Hi Kavin,
This question can be solved by TESTing THE ANSWERS.
The prompt tells us that Kay lost 1 MORE than HALF of her chips each 'play' and ended up with 5 chips after 2 'plays', so the number of starting chips has to be more than 20 (since half of 20 is 10 and half of 10 is 5). In addition, the starting number of chips CANNOT be an odd number, since you would end up with a 'fraction of a chip' at some point, which is not possible.
Let's TEST Answer C. The upper-end of that range is 24...
IF...Kay started with 24 chips....
Half+1 of 24 = 12+1 = 13 which leaves 11 chips
Half+1 of 11 = 5.5 + 1 = 6.5 which leaves 4.5 chips. This is TOO SMALL (it's supposed to be 5 chips).
This example is pretty close to what we're looking for though, so let's try a number just a little bigger...
Answer D.
IF...Kay started with 26 chips....
Half+1 of 26 = 13+1 = 14 which leaves 12 chips
Half+1 of 12 = 6 + 1 = 7 which leaves 5 chips. This is an exact MATCH for what we were told, so this MUST be the answer.
Final Answer:
GMAT assassins aren't born, they're made,
Rich