GMAT Question of the Day - Daily to your Mailbox; hard ones only

It is currently 14 Oct 2019, 19:26

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Close

Request Expert Reply

Confirm Cancel

In order to increase profits during a prolonged slowdown in sales, the

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:

Hide Tags

Find Similar Topics 
Intern
Intern
avatar
B
Joined: 13 Jun 2013
Posts: 5
Location: India
Concentration: International Business, Strategy
GPA: 3.88
In order to increase profits during a prolonged slowdown in sales, the  [#permalink]

Show Tags

New post Updated on: 23 Jan 2019, 00:13
2
2
00:00
A
B
C
D
E

Difficulty:

  5% (low)

Question Stats:

92% (01:28) correct 8% (01:52) wrong based on 658 sessions

HideShow timer Statistics

In order to increase profits during a prolonged slowdown in sales, the largest manufacturers of automobiles in the United States have instituted record-setting price increases on all their models. The manufacturers believe that this strategy will succeed, even though it is inconsistent with the normal relationship between price and demand.

The manufacturers' plan to increase profits relies on which of the following assumptions?


A. Automobile manufacturers will, of necessity, raise prices whenever they introduce a new model.

B. The smaller automobile manufacturers will continue to take away a large percentage of business from the largest manufacturers.

C. The increased profit made on cars sold will more than compensate for any decline in sales caused by the price increases.

D. New safety restraints that will soon become mandatory for all new cars will not be very costly for manufacturers to install.

E. Low financing and extended warranties will attract many price-conscious consumers.

Originally posted by kalra on 09 Nov 2017, 09:41.
Last edited by Bunuel on 23 Jan 2019, 00:13, edited 1 time in total.
Renamed the topic and edited the question.
Ask GMAT Experts Forum Moderator
User avatar
V
Status: Preparing for GMAT
Joined: 25 Nov 2015
Posts: 1042
Location: India
GPA: 3.64
GMAT ToolKit User Reviews Badge
Re: In order to increase profits during a prolonged slowdown in sales, the  [#permalink]

Show Tags

New post 09 Nov 2017, 10:48
1
kalra wrote:
In order to increase profits during a prolonged slowdown in sales, the largest manufacturers of automobiles in the United States have instituted record-setting price increases on all their models. The manufacturers believe that this strategy will succeed, even though it is inconsistent with the normal relationship between price and demand.

The manufacturers' plan to increase profits relies on which of the following assumptions?

A Automobile manufacturers will, of necessity, raise prices whenever they introduce a new model. - Irrelevant
B The smaller automobile manufacturers will continue to take away a large percentage of business from the largest manufacturers. - Does not give proper reason.
C The increased profit made on cars sold will more than compensate for any decline in sales caused by the price increases. - Correct
D New safety restraints that will soon become mandatory for all new cars will not be very costly for manufacturers to install. - Irrelevant
E Low financing and extended warranties will attract many price-conscious consumers.Does not indicate the assumption


Please refer to the reasoning marked above.
Hope it is clear.
_________________
Please give kudos, if you like my post

When the going gets tough, the tough gets going...
Board of Directors
User avatar
D
Status: QA & VA Forum Moderator
Joined: 11 Jun 2011
Posts: 4765
Location: India
GPA: 3.5
WE: Business Development (Commercial Banking)
GMAT ToolKit User
Re: In order to increase profits during a prolonged slowdown in sales, the  [#permalink]

Show Tags

New post 11 Nov 2017, 11:15
kalra wrote:
In order to increase profits during a prolonged slowdown in sales, the largest manufacturers of automobiles in the United States have instituted record-setting price increaseson all their models. The manufacturers believe thatthis strategy will succeed, even though it is inconsistent with the normal relationship between price and demand.

The manufacturers' plan to increase profits relies on which of the following assumptions?

A Automobile manufacturers will, of necessity, raise prices whenever they introduce a new model.
B The smaller automobile manufacturers will continue to take away a large percentage of business from the largest manufacturers.
C The increased profit made on cars sold will more than compensate for any decline in sales caused by the price increases.
D New safety restraints that will soon become mandatory for all new cars will not be very costly for manufacturers to install.
E Low financing and extended warranties will attract many price-conscious consumers.


The highlighted part suggests that despite increase in Prince Profit maximisation might happen ( Though it is against the normal Price & Demand relationship)

None but (C) talks about the compensation for decreased sales due to increase in price, hence this is our answer!!!
_________________
Thanks and Regards

Abhishek....

PLEASE FOLLOW THE RULES FOR POSTING IN QA AND VA FORUM AND USE SEARCH FUNCTION BEFORE POSTING NEW QUESTIONS

How to use Search Function in GMAT Club | Rules for Posting in QA forum | Writing Mathematical Formulas |Rules for Posting in VA forum | Request Expert's Reply ( VA Forum Only )
Verbal Forum Moderator
User avatar
V
Status: Greatness begins beyond your comfort zone
Joined: 08 Dec 2013
Posts: 2401
Location: India
Concentration: General Management, Strategy
Schools: Kelley '20, ISB '19
GPA: 3.2
WE: Information Technology (Consulting)
GMAT ToolKit User Reviews Badge CAT Tests
Re: In order to increase profits during a prolonged slowdown in sales, the  [#permalink]

Show Tags

New post 13 Nov 2017, 23:36
In order to increase profits during a prolonged slowdown in sales, the largest manufacturers of automobiles in the United States have instituted record-setting price increases on all their models. The manufacturers believe that this strategy will succeed, even though it is inconsistent with the normal relationship between price and demand.

