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

 It is currently 24 Aug 2019, 00:27

### 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

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

# In Varisland, when a subscriber of one telecom operator calls a subscr

Author Message
Current Student
Joined: 02 Jul 2017
Posts: 292
Concentration: Entrepreneurship, Technology
GMAT 1: 730 Q50 V38
In Varisland, when a subscriber of one telecom operator calls a subscr  [#permalink]

### Show Tags

24 Oct 2017, 02:20
2
3
00:00

Difficulty:

75% (hard)

Question Stats:

50% (02:16) correct 50% (02:27) wrong based on 108 sessions

### HideShow timer Statistics

In Varisland, when a subscriber of one telecom operator calls a subscriber of a different telecom ope­­­­­rator, the latter’s telecom company charges a small connection fee to the originating operator, a fee stipulated by the regulator and same for every operator. Almost all the new telecom operators are enticing customers by charging much lower call rates than charged by the existing operators. Since the connection fee is one of the sources of revenue for new companies, an increase in the fee will significantly improve the financials of the new operators and enable them to compete better in the market.

Which of the following statements is an assumption made by the author?

A)The regulator will most probably agree with the author’s recommended course of action
B)To improve the financials of the new companies, all the possible sources of revenues should be utilized in the best manner possible.
C)One of the goals of the regulator is to make the telecom market highly competitive, which will ensure consumer welfare.
D)For the new telecom operators, the connection fee does not form an insignificant proportion of their revenues.
E)New companies will not have to pay increased connection fee to the existing companies

I am not satisfied with given OE, so posting question for better explanation

D)For the new telecom operators, the connection fee does not form an insignificant proportion of their revenues.
Correct
It is on the same lines as the assumption arrived by us in the pre-thinking analysis.
Linkage#1: CF= a source of revenue for new TOs
What if despite an increase in the CF, there is no significant improvement in the financials of the new TOs? Such a situation is possible if the CF forms an insignificant component of the revenues of the new TOs. Therefore, the author assumes that:
Assumption: The CF forms a considerable part of the revenues of the new TOs.

E)New companies will not have to pay increased connection fee to the existing companies
Incorrect - Against the given information
The passage clearly states that each company needs to pay the same connection fee. Clearly, the information given in this choice is inconsistent with that provided in the given passage.

--== Message from the GMAT Club Team ==--

THERE IS LIKELY A BETTER DISCUSSION OF THIS EXACT QUESTION.
This discussion does not meet community quality standards. It has been retired.

If you would like to discuss this question please re-post it in the respective forum. Thank you!

To review the GMAT Club's Forums Posting Guidelines, please follow these links: Quantitative | Verbal Please note - we may remove posts that do not follow our posting guidelines. Thank you.
Intern
Joined: 20 Aug 2016
Posts: 44
GMAT 1: 570 Q46 V23
GMAT 2: 610 Q49 V25
GMAT 3: 620 Q45 V31
WE: Information Technology (Other)
Re: In Varisland, when a subscriber of one telecom operator calls a subscr  [#permalink]

### Show Tags

24 Oct 2017, 02:28
between D (I believe so) or E.
My reasons inline.

A)The regulator will most probably agree with the author’s recommended course of action - Irrelavent
B)To improve the financials of the new companies, all the possible sources of revenues should be utilized in the best manner possible. - Nothing specifically mentioned in para.
C)One of the goals of the regulator is to make the telecom market highly competitive, which will ensure consumer welfare. - Nothing specifically mentioned in para.
D)For the new telecom operators, the connection fee does not form an insignificant proportion of their revenues. - If its significant portion of their revenue then it can lead to stated conclusion.
E)New companies will not have to pay increased connection fee to the existing companies. - If they have to pay huge amount to existing companies, then this may not benefit their financials.
Intern
Joined: 23 Oct 2017
Posts: 5
Re: In Varisland, when a subscriber of one telecom operator calls a subscr  [#permalink]

### Show Tags

24 Oct 2017, 02:45
D)For the new telecom operators, the connection fee does not form an insignificant proportion of their revenues.

I answered D because "the connection fee does not form an insignificant proportion of their revenues" means the connection fee is a significant proportion of new telecom operators' revenue. If the fee does not important revenue to them, they cannot improve their financials by increasing the fee.

(the passage : Since the connection fee is one of the sources of revenue for new companies, an increase in the fee will significantly improve the financials of the new operators and enable them to compete better in the market.)

Hope this helps.
_________________
I would like to practice my English skill and GMAT, Please advise if I am incorrect. Thanks in advance!
Retired Moderator
Joined: 28 Mar 2017
Posts: 1205
Location: India
GMAT 1: 730 Q49 V41
GPA: 4
Re: In Varisland, when a subscriber of one telecom operator calls a subscr  [#permalink]

### Show Tags

25 Oct 2017, 08:41
1
1
In Varisland, when a subscriber of one telecom operator calls a subscriber of a different telecom ope­­­­­rator, the latter’s telecom company charges a small connection fee to the originating operator, a fee stipulated by the regulator and same for every operator. Almost all the new telecom operators are enticing customers by charging much lower call rates than charged by the existing operators. Since the connection fee is one of the sources of revenue for new companies, an increase in the fee will significantly improve the financials of the new operators and enable them to compete better in the market.

Which of the following statements is an assumption made by the author?

A)The regulator will most probably agree with the author’s recommended course of action -Out of scope, since no recommendation is being made.
B)To improve the financials of the new companies, all the possible sources of revenues should be utilized in the best manner possible. -This is a fact statement irrelevant to the argument at hand
C)One of the goals of the regulator is to make the telecom market highly competitive, which will ensure consumer welfare. -We are not worried about the consumer welfare.
D)For the new telecom operators, the connection fee does not form an insignificant proportion of their revenues. -Correct. As per the argument the fee is SIGNIFICANT part of the revenue
E)New companies will not have to pay increased connection fee to the existing companies -We are worried about the generation of revenue and not about the cost to the company. Minimising the cost will lead to an increase in profits, not to an increase in revenue.

--== Message from the GMAT Club Team ==--

THERE IS LIKELY A BETTER DISCUSSION OF THIS EXACT QUESTION.
This discussion does not meet community quality standards. It has been retired.

If you would like to discuss this question please re-post it in the respective forum. Thank you!

To review the GMAT Club's Forums Posting Guidelines, please follow these links: Quantitative | Verbal Please note - we may remove posts that do not follow our posting guidelines. Thank you.

_________________
Non-Human User
Joined: 01 Oct 2013
Posts: 5232
Re: In Varisland, when a subscriber of one telecom operator calls a subscr  [#permalink]

### Show Tags

07 Aug 2019, 03:49
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
_________________
Re: In Varisland, when a subscriber of one telecom operator calls a subscr   [#permalink] 07 Aug 2019, 03:49
Display posts from previous: Sort by