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# Last August the XT chain of gasoline stations had a temporary sales

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Re: Last August the XT chain of gasoline stations had a temporary sales  [#permalink]

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13 Sep 2016, 23:24
Thanks,
Your explanation to A/C is perfect and clear

cssk wrote:
I think I can add my inputs here. First of all, take this for granted that carrying out a promotion can lead to increase in sales but may not result in an immediate increase in profits or returns.

Last August the XT chain of gasoline stations had a temporary sales promotion in effect. In the promotion, any customer who made a purchase of ten or more gallons of gasoline was entitled to a free car wash. For the month of August, XT experienced a ten percent increase in gasoline sales as compared to sales in August the previous year, so evidently the promotion was successful as a means of boosting sales.
In evaluating the argument, it would be most helpful to answer which of the following?
A. In the areas in which XT’s gasoline stations operate, how did total combined gasoline sales for all gasoline stations last August compare with sales for the previous August? Sounds good. If all the gasoline stations including those that did not implement a promotional plan see an increase in sales along with XT chain, then the success cannot be attributed to the promotion. So answer to this question evaluates our conclusion.
B. Was the money that XT earned from the increase in gasoline sales enough to offset the cost of providing free car washes during the promotion? Whether cost of providing free car washes can be offset by the increase in gasoline sales is irrelevent to find whether the increase in sales is actually due to the promotion.
C. Were there any customers who bought ten or more gallons at an XT gasoline station during the promotion who would have or more gallons at an XT gasoline in lower quantities, but more frequently, if the promotion had not been in effect? Trap answer. How the customers bought those quantities, be it in large quantities at a time ot in smaller quantities frequently, is totally useless to identify the effect of a promotion on sales.
D. Did XT or any of its gasoline stations have to pay other businesses to provide the car washes that customers were offered in the promotion? Same as B and C, this choice is irrelevent too.
E. Are XT’s gasoline sales in August usually significantly higher than one twelfth of XT’s annual gasoline sales? The answer yes or no this question would not help evaluate our conclusion.
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03 Jul 2017, 20:54
B is just a strengthener.
C would have been correct if there had been no "but more frequently". Even if that is the case, C is still incorrect because C still cannot show a causal relation between the promotion and the sales, but a correlation; in other word, C is not an assumption in either scenario.
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Re: Last August the XT chain of gasoline stations had a temporary sales  [#permalink]

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07 Jul 2017, 07:46
An excellent question .I took a long time to answer it but still got it wrong .
Agree with OA
The problem with C is that we can not conclusively say that it helped in boosting sales .
Some people may have bought frequently and the amount of gasoline bought might be or might be not greater than the 10 gallons of gasoline .
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25 Aug 2017, 22:14
This is a very deceptive question- the GMAT wants to bait you into C; however, the issue with C is that it would lead to a conclusion about the performance of XT to other companies- in order to evaluate the efficacy of XT's promotion the more logical comparison would be the sales of gasoline before and after the promotion w/r/t XT which A does.

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26 Aug 2017, 00:15
Totally stumbled. I chose B but the answer mentioned is A.

Yet to understand..very tough.

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03 Apr 2018, 01:05
Hi GMATNinja, sayantanc2k, VeritasPrepKarishma, experts,

Can you please tell me how to apply variance test on choice A in this question? Usually, I focus on the conclusion, and then make sure to double check the answer by applying variance test, which strengthens and weakens the conclusion.

Thanks very much for your help!
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03 Dec 2018, 03:11
Perfect grounds to eliminate C. C shows that sales of gasoline in XT would have still been there with or without promostions, albeit in different quantities. So, C doesn't support the conclusion that promotion was successful as means of boosting sales.

arvind910619 wrote:
An excellent question .I took a long time to answer it but still got it wrong .
Agree with OA
The problem with C is that we can not conclusively say that it helped in boosting sales .
Some people may have bought frequently and the amount of gasoline bought might be or might be not greater than the 10 gallons of gasoline .

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09 Dec 2018, 09:41
1
Last August the XT chain of gasoline stations had a temporary sales promotion in effect. In the promotion, any customer who made a purchase of ten or more gallons of gasoline was entitled to a free car wash. For the month of August, XT experienced a ten percent increase in gasoline sales as compared to sales in August the previous year, so evidently the promotion was successful as a means of boosting sales.

In evaluating the argument, it would be most helpful to answer which of the following?

