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Difficulty:
25%
(medium)
Question Stats:
80% (01:59) correct
20%
(02:08)
wrong
based on 986
sessions
History
Date
Time
Result
Not Attempted Yet
It might seem that an airline could increase profits by reducing airfares on all its flights in order to encourage discretionary travel and thus fill planes. Offers of across-the-board discount fares have, indeed, resulted in the sale of large numbers of reduced-price tickets. Nevertheless such offers have, in the past, actually cut the airline’s profits.
Which one of the following, if true, most helps to resolve the apparent discrepancy described above?
(A) Fewer than 10 percent of all air travelers make no attempt to seek out discount fares.
(B) Fares for trips between a large city and a small city are higher than those for trips between two large cities even when the distances involved are the same.
(C) Across-the-board discounts in fares tend to decrease revenues on flights that are normally filled, but they fail to attract passengers to unpopular flights.
(D) Only a small number of people who have never before traveled by air are persuaded to do so on the basis of across-the-board discount fares.
(E) It is difficult to devise an advertising campaign that makes the public aware of across-the-board discount fares while fully explaining the restrictions applied to those discount fares.
Which one of the following, if true, most helps to resolve the apparent discrepancy described above?
(A) Fewer than 10 percent of all air travelers make no attempt to seek out discount fares.
(B) Fares for trips between a large city and a small city are higher than those for trips between two large cities even when the distances involved are the same.
(C) Across-the-board discounts in fares tend to decrease revenues on flights that are normally filled, but they fail to attract passengers to unpopular flights.
(D) Only a small number of people who have never before traveled by air are persuaded to do so on the basis of across-the-board discount fares.
(E) It is difficult to devise an advertising campaign that makes the public aware of across-the-board discount fares while fully explaining the restrictions applied to those discount fares.
12 Jan 2012, 23:08
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Let’s first simplify the argument:
Airlines hope to increase profits by offering across-the-board discounts on seats that would otherwise remain unfilled. This strategy has worked in terms of the total number of tickets sold, yet such discounts have actually resulted in a decrease in airlines’ profits.
Now we have to determine which answer choice resolves this paradox.
(A) The behavior of this 10% would not be able to account for the decrease on profit.
(B) The difference in cost regarding small cities and large cities is not mentioned and is thus irrelevant.
(C) Popular flights that were completely filled pre-discount are now going to make a loss because people are paying less for tickets for which they would otherwise have paid more. This is a problem esp. when we read the last part of the answer choice, which explains that the discounts aren’t attracting any new customers to the unpopular flights. Had the unpopular flights attracted passengers that wouldn’t have flown they could be deemed somewhat successful.
(D) This answer choice shows that more people – albeit a very small number – are flying, which would suggest that profits would increase very slightly. Regardless, it in no way accounts for the decrease in profits.
(E) Awareness is important, i.e. if people aren’t aware of the discounts then they are unlikely to take advantage. Still, lack of awareness does not account for why profits decreased. We need an answer choice that gives us a reason why the across-the-board discounts did not work. Only (C) does this by citing that popular flights were losing money, and unpopular flights were not able to fill more seats.
Let me know if that makes sense.
Airlines hope to increase profits by offering across-the-board discounts on seats that would otherwise remain unfilled. This strategy has worked in terms of the total number of tickets sold, yet such discounts have actually resulted in a decrease in airlines’ profits.
Now we have to determine which answer choice resolves this paradox.
(A) The behavior of this 10% would not be able to account for the decrease on profit.
(B) The difference in cost regarding small cities and large cities is not mentioned and is thus irrelevant.
(C) Popular flights that were completely filled pre-discount are now going to make a loss because people are paying less for tickets for which they would otherwise have paid more. This is a problem esp. when we read the last part of the answer choice, which explains that the discounts aren’t attracting any new customers to the unpopular flights. Had the unpopular flights attracted passengers that wouldn’t have flown they could be deemed somewhat successful.
(D) This answer choice shows that more people – albeit a very small number – are flying, which would suggest that profits would increase very slightly. Regardless, it in no way accounts for the decrease in profits.
(E) Awareness is important, i.e. if people aren’t aware of the discounts then they are unlikely to take advantage. Still, lack of awareness does not account for why profits decreased. We need an answer choice that gives us a reason why the across-the-board discounts did not work. Only (C) does this by citing that popular flights were losing money, and unpopular flights were not able to fill more seats.
Let me know if that makes sense.
03 Apr 2021, 01:30
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OFFICIAL EXPLANATION
(A) No. This doesn’t provide enough information about the 90 percent of the travelers who seek discount fares. Are they new travelers who would not have otherwise purchased tickets except at a discount? Or are they travelers who were intending to pay full-face but took advantage of a good deal?
(B) No. This is irrelevant.
(C) Yes. If across-the-board discounts attract passengers who displace full-fare travelers on filled flights, then revenues will decrease on those flights. Further, if no new passengers are attracted to usually unfilled flights, there will be no corresponding increases in revenue elsewhere. The net effect is a decrease in revenues and thus profits.
(D) No. This is actually a pretty good choice, but it’s not the answer for two reasons: 1) There is a stronger answer-choice. 2) It has a flaw: Although only a small number of people who had never flown before were persuaded to do so, it’s possible that people who already travel by air greatly increased the number of
trips they take.
(E) No. This is irrelevant.
