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# In contrast to many speculators, demand for SUV (sports

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Senior Manager
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In contrast to many speculators, demand for SUV (sports [#permalink]

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19 Apr 2013, 09:09
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Difficulty:

15% (low)

Question Stats:

80% (01:25) correct 20% (01:22) wrong based on 152 sessions

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In contrast to many speculators, demand for SUV (sports utility vehicles) has not increased in recent years. Yet, even though prices and production amounts have generally been stable during the last three years, SUV manufacturers last year increased their profits by more than 10 percent over the previous year's level.

Any of the following statements, if true about last year, helps to explain the rise in profits EXCEPT:

(A)Many countries, like Thailand, that have a preference for SUVs increased their production of SUVs in hopes of taking market share away from sedans and coupes.

(B)SUV manufacturers have saved money on wages by switching from paying assembly workers an hourly wage to paying them per vehicle assembled.

(C)The price of oil, the major energy source used by SUV manufacturers in machining their vehicle components, dropped by over 25 percent.

(D)Many small SUV manufacturers joined together to form an association of SUV manufacturers and began to buy vehicle components at low group rates.

(E)Temperatures in manufacturing facilities were lower than they had been during the previous year, allowing the manufacturers to save money on expensive heat and electricity-powered ventilation systems.
[Reveal] Spoiler: OA

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Re: In contrast to many speculators, demand for SUV [#permalink]

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19 Apr 2013, 09:15
1
KUDOS
Demand = stable
Price = stable
Production = stable

Profits = UP, clearly profits are a function of (REVENUES - COSTS) every component of the revenues (see above) is stable ==> cost must have been lower this year.

All the options give us possible scenarios in which this happened.
(ie: (B)SUV manufacturers have saved money on wages by switching from paying assembly workers an hourly wage to paying them per vehicle assembled.
(C)The price of oil, the major energy source used by SUV manufacturers in machining their vehicle components, dropped by over 25 percent.)

Only A doesn't, so A
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Re: In contrast to many speculators, demand for SUV [#permalink]

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19 Apr 2013, 09:16
looks like A is best
all except A help to explain the rise in profit

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Re: In contrast to many speculators, demand for SUV [#permalink]

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19 Apr 2013, 10:49
Yes A is the best answer.Increase in the production of SUV alone is not going to bring down the cost in anyway.
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Re: In contrast to many speculators, demand for SUV [#permalink]

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19 Apr 2013, 13:22
Its clear A.....u can find similar question in OG 13....

contrary-to-earlier-predictions-demand-for-sugarcane-has-58533.html

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Re: In contrast to many speculators, demand for SUV [#permalink]

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19 Apr 2013, 16:17
guerrero25 wrote:
In contrast to many speculators, demand for SUV (sports utility vehicles) has not increased in recent years. Yet, even though prices and production amounts have generally been stable during the last three years, SUV manufacturers last year increased their profits by more than 10 percent over the previous year's level.

Any of the following statements, if true about last year, helps to explain the rise in profits EXCEPT:

(A)Many countries, like Thailand, that have a preference for SUVs increased their production of SUVs in hopes of taking market share away from sedans and coupes.

(B)SUV manufacturers have saved money on wages by switching from paying assembly workers an hourly wage to paying them per vehicle assembled.

(C)The price of oil, the major energy source used by SUV manufacturers in machining their vehicle components, dropped by over 25 percent.

(D)Many small SUV manufacturers joined together to form an association of SUV manufacturers and began to buy vehicle components at low group rates.

(E)Temperatures in manufacturing facilities were lower than they had been during the previous year, allowing the manufacturers to save money on expensive heat and electricity-powered ventilation systems.

Profit = Revenue - Cost.
Demand has not increased ==> Revenue has not increased.
Profit increases only if cost decreases.
B, C, D, E mention the ways by which SUV manufactures can reduce costs.
So A is correct.
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Re: In contrast to many speculators, demand for SUV (sports [#permalink]

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29 May 2013, 11:49
+1 A

This is not a weaken question; it is a resolve the paradox question.

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Re: In contrast to many speculators, demand for SUV (sports [#permalink]

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14 Jun 2014, 08:08
All the choices except A help explain the discrepancy in the argument, while choice A negates the premise that the production levels are stable over the past three years. Hence +A is the answer.
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Re: In contrast to many speculators, demand for SUV (sports   [#permalink] 14 Jun 2014, 08:08
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