WHAT IS THE MAIN CONCERN ? IF SALES THIS YEAR IN AUGUST BROUGHT MORE PROFIT COMPARED TO SALES OF PREVIOUS AUGUST

(A) In the areas in which XT’s gasoline stations operate, how did total combined gasoline sales for all gasoline stations last August compare with sales for the previous August? ( comparision is given between the concerned sales periods keep it.)

(B) Was the money that XT earned from the increase in gasoline sales enough to offset the cost of providing free car washes during the promotion? (not concerned with car washes cost. out of scope.

(C) Were there any customers who bought ten or more gallons at an XT gasoline station during the promotion who would have or more gallons at an XT gasoline in lower quantities, but more frequently, if the promotion had not been in effect? ( this one is tricky. but since it talks about customers and ignored comparison between August sales this year and that of previous year hence out of scope. because our main concerni is increase in profit. no such keyword is mentioned here)

(D) Did XT or any of its gasoline stations have to pay other businesses to provide the car washes that customers were offered in the promotion? (same issue as in B)

(E) Are XT’s gasoline sales in August usually significantly higher than one twelfth of XT’s annual gasoline sales? (out of scope. wrong comparison.)
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Re: Last August the XT chain of gasoline stations had a temporary sales  [#permalink]

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25 Dec 2018, 08:08
1
imhimanshu wrote:
Last August the XT chain of gasoline stations had a temporary sales promotion in effect. In the promotion, any customer who made a purchase of ten or more gallons of gasoline was entitled to a free car wash. For the month of August, XT experienced a ten percent increase in gasoline sales as compared to sales in August the previous year, so evidently the promotion was successful as a means of boosting sales.

In evaluating the argument, it would be most helpful to answer which of the following?

(A) In the areas in which XT’s gasoline stations operate, how did total combined gasoline sales for all gasoline stations last August compare with sales for the previous August?

(B) Was the money that XT earned from the increase in gasoline sales enough to offset the cost of providing free car washes during the promotion?

(C) Were there any customers who bought ten or more gallons at an XT gasoline station during the promotion who would have or more gallons at an XT gasoline in lower quantities, but more frequently, if the promotion had not been in effect?

(D) Did XT or any of its gasoline stations have to pay other businesses to provide the car washes that customers were offered in the promotion?

(E) Are XT’s gasoline sales in August usually significantly higher than one twelfth of XT’s annual gasoline sales?

In the promotion, any customer who made a purchase of ten or more gallons of gasoline was entitled to a free car wash.
For the month of August, XT experienced a ten percent increase in gasoline sales as compared to sales in August the previous year,

Conclusion: the promotion was successful as a means of boosting sales.

Here was the first thing that came to my mind: They are comparing sales in aug this time vs sales in aug last year. That's too much of a time gap. What if this year, the revenue has anyway gone up?
Note that the conclusion is based on "increase in total sales". There is no distinction between transactions of less than 10 gallons and more than 10 gallons.

What would help us evaluate this conclusion?

The only relevant options are (A) and (C) so let's look at them.

(A) In the areas in which XT’s gasoline stations operate, how did total combined gasoline sales for all gasoline stations last August compare with sales for the previous August?

This questions whether the overall gasoline revenue has seen arise this time.
- Say combined gasoline sales for all stations this time is 10% more than the previous August. Then most gasoline stations would have seen this 10% rise in August sales. Hence the promotion would have had no impact.
- Say combined gasoline sales for all stations this time is no more than the previous August. Then we can say with more certainty that the promotion has had impact.
Hence how we answer this question affects our conclusion.

(C) Were there any customers who bought ten or more gallons at an XT gasoline station during the promotion who would have or more gallons at an XT gasoline in lower quantities, but more frequently, if the promotion had not been in effect?

Here is the reason this is not helpful to evaluate. The station is trying to increase its overall revenue - whether it is through 10 gallons sales or fewer gallons sale is immaterial. The overall sales has increased.
When we compare customers who bought 10 or more gallons fewer times compared to earlier when they bought the SAME amount of fuel but by visiting more frequently, it doesn't impact the station. These people are today also buying the same amount of fuel that they were buying a year ago. Whether they did it in small amounts or one big, it doesn't impact the success of the promotion at all. What impacts is whether there are people who were not buying at this station or were buying less total amount in the month before but are now buying higher amount. That is what we need to evaluate. That is what will define the success of the promotion.

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25 Dec 2018, 09:31
imhimanshu wrote:
Last August the XT chain of gasoline stations had a temporary sales promotion in effect. In the promotion, any customer who made a purchase of ten or more gallons of gasoline was entitled to a free car wash. For the month of August, XT experienced a ten percent increase in gasoline sales as compared to sales in August the previous year, so evidently the promotion was successful as a means of boosting sales.

In evaluating the argument, it would be most helpful to answer which of the following?

(A) In the areas in which XT’s gasoline stations operate, how did total combined gasoline sales for all gasoline stations last August compare with sales for the previous August?

(B) Was the money that XT earned from the increase in gasoline sales enough to offset the cost of providing free car washes during the promotion?

(C) Were there any customers who bought ten or more gallons at an XT gasoline station during the promotion who would have or more gallons at an XT gasoline in lower quantities, but more frequently, if the promotion had not been in effect?

(D) Did XT or any of its gasoline stations have to pay other businesses to provide the car washes that customers were offered in the promotion?

(E) Are XT’s gasoline sales in August usually significantly higher than one twelfth of XT’s annual gasoline sales?

In the promotion, any customer who made a purchase of ten or more gallons of gasoline was entitled to a free car wash.
For the month of August, XT experienced a ten percent increase in gasoline sales as compared to sales in August the previous year,

Conclusion: the promotion was successful as a means of boosting sales.

Here was the first thing that came to my mind: They are comparing sales in aug this time vs sales in aug last year. That's too much of a time gap. What if this year, the revenue has anyway gone up?
Note that the conclusion is based on "increase in total sales". There is no distinction between transactions of less than 10 gallons and more than 10 gallons.

What would help us evaluate this conclusion?

The only relevant options are (A) and (C) so let's look at them.

(A) In the areas in which XT’s gasoline stations operate, how did total combined gasoline sales for all gasoline stations last August compare with sales for the previous August?

This questions whether the overall gasoline revenue has seen arise this time.
- Say combined gasoline sales for all stations this time is 10% more than the previous August. Then most gasoline stations would have seen this 10% rise in August sales. Hence the promotion would have had no impact.
- Say combined gasoline sales for all stations this time is no more than the previous August. Then we can say with more certainty that the promotion has had impact.
Hence how we answer this question affects our conclusion.

(C) Were there any customers who bought ten or more gallons at an XT gasoline station during the promotion who would have or more gallons at an XT gasoline in lower quantities, but more frequently, if the promotion had not been in effect?

Here is the reason this is not helpful to evaluate. The station is trying to increase its overall revenue - whether it is through 10 gallons sales or fewer gallons sale is immaterial. The overall sales has increased.
When we compare customers who bought 10 or more gallons fewer times compared to earlier when they bought the SAME amount of fuel but by visiting more frequently, it doesn't impact the station. These people are today also buying the same amount of fuel that they were buying a year ago. Whether they did it in small amounts or one big, it doesn't impact the success of the promotion at all. What impacts is whether there are people who were not buying at this station or were buying less total amount in the month before but are now buying higher amount. That is what we need to evaluate. That is what will define the success of the promotion.

Thank you for a comprehensive explanation. In option C you said that amount of fuel is same even though it is bought in lower or higher quantity. In option it is not said that amount remains the same?? Am I going wrong in absorbing the meaning of the option C??
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Re: Last August the XT chain of gasoline stations had a temporary sales  [#permalink]

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25 Dec 2018, 09:35
warrior1991 wrote:
imhimanshu wrote:
Last August the XT chain of gasoline stations had a temporary sales promotion in effect. In the promotion, any customer who made a purchase of ten or more gallons of gasoline was entitled to a free car wash. For the month of August, XT experienced a ten percent increase in gasoline sales as compared to sales in August the previous year, so evidently the promotion was successful as a means of boosting sales.

In evaluating the argument, it would be most helpful to answer which of the following?

(A) In the areas in which XT’s gasoline stations operate, how did total combined gasoline sales for all gasoline stations last August compare with sales for the previous August?

(B) Was the money that XT earned from the increase in gasoline sales enough to offset the cost of providing free car washes during the promotion?

(C) Were there any customers who bought ten or more gallons at an XT gasoline station during the promotion who would have or more gallons at an XT gasoline in lower quantities, but more frequently, if the promotion had not been in effect?