Type -assumption
Boil it down - In order to increase profits during sales slowdown , manufacturers have instituted record-setting price increase on all models
-- The net increase in profit because of price increase will be more than loss due to decline in sale caused by price increase

A Automobile manufacturers will, of necessity, raise prices whenever they introduce a new model. - Incorrect - price of all models has been increased
B The smaller automobile manufacturers will continue to take away a large percentage of business from the largest manufacturers.- Incorrect
C The increased profit made on cars sold will more than compensate for any decline in sales caused by the price increases. - Correct -- negate this and the argument falls apart
D New safety restraints that will soon become mandatory for all new cars will not be very costly for manufacturers to install. -- Irrelevant
E Low financing and extended warranties will attract many price-conscious consumers. - Irrelevant


Answer C
_________________
When everything seems to be going against you, remember that the airplane takes off against the wind, not with it. - Henry Ford
The Moment You Think About Giving Up, Think Of The Reason Why You Held On So Long
Director
Director
avatar
G
Joined: 09 Mar 2018
Posts: 997
Location: India
Re: In order to increase profits during a prolonged slowdown in sales, the  [#permalink]

Show Tags

New post 23 Jan 2019, 00:09
1
kalra wrote:
In order to increase profits during a prolonged slowdown in sales, the largest manufacturers of automobiles in the United States have instituted record-setting price increases on all their models. The manufacturers believe that this strategy will succeed, even though it is inconsistent with the normal relationship between price and demand.

The manufacturers' plan to increase profits relies on which of the following assumptions?

A Automobile manufacturers will, of necessity, raise prices whenever they introduce a new model.
B The smaller automobile manufacturers will continue to take away a large percentage of business from the largest manufacturers.
C The increased profit made on cars sold will more than compensate for any decline in sales caused by the price increases.
D New safety restraints that will soon become mandatory for all new cars will not be very costly for manufacturers to install.
E Low financing and extended warranties will attract many price-conscious consumers.


Plan -> increase the price of all models to increase profits.

Assumption can be -> It will get a good reception from people.

A Automobile manufacturers will, of necessity, raise prices whenever they introduce a new model.
This doesn't address the conclusion.

B The smaller automobile manufacturers will continue to take away a large percentage of business from the largest manufacturers.
smaller automobile is Out of Scope

C The increased profit made on cars sold will more than compensate for any decline in sales caused by the price increases.
Correct answer, Negating this will weaken the argument.
The increased profit made on cars sold will result in further loss, for any decline in sales caused by the price increases.

D New safety restraints that will soon become mandatory for all new cars will not be very costly for manufacturers to install.
Safety restraints, is out of scope

E Low financing and extended warranties will attract many price-conscious consumers.
Out of scope of this argument

Answer C
_________________
If you notice any discrepancy in my reasoning, please let me know. Lets improve together.

Quote which i can relate to.
Many of life's failures happen with people who do not realize how close they were to success when they gave up.
Manager
Manager
avatar
G
Joined: 16 May 2016
Posts: 199
Location: India
Concentration: Marketing, International Business
Schools: ESSEC '21 (A$)
GMAT 1: 720 Q50 V38
GPA: 3.5
WE: Analyst (Consulting)
Re: In order to increase profits during a prolonged slowdown in sales, the  [#permalink]

Show Tags

New post 25 Jan 2019, 21:12
kalra wrote:
In order to increase profits during a prolonged slowdown in sales, the largest manufacturers of automobiles in the United States have instituted record-setting price increases on all their models. The manufacturers believe that this strategy will succeed, even though it is inconsistent with the normal relationship between price and demand.

The manufacturers' plan to increase profits relies on which of the following assumptions?


A. Automobile manufacturers will, of necessity, raise prices whenever they introduce a new model.

B. The smaller automobile manufacturers will continue to take away a large percentage of business from the largest manufacturers.

C. The increased profit made on cars sold will more than compensate for any decline in sales caused by the price increases.

D. New safety restraints that will soon become mandatory for all new cars will not be very costly for manufacturers to install.

E. Low financing and extended warranties will attract many price-conscious consumers.



Defender type Assumption. We are not able to pre-phrase or look for any rogue information.
We need to understand the mentality of the author where his/her way of tackling a prolonged decline in sales will eliminate other negatives.

A. Automobile manufacturers will, of necessity, raise prices whenever they introduce a new model.-Out of Scope

B. The smaller automobile manufacturers will continue to take away a large percentage of business from the largest manufacturers-Out of Scope

C. The increased profit made on cars sold will more than compensate for any decline in sales caused by the price increases-
With the price increase and prolonged decline in sales, profit must be made in the process otherwise there is no use of employing this strategy
HOLD ON

D. New safety restraints that will soon become mandatory for all new cars will not be very costly for manufacturers to install.-Out of Scope

E. Low financing and extended warranties will attract many price-conscious consumers.-Out of Scope

ANSWER: C
LEVEL: 600
_________________
Not Giving UP! Kudos if you like the question :)
GMAT Club Bot
Re: In order to increase profits during a prolonged slowdown in sales, the   [#permalink] 25 Jan 2019, 21:12
Display posts from previous: Sort by

In order to increase profits during a prolonged slowdown in sales, the

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  





Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne