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# In order to decrease losses during a prolonged shutdown in sales, the

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Senior Manager
Joined: 25 Dec 2018
Posts: 487
Location: India
Concentration: General Management, Finance
GMAT Date: 02-18-2019
GPA: 3.4
WE: Engineering (Consulting)
In order to decrease losses during a prolonged shutdown in sales, the  [#permalink]

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25 Feb 2019, 09:41
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Question Stats:

94% (01:41) correct 6% (01:27) wrong based on 168 sessions

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In order to decrease losses during a prolonged shutdown in sales, the sales representatives of insurances in the Cayman Islands have instituted record-setting price increases on all their plans. The representatives believe that this strategy will succeed, even though it is inconsistent with the normal relationship between price and demand.

The representatives’ plan to increase profits relies on which of the following assumptions?

A) Sales representatives will, out of necessity, raise prices whenever they introduce a new plan.
B) The smaller sales representatives will continue to take away a large percentage of business from the larger representatives.
C) The increased profit made on plans sold will more than compensate for any decline in sales caused by the price increases.
D) New background checks that will soon become mandatory for all new plans will not be very costly for representatives to implement.
E) Low financing and extended lifetime will attract many price-conscious customers.
Manager
Joined: 17 May 2018
Posts: 140
Location: India
Re: In order to decrease losses during a prolonged shutdown in sales, the  [#permalink]

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26 Feb 2019, 01:43
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Option C is correct, as the other points are not mentioned and since we know the step has been done after sales decline this is must be the underlying assumption

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Intern
Joined: 04 Sep 2016
Posts: 16
Re: In order to decrease losses during a prolonged shutdown in sales, the  [#permalink]

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14 May 2019, 08:50
I believe the conclusion of this question is that the approach will succeed despite the fact that it's inconsistent with the price-demand relationship. And therefore, the assumption should link the premise and this conclusion.
I'd have thought the assumption should be something that proves that even though this approach is not consistent with the price-demand relationship, it should see to the success of the strategy of the sales rep (setting price increases on all their plans)

Why is option E wrong?
Re: In order to decrease losses during a prolonged shutdown in sales, the   [#permalink] 14 May 2019, 08:50
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