If shoplifting at ToySMart continues at the current rate

Question

If shoplifting at ToySMart continues at the current rate, the shop's owner will be forced to close the store. Raising the prices of the goods sold at ToySMart by 10% will help make up the shortfall in the store's income; this change will therefore protect ToySMart from having to close.

Which of the following is an assumption made in drawing the conclusion above?

A. Visitors to the store will be more likely to consider purchasing more of the shop's less-expensive products.
B. The rise in prices will have no effect on the number of goods sold, even if the rate of shoplifting remains the same.
C. The rise in prices will not induce visitors who otherwise would not have shoplifted to shoplift items they can now not afford.
D. The store owner's profits are important to the majority of the shoppers at ToySMart.
E. Other stores may experience an increase in shoplifting as the practice is reduced at ToySMart.

RMD007 · Accepted Answer

Though not an expert, I will try to explain the twist here.The essence of the argument is, the changes, i.e. 10% hike in price, should not alter(rather increase) the shoplifting rate.

Let's break the argument.

If shoplifting at ToySMart continues at the current rate, the shop's owner will be forced to close the store.

--> Say there are 10 customers, out of which 3 customers shoplift. To keep same proportion, lets say out of 100$ goods, 30$ goods are shoplifted.

Raising the prices of the goods sold at ToySMart by 10% will help make up the shortfall in the store's income

--> This says, increase of 10% amount, is going to counter the 30$ loss (Hint- What if, because of 10% increase, 30$ itself increases??)

Option B Says   - The rise in prices will have no effect on the number of goods sold, even if the rate of shoplifting remains the same.
If 30$ is constant, people will still buy goods worth of 100$. 
We aren't interested in this case, we want to cover the scenario that the increase of 10% is actually not going to boost shoplifters to go beyond 30$

Option C Says   - The rise in prices will not induce visitors who otherwise would not have shoplifted to shoplift items they can now not afford.
Well, twisted statement. Lets simplify..

The rise in prices  (i.e. 10%)  will not induce visitors  (Not Promote visitors)  who otherwise would not have shoplifted  (Not Shoplifted --> Bought)  to shoplift items they can now not afford.

--> The rise is not going to promote the people, who otherwise would have bought the goods, to shoplift. (This is what we were looking for)

Hope its clear. Kudos if helped..

goforgmat · Answer

arjun90  ,  niteshwaghray

IMO,
What if as a result of price increase people switch from buying earlier cheaper items to now cheaper items. No of goods sold remain the same and given the rate of shoplifting remains the same,
That needn't increase the profits required to maintain the store.
Also when you negate it doesnt shatter the conclusion.
The change in no of goods sold can be both an increase and decrease. This is not shatter proof. hence IMO b is wrong.

veteranrookie · Answer

I am not sure what is wrong with B i just feel we are not concerned with people worried about the price. We are concerned about shoplifting so I just want to stick to that.
So if he increases the price the shortcoming would be met. And it WOULD not result in increase in the shoplifting too.
And I guess this is the assumption the author is making.
Rather than worrying about the impact on sale by the price increase.

Though I also felt B is the answer in the first glance.

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maheshaero20 · Answer

The conclusion of the argument is "Increase in prices will protect toysmart from closing"

Option B:
1. Prices increased
2. Number of Goods sold remain same
3. Rate of shop lifting same

From all the above three, I can concluded that the plan will work.

I agree Option C is far better than B. But I would like to know how option B is flawed.

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niteshwaghray · Answer

Please explain why C is a better option than B.
In my opinion, the assumption laid out in option B best supports the conclusion that raising the prices by 10% will makeup for the shortfall in the store's income. Option C seems much more indirect than option B.

veteranrookie · Answer

Here the author is assuming that the price increase would make the profit needed to meet the shortcoming and keep the shop working, and not result in a loss which would result in closing down shop.

So he is here assuming that the price would be increased, so it'll be profitable.

Assumption is that even when I do the price increase, it'll not cause more people to start stealing cause the price is more which is the main problem in the neighborhood. Which would result in more loss.

Then maybe I can assume it may result in problems selling stuff to people who are genuine people who pay for their stuff.

I am sorry if I am not articulate. But then the other way I came to this was that
I just use the negation technique, and then it just made the option C shine brighter as the answer.

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TejasD · Answer

Just imagine in B, if the number of people increase by a 100% and the rate remains the same, so percentage wise, higher number of people will steal and the sale remains steady. How does this help the store??

Hence B is incorrect.

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Hence B is incorrect.