(D) Did XT or any of its gasoline stations have to pay other businesses to provide the car washes that customers were offered in the promotion?

(E) Are XT’s gasoline sales in August usually significantly higher than one twelfth of XT’s annual gasoline sales?

In the promotion, any customer who made a purchase of ten or more gallons of gasoline was entitled to a free car wash.
For the month of August, XT experienced a ten percent increase in gasoline sales as compared to sales in August the previous year,

Conclusion: the promotion was successful as a means of boosting sales.

Here was the first thing that came to my mind: They are comparing sales in aug this time vs sales in aug last year. That's too much of a time gap. What if this year, the revenue has anyway gone up?
Note that the conclusion is based on "increase in total sales". There is no distinction between transactions of less than 10 gallons and more than 10 gallons.

What would help us evaluate this conclusion?

The only relevant options are (A) and (C) so let's look at them.

(A) In the areas in which XT’s gasoline stations operate, how did total combined gasoline sales for all gasoline stations last August compare with sales for the previous August?

This questions whether the overall gasoline revenue has seen arise this time.
- Say combined gasoline sales for all stations this time is 10% more than the previous August. Then most gasoline stations would have seen this 10% rise in August sales. Hence the promotion would have had no impact.
- Say combined gasoline sales for all stations this time is no more than the previous August. Then we can say with more certainty that the promotion has had impact.
Hence how we answer this question affects our conclusion.

(C) Were there any customers who bought ten or more gallons at an XT gasoline station during the promotion who would have or more gallons at an XT gasoline in lower quantities, but more frequently, if the promotion had not been in effect?

Here is the reason this is not helpful to evaluate. The station is trying to increase its overall revenue - whether it is through 10 gallons sales or fewer gallons sale is immaterial. The overall sales has increased.
When we compare customers who bought 10 or more gallons fewer times compared to earlier when they bought the SAME amount of fuel but by visiting more frequently, it doesn't impact the station. These people are today also buying the same amount of fuel that they were buying a year ago. Whether they did it in small amounts or one big, it doesn't impact the success of the promotion at all. What impacts is whether there are people who were not buying at this station or were buying less total amount in the month before but are now buying higher amount. That is what we need to evaluate. That is what will define the success of the promotion.

Thank you for a comprehensive explanation. In option C you said that amount of fuel is same even though it is bought in lower or higher quantity. In option it is not said that amount remains the same?? Am I going wrong in absorbing the meaning of the option C??

Hey warrior1991,

The "same amount" is implied. When they say "lower quantities but more frequently", you are implying that you make up for lower quantity by visiting more frequently.
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12 Jan 2019, 11:57
Option C is wrong for two reasons:

(1) If XT had 1 million customers in August and if there were only 2 customers who bought ten or more gallons at an XT gasoline station during the promotion who would have bought gasoline at the same station in lower quantities, but more frequently, then this question wouldn't help us out very much.

(2) Even if a majority of customers fell into this category, it still wouldn't mean much because they obviously aren't the customers that are responsible for the 10% sales increase. However, we know for a fact that other customers are responsible for this 10% sales increase.
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12 May 2019, 13:51
imhimanshu wrote:
Last August the XT chain of gasoline stations had a temporary sales promotion in effect. In the promotion, any customer who made a purchase of ten or more gallons of gasoline was entitled to a free car wash. For the month of August, XT experienced a ten percent increase in gasoline sales as compared to sales in August the previous year, so evidently the promotion was successful as a means of boosting sales.

In evaluating the argument, it would be most helpful to answer which of the following?

(A) In the areas in which XT’s gasoline stations operate, how did total combined gasoline sales for all gasoline stations last August compare with sales for the previous August?

(B) Was the money that XT earned from the increase in gasoline sales enough to offset the cost of providing free car washes during the promotion?

(C) Were there any customers who bought ten or more gallons at an XT gasoline station during the promotion who would have or more gallons at an XT gasoline in lower quantities, but more frequently, if the promotion had not been in effect?

(D) Did XT or any of its gasoline stations have to pay other businesses to provide the car washes that customers were offered in the promotion?

(E) Are XT’s gasoline sales in August usually significantly higher than one twelfth of XT’s annual gasoline sales?

