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

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Senior Manager
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Joined: 02 Jul 2017
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Kudos [?]: 106 [0], given: 66

GMAT 1: 730 Q50 V38
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In Varisland, when a subscriber of one telecom operator calls a subscr [#permalink]

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New post 24 Oct 2017, 02:20
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Difficulty:

  85% (hard)

Question Stats:

55% (02:20) correct 45% (02:50) wrong based on 133 sessions

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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

[Reveal] Spoiler:
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.
[Reveal] Spoiler: OA

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Re: In Varisland, when a subscriber of one telecom operator calls a subscr [#permalink]

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New post 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.

Kudos [?]: 6 [0], given: 93

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Re: In Varisland, when a subscriber of one telecom operator calls a subscr [#permalink]

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New post 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.
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I would like to practice my English skill and GMAT, Please advise if I am incorrect. Thanks in advance!

Kudos [?]: 0 [0], given: 2

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Re: In Varisland, when a subscriber of one telecom operator calls a subscr [#permalink]

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New post 25 Oct 2017, 08:41
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.
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Kudos [?]: 161 [0], given: 138

Re: In Varisland, when a subscriber of one telecom operator calls a subscr   [#permalink] 25 Oct 2017, 08:41
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In Varisland, when a subscriber of one telecom operator calls a subscr

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