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broall · Answer

Choice C is stated in an indirect way to make readers confused. It just stated that raising prices makes people can't afford goods. Hence, they are unlikely to shoplift items. This means the shoplifting rate will decrease and protects the store from closing.

Skywalker18 · Answer

If shoplifting at ToySMart continues at the current rate, the shop's owner will be forced to close the store. Raising the prices of the goods sold at ToySMart by 10% will help make up the shortfall in the store's income; this change will therefore protect ToySMart from having to close.

Type - Assumption
Boil it down - Raising price by 10 % will help make up the shortfall in income and protect from store closure 
Pre-thinking - Price hike will not alter the behavior of the consumers. The plan might fail if
- There is a significant decrease in sales
- Percentage of consumers who shoplift has increased i.e people who did not shoplift before the hike have started to shoplift 
Revenue = Number of units sold * price per unit

A. Visitors to the store will be more likely to consider purchasing more of the shop's less-expensive products. - irrelevant 
B. The rise in prices will have no effect on the number of goods sold, even if the rate of shoplifting remains the same. - "no effect " is vague and can refer to increase or decrease of the number of goods sold. Incorrect
C. The rise in prices will not induce visitors who otherwise would not have shoplifted to shoplift items they can now not afford. - If before the price hike, suppose 5 percent of shoppers used to shoplift, but after the 10 percent hike, there is a significant increase in the percentage of people who shoplift, then the argument will fall apart. - Correct 
D. The store owner's profits are important to the majority of the shoppers at ToySMart. - irrelevant 
E. Other stores may experience an increase in shoplifting as the practice is reduced at ToySMart. - irrelevant

Answer C

shubham2312 · Answer

i am also facing same question why C is better answer than B.
although i was able to answer the question correctly but my reasoning i think is flawed.
i used the logic sales are not related to shoplifting directly in any way,means out of 2 parts of the option statement one is saying price rise will not have any effect on sales than 2nd statement should present contrast or something of that sort.

someone kindly throw some light on the same.

Skywalker18 · Answer

If shoplifting at ToySMart continues at the current rate, the shop's owner will be forced to close the store. Raising the prices of the goods sold at ToySMart by 10% will help make up the shortfall in the store's income; this change will therefore protect ToySMart from having to close.

B. The rise in prices will have no effect on the number of goods sold, even if the rate of shoplifting remains the same. - Incorrect - Negate this -- so the rise in price can have an effect that can range from insignificant to a significant decrease on the number of goods sold.
"no effect " is vague and can refer to an increase or decrease in the number of goods sold

C. The rise in prices will not induce visitors who otherwise would not have shoplifted to shoplift items they can now not afford. - Correct - Negate this and the argument falls apart - the rise in prices will induce more visitors to shoplift

Negation of B - The rise in prices will have an effect on the number of goods sold, even if the rate of shoplifting remains the same.

Generally, if the price of an item increases, then the number of the item sold will decrease. 
1. When we negate option B, can we assume that no effect "no effect " is vague and can refer to an increase or decrease in the number of goods sold ? 
2. Even if assume that if the price of an item increases, then the number of the item sold will decrease. For option B, we don't know whether the decrease is minuscule or a significant number.

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Answer C

adstudy · Answer

Hey shubham2312 , I also rounded up to the above two options. Here is my insight on the same - (B) The rise in prices will have no effect on the number of goods sold, even if the rate of shoplifting remains the same. Suppose here we assume, that a customer goes in the store and is wanting to buy a puppet for say $20. Now when he goes in, he sees that the puppet which he thought was to be for $20 is now for $22 (increase of 10%). Now his mind says that I want to buy the puppet,even if it for $22, but his pocket says not more than $20 . So his best option would be to buy a smaller puppet that would be equivalent to $20 or less. Now when he buys the same our statement is also consistent with the same number of goods being sold and rate of shoplifting also being the same but still the profits would not have been the same as they were expected to be as we can consider the same scenarios on a much more costlier product of say $500 and that too with many people. Hence in my opinion because of the above reasoning B is wrong and C is the only remaining answer. Also I thought of a funnier version of this. What if the shoplifters think that I will lift anything above $21. Now when the price increases. He will lift this puppet as well making the buyer forced to buy the cheaper puppet.

