In 1994, TipTop Airlines reported an increase in the total number of

Question

In 1994, TipTop Airlines reported an increase in the total number of passengers it carried from the year before, but a decrease in total revenues — even though prices for its tickets on all routes remained unchanged during the two-year period.

Which of the following, if true, best reconciles the apparent paradox described above?

Which of the following, if true, best reconciles the apparent paradox described above?

A. TipTop Airlines was a victim of a mild recession in 1994.

B. Total passenger miles were up in 1994.

C. Fuel costs remained constant during the two-year period.

D. Passengers traveled shorter (and thus less expensive) distances in 1994.

E. TipTop did not buy any new airplanes or equipment in 1994.

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findingmyself · Answer

Which of the following, if true, best reconciles the apparent paradox described above?

Revenue= Cost-Expenses 
 Cost= Passengers*Price 
 Revenue (Passengers*Price)-Expenses 
 Given that P increased and Price constant 
 So paradox can only be explained by saying either Expense increased or Price per passanger was low (Ticket size per passanger went down/Passengers bought smaller value items)
 
 A. TipTop Airlines was a victim of a mild recession in 1994.:  
 Incorrect: Doesn't explain the paradox. Mild recession can mean reduction in number of passengers which is apparently not the case. Passengers increased

B. Total passenger miles were up in 1994. 
 Incorrect: Passenger miles up doesn't mean revenue should go down. For eg: Passengers are charged prices based on the standard miles between two destinations.
 
 C. Fuel costs remained constant during the two years. 
 Incorrect: It just says expenses have no effect, but we still don't know what happened with Revenue.
 
 D. Passengers traveled shorter (and thus less expensive) distances in 1994. 
 Correct:   Consider this example:   Suppose there were 1,000 passengers. 
 The fare from City A to B is $100 
 The fare from City A to Z is $10

Even if the number of passengers increased overall, total revenue could still decrease if more passengers in 1994 chose the cheaper A-to-Z route rather than the more expensive A-to-B route.  This shows that an increase in passenger numbers doesn't necessarily mean an increase in revenue—it depends on the routes taken and the corresponding ticket prices

E. TipTop did not buy any new airplanes or equipment in 1994. 
 Incorrect: Same as Option C

victorhc0911 · Answer

This question is the same: https://gmatclub.com/forum/in-2008-the- ... 28734.html But i'm not sure what is the real level of the question? 505-555 Level or 555-605 Level?

bb · Answer

Yes, funny how they just changed a few words. Technically it is a different question however.

The other has 3x more answers than this one so the accuracy for difficulty is more accurate with the other one you linked as this one has only 60 or so answers. The more people attempt the question, the more accurate is the difficulty calculation.

Bunuel · Answer

OFFICIAL EXPLANATION

In 1994, TipTop Airlines reported an increase in the total number of passengers it carried from the year before, but a decrease in total revenues — even though prices for its tickets on all routes remained unchanged during the two-year period.

Which of the following, if true, best reconciles the apparent paradox described above?

Which of the following, if true, best reconciles the apparent paradox described above?

First, restate the contradiction in your own words. “TipTop’s profits went down even though they flew more passengers.” Now, let’s see which of the answer choices makes both of the facts in the argument true.

A. TipTop Airlines was a victim of a mild recession in 1994.

If TipTop was affected by a recession, that might explain a loss of revenues. But because ticket prices remained the same, it would not explain how the number of passengers could have increased at the same time. Eliminate it.

B. Total passenger miles were up in 1994.

If total passenger miles were up, and prices remained the same, there is no way that there could have been a loss of revenues. We can eliminate this choice as well.

C. Fuel costs remained constant during the two-year period.

If fuel costs had not remained constant, the company’s profits might have fallen. An increase in fuel prices could have increased its costs and cut into profits. But it would not have cut into total revenues, which is what we are concerned with in this passage. Of course, because choice C told us that the costs remained constant, this choice has no bearing on the argument at all. Eliminate it.

D. Passengers traveled shorter (and thus less expensive) distances in 1994.

Bingo! If passengers traveled on short, inexpensive flights, then they paid less money. In spite of the increase in number of passengers, the money they paid could have added up to less than that of the year before. This is the best answer, but always remember to read all the choices anyway.

E. TipTop did not buy any new airplanes or equipment in 1994.

This answer is much like the third choice, which we call choice C. If TipTop had bought new planes, it might have cut into its profits, but it would not have had any bearing on revenues. Of course, because this choice told us that TipTop did not buy any planes, there is no relevance at all. Eliminate it.

In 1994, TipTop Airlines reported an increase in the total number of

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GMAT Critical Reasoning (CR) Questions

In 1994, TipTop Airlines reported an increase in the total number of

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