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# In order to increase revenues, an airport plans to change the parking

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Math Expert
Joined: 02 Sep 2009
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In order to increase revenues, an airport plans to change the parking  [#permalink]

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18 Jan 2020, 03:21
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Difficulty:

15% (low)

Question Stats:

79% (01:49) correct 21% (02:10) wrong based on 217 sessions

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In order to increase revenues, an airport plans to change the parking fees it charges at its hourly parking lots. Rather than charging \$2.00 for the first two-hour period, or part thereof, and \$1.00 for each hour thereafter, the airport will charge \$4.00 for the first four-hour period, or part thereof, and \$1.00 for each hour thereafter.

Which of the following is a consideration that, if true, suggests that the plan will be successful in increasing revenues?

(A) Very few people who park their cars at the hourly parking lot at the airport leave their cars for more than two hours at a time.

(B) Over the past several years, the cost to the airport of operating its hourly parking facilities has been greater than the revenues it has received from them.

(C) People who leave their cars at the airport while on a trip generally park their cars in lots that charge by the day rather than by the hour.

(D) A significant portion of the money spent to operate the airport parking lot is spent to maintain the facilities rather than to pay the salaries of the personnel who collect the parking fees.

(E) The hourly parking lots at the airport have recently been expanded and are therefore rarely filled to capacity.

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Re: In order to increase revenues, an airport plans to change the parking  [#permalink]

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18 Jan 2020, 16:14
A is the clear winner, as ver few park for more than 2 hours, so the majority use for less than 2 hours. Thus more dollars as per the new fare schedule.
B is IRRELEVANT as it talks about the revenue vs costs and nothing about the effect of the new plan.
C is IRRELEVANT as it shows that people donot use hourly fare schedule
D is IRRELEVANT as it talks about the expenses not about the impact of new fare schedule.
E is IRRELEVANT.

A is the clear winner.

Regards

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Re: In order to increase revenues, an airport plans to change the parking  [#permalink]

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18 Jan 2020, 17:44
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If people leave their cars parked for 4 hours or longer, let's say, 5 hours, then the airport would not increase their profits, as their revenue would be the same.

For the airport to get more revenue, it is necessary that many people who park pay for the four hours but don't park for that long, so they would end up paying a higher rate per hour.
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GMAT Elimination System: "When you have eliminated the impossible, whatever remains, however improbable, must be the truth."

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Re: In order to increase revenues, an airport plans to change the parking  [#permalink]

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20 Jan 2020, 05:08
Ok. So the Argument core is - Changing the parking lot hourly rate will generate more revenue ( Based on the Question stem).

Earlier- First 2 hours for 2\$
Now- 4\$ for first four hours

If this has to be true then clearly assumption should be that most cars do not park for more than 2 hours and thus that space will be again filled by a new car . Thus in 4 hours they can have 8 \$ which 100% more than earlier one.

That is the assumption here.

Only A fits our prethinking
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Re: In order to increase revenues, an airport plans to change the parking  [#permalink]

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19 May 2020, 03:36
Our objective is to evaluate whether the plan would be successful & choose an option which suggests that it will be successful.

(A) Very few people who park their cars at the hourly parking lot at the airport leave their cars for more than two hours at a time.

This will suggest that the plan will be successful as in first case only \$2 will be colllected but in second case \$4 will be collected.

(B) Over the past several years, the cost to the airport of operating its hourly parking facilities has been greater than the revenues it has received from them.

We are not concerned about the cost or profits and just want to evaluate the plan of increasing the revenue.

(C) People who leave their cars at the airport while on a trip generally park their cars in lots that charge by the day rather than by the hour.

We are concerned with increasing revenue at the hourly parking lot so this is not relevant.

(D) A significant portion of the money spent to operate the airport parking lot is spent to maintain the facilities rather than to pay the salaries of the personnel who collect the parking fees.
Irrelevant

(E) The hourly parking lots at the airport have recently been expanded and are therefore rarely filled to capacity.
Whether it's filled to capacity or not, we need to know whether the revenue gets increased from the new plan with the existing capacity.
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In order to increase revenues, an airport plans to change the parking  [#permalink]

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20 May 2020, 03:46
Old charges: \$2 for the first two hours + \$1 per hour for each additional hour thereafter.

New charges: \$4 for the first four hours + \$1 per hour for each additional hour thereafter.

For the new charges to bring in additional revenue, the number of users should remain relatively stable (who use the parking slot for at least 4 hours) or the number of users should increase.

(A) Very few people who park their cars at the hourly parking lot at the airport leave their cars for more than two hours at a time. This indicates that the vast majority of the parking slot users use these slots for a maximum of 2 hours and not more. if 'X' is the number of users who use the parking slot for only two hours, then the revenue generated under the old charges would be '\$2X'. With the new charges, the revenue generated from 'X' number of parking slot users would be '\$4X'. this proves that the new charges do bring additional revenue. Hence, (A) is the right answer.

(B) Over the past several years, the cost to the airport of operating its hourly parking facilities has been greater than the revenues it has received from them. - this has no relation with whether the new charges would bring in more revenue. hence, eliminate (B)

(C) People who leave their cars at the airport while on a trip generally park their cars in lots that charge by the day rather than by the hour. - Do people use the parking slots for the entire day or only for a few hours? Without this understanding, it will be impossible to tell whether more revenue can be brought in by changing the rate. Moreover, this option literally tells us "where people park their cars" and has no bearing on the new \$4 charge plan. Hence, eliminate (C)

(D) A significant portion of the money spent to operate the airport parking lot is spent to maintain the facilities rather than to pay the salaries of the personnel who collect the parking fees. - irrelevant to the topic of discussion. hence, eliminate (D)

(E) The hourly parking lots at the airport have recently been expanded and are therefore rarely filled to capacity. - this does not tell us whether the revenue increases or decrease, after the implementation of the new plan. For example :Say that there are 100 frequent users of airport parking slots, who use the slot for 2 hours on average. After expansion, the airport parking can now accommodate 200 cars.

Under the old parking charges, the revenue would have been \$200. under the new charge plan, \$400 would have been the revenue.

But what if the number of frequent users dropped after the new plan was implemented? This would certainly signal a decrease in revenue, NOT an increase.

Since (E) leaves a lot of room for speculation, (E) is not a solid answer choice. Hence, eliminate (E)
In order to increase revenues, an airport plans to change the parking   [#permalink] 20 May 2020, 03:46