Hope this all makes sense. Please let me know in case of any clarifications

MagooshExpert · Answer

Hi Skywalker18 , Yes, all your thinking is exactly correct here

While we can assume that here if the price of something increases, the number sold will decrease (if the number sold changes), we don't know the extent of the change. As you said, it might be minuscule, in which case the argument's conclusion still holds. That's why C is the better option

-Carolyn

aragonn · Answer

Official Explanation
Answer = (C).  The owner of ToySMart has a problem with shoplifting causing a loss of profits, which he wants to solve by raising his prices. To make this conclusion, he would have to assume, first of all, that raising his prices would make him more money, which is logical. Second, he would have to assume that raising the prices would not exacerbate the existing problem with shoplifting. (C) best addresses this issue.

The shop owner hasn’t made any assumptions (in this passage, at least) about what people will buy once he raises his prices (A). This is also important in evaluating (B). Note that the passage tells us that if the current rate of shoplifting continues, the store will have to close--if the rate of shoplifting continues, the owner would still be losing money. The higher prices might or might not make up for this shortfall, but we don’t have enough information to evaluate this point.

Choice (D) is irrelevant. In general, most shoppers at any store are wholly ignorant of the profits of the store's owner. It would imply an extremely loyal and personal relationship if the majority of shoppers cared this much about the owner's profits, and there is nothing in the question justifying this sort of bond.

Finally, the effects on other stores (E) do not come into play in this argument. This argument relies on the owner’s assumption that his price rise will fix, or at least ameliorate, ToySMart financial problems, which do not (in this scenario) involve other stores.

Kritisood · Answer

If shoplifting at ToySMart continues at the current rate, the shop's owner will be forced to close the store. Raising the prices of the goods sold at ToySMart by 10% will help make up the shortfall in the store's income; this change will therefore protect ToySMart from having to close.

B. The rise in prices will have no effect on the number of goods sold, even if the rate of shoplifting remains the same. - Incorrect - Negate this -- so the rise in price can have an effect that can range from insignificant to a significant decrease on the number of goods sold.
"no effect " is vague and can refer to an increase or decrease in the number of goods sold

C. The rise in prices will not induce visitors who otherwise would not have shoplifted to shoplift items they can now not afford. - Correct - Negate this and the argument falls apart - the rise in prices will induce more visitors to shoplift

Negation of B - The rise in prices will have an effect on the number of goods sold, even if the rate of shoplifting remains the same.

Generally, if the price of an item increases, then the number of the item sold will decrease.
1. When we negate option B, can we assume that no effect "no effect " is vague and can refer to an increase or decrease in the number of goods sold ?
2. Even if assume that if the price of an item increases, then the number of the item sold will decrease. For option B, we don't know whether the decrease is minuscule or a significant number.

AjiteshArun , GMATNinja , mikemcgarry , egmat , RonPurewal , DmitryFarber , MagooshExpert , ccooley , ChiranjeevSingh, GMATGuruNY , KarishmaB , other experts-- please enlighten

Answer C

monk123 · Answer

If shoplifting at ToySMart continues at the current rate, the shop's owner will be forced to close the store. Raising the prices of the goods sold at ToySMart by 10% will help make up the shortfall in the store's income; this change will therefore protect ToySMart from having to close.

Reasoning:

there is no problem with the plan and the shop should revive or not closed.

Which of the following is an assumption made in drawing the conclusion above?

A. Visitors to the store will be more likely to consider  purchasing more of the shop's less-expensive products.  -  IT WILL NOT HELP IN PROFITS AND SHOP WILL CLOSE. (IRREVELANT) 
B. The rise in prices will have  no effect on the number of goods sold , even if the rate of shoplifting remains the same. -  SHOWING PROBLEM WITH PLAN (IRREVELANT) 
 C. The rise in prices will not induce visitors who otherwise would not have shoplifted to shoplift items they can now not afford.  -  SHOWS PLAN WILL WORK 
D. The  store owner's profits are important to the majority of the shoppers  at ToySMart. -  OUT OF SCOPE
E .  Other stores  may experience an increase in shoplifting as the practice is reduced at ToySMart. - O UT OF SCOPE

Kamlaksh · Answer

i have doubt in option b please help

Goldenfuture · Answer

Still believe option B is more correct.  KarishmaB  - please help

KarishmaB · Answer

Can't say. The test maker can better explain their thought process here. 
As per me, we don't need (B) to be true. It is possible that increase in prices has some effect on number of items sold but 10% increase is enough to take care of it.
But by the same logic, we don't need (C) to be true too. It is not necessary that shoplifting should not increase at all. Perhaps the 10% increase in prices will handle a tiny increase in shoplifting too. If the 10% accounts for the reduction in number sold, it could account for increase in shoplifting too. I am not sure what to think here.

If shoplifting at ToySMart continues at the current rate

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If shoplifting at ToySMart continues at the current rate

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