by employees of Colora, the manufacturing of the company’s paintbrushes will soon be completed in about two-thirds the time that it currently takes.
(E) Whatever fees that Colora has to pay to sell to other countries will not negate any gains coming from the higher prices made possible by greater demand for its products.
Question Type: Inference (Assumption family)
Boil It Down: Colora will make more profit without substantially increasing the amount of sales because they are marketing in all of North America, instead of just the United States.
Goal: Find the option that best explains how Colora’s plans will succeed, even when the evidence given might suggest otherwise.
Analysis:
This prompt gives us a conundrum. By marketing in other countries, Colora will make more profit without selling substantially more of their paint brushes. That isn’t what you would expect right? At the very least it goes against what I would think. For example, if Ford was only in the United States, and then decided to sell its cars in Mexico and Canada too, you would expect them to make more money only because they are selling more cars. How are they making more profit without more sales? Let’s break it down like a usual assumption question and see what helps.
Evidence: Colora is marketing its paintbrushes in all of North America, rather than just the United States
Assumption: ???
Conclusion: Colora will make more profit as a result of this marketing, without a substantial increase in sales.
So, the question is, how can a business make more profit while selling the same amount of product? I can make two predictions.
First, maybe it’s cheaper to make the paint brushes in Canada, for example. If they make their paint brushes in Canada for cheaper, and sell them for the same price, they would make more profit.
Second, maybe they can charge more in Mexico, for example. Maybe the market for high-end paint brushes is super competitive, so they price competitively in the United States. However, in Mexico the market is dry for high-end paint brushes, so Colora can charge a uber-competitive high price as a result.
Those are my two predictions, but in the end, we need an answer that answers this question: How can Colora sell the same number of paintbrushes but also make more profit?
(A) The areas outside of North America to which Colora plans to sell its products are not already aware of the company’s specialized products.
Does this answer our question? Colora is going to market in North America, and they believe that will increase profit without increasing the number of paint brushes sold. Why do we care about marketing outside of North America? The marketing is going to only be in North America. This is too far off base to be the answer.
(B) North America is the dominant market in sales of specialized artist supplies.
So what? We need something that separates Canada and Mexico from the United States, not something that tells us why they all are similar. If North America as a whole is a similar market, how could expanding into Canada and Mexico have the conclusion our prompt suggests?
(C) A German company that makes paint brushes that are similar to those made by Colora was not able to expand its market share when it marketed its products to North American countries other than the United States.
Shouldn’t this really hurt our case? If the German company had trouble in places outside the United States, wouldn’t you also expect Colora to have troubles as well? This does not give us an answer as to why profit would increase while sales stay the same.
(D) Because of new tools that have been designed by employees of Colora, the manufacturing of the company’s paintbrushes will soon be completed in about two-thirds the time that it currently takes.
This is a tricky one, because it would explain profit. Sure, making the paintbrushes in 2/3 the time means you can sell more, and selling more means more money. However, it ignores our conundrum with the prompt. Our prompt is clear: they will increase profit without selling substantially more. This answer choice only makes sense if you assume that making them quicker means you can sell more. It has not resolved our paradox.
(E) Whatever fees that Colora has to pay to sell to other countries will not negate any gains coming from the higher prices made possible by greater demand for its products.
This is the correct answer. It shows us how Colora is making more profit without selling more products: it is charging higher prices in the other North American countries. Just saying “higher demand causes higher prices in the other countries” was enough to make this answer correct. However, this answer choice even goes as far to say that no other fees would cancel out the gain either. That is just the cherry on top of an already great answer choice. Again, sometimes it’s helpful to visualize why an answer is correct so let’s plug this answer in.
Evidence: Colora is marketing its paintbrushes in all of North America, rather than just the United States
Assumption: Whatever fees Colora pays to sell in other countries will not negate any gains from the higher prices made possible by greater demand.
Conclusion: Therefore, Colora will make more profit as a result of this marketing, without a substantial increase in sales.
E is our best answer choice.
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