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Can you please explain why option C is incorrect here ?
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Last August the XT chain of gasoline stations had a temporary sales  [#permalink]

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12 May 2019, 17:35
imhimanshu wrote:
Last August the XT chain of gasoline stations had a temporary sales promotion in effect. In the promotion, any customer who made a purchase of ten or more gallons of gasoline was entitled to a free car wash. For the month of August, XT experienced a ten percent increase in gasoline sales as compared to sales in August the previous year, so evidently the promotion was successful as a means of boosting sales.

In evaluating the argument, it would be most helpful to answer which of the following?

(A) In the areas in which XT’s gasoline stations operate, how did total combined gasoline sales for all gasoline stations last August compare with sales for the previous August?

(B) Was the money that XT earned from the increase in gasoline sales enough to offset the cost of providing free car washes during the promotion?

(C) Were there any customers who bought ten or more gallons at an XT gasoline station during the promotion who would have bought gasoline at the same station in lower quantities, but more frequently, if the promotion had not been in effect?

(D) Did XT or any of its gasoline stations have to pay other businesses to provide the car washes that customers were offered in the promotion?

(E) Are XT’s gasoline sales in August usually significantly higher than one twelfth of XT’s annual gasoline sales?

When I see this many incredibly boring words, I
(1) list the factual premises more specifically (I always take notes); and
(2) If I am down to two answers, in those two options I look even more carefully than usual for key words.

• THE PROMPT
Fact #1: Last August the XT chain of gas stations had a temporary sales promotion
Fact #2: Promotion = IF customer bought 10+ gallons of gas, customer got a free car wash
Fact #3: Last August, XT [stations] had a 10% increase in SALES compared to SALES during the previous August
Conclusion: The promotion "evidently" boosted sales

When I reached the conclusion, I went back and circled SALES in my notes.
Questions that involve one issue in business accounting almost always try to sneak in other accounting issues.

What is the issue? What do we not know?

We do not know whether the promotion caused the increase in sales.

Correlation is not causation.
Other things could explain August #2's 10% increase in sales.
Maybe in August #2, the public transportation system broke down so people had to drive more.
Maybe in August #2, an amazing circus was in town and lots of people came from other places to see the circus.

What information would help the most to tell us whether the sales promotion caused the increase in sales?

• Things to keep in mind
-- August vs. August is important
-- we care about one thing: which information pertains to whether the promotion caused the sales increase. All else is distraction.

• OPTIONS

Quote:
(A) In the areas in which XT’s gasoline stations operate, how did total combined gasoline sales for all gasoline stations last August compare with sales for the previous August?

-- I cannot eliminate this answer quickly. I am looking for 4 wrong answers, not one correct answer. KEEP.

Quote:
(B) Was the money that XT earned from the increase in gasoline sales enough to offset the cost of providing free car washes during the promotion?

Trap. Irrelevant. This answer has something to do with profit and loss. Eliminate.
-- The conclusion asks nothing about whether XT turned a profit. The prompt says nothing about profit.
The issue is: Did the promotion cause the sales increase?

Quote:
(C) Were there any customers who bought ten or more gallons at an XT gasoline station during the promotion who would have bought gasoline at the same station in lower quantities, but more frequently, if the promotion had not been in effect?

Much too vague.
Wow, this one is bad.

First, nothing in this option indicates that sales increased at all, let alone because of the promotion.
-- if people who bought 10+ gallons would have bought, theoretically, fewer gallons more frequently,
that fact suggests that they would have bought the same total amount of gas.

Second, this data has too much uncertainty.
This data is focused on hypothetical buying patterns that do not show a real-world 10% increase in sales.
The quantity words look tempting. They are too vague to be helpful.

Customers who would have bought lower qualities more frequently sound as though they are customers who did not increased total monthly gas purchase.
lower quantities more frequently = probably the same total amount of gas purchased.

Second, what does ANY customers mean?
Customer buying patterns might have changed, but nothing says that all of them
increased their purchase of total gallons by 10%.

When we see vague quantity words such as any, lower, or more frequently, we should ask: do I know anything specific?
-- What is ANY [customers]? A majority? 100% of them?
-- What are LOWER quantities? A lot lower? A little bit lower? There are thousands of possibilities.
-- What is MORE FREQUENTLY? A few times a week? One time more than usual? Again, thousands of possibilities.

ANY is a key word, as are the other capitalized key words.
We have no actual quantities and no guarantee that we will have comparative quantities.

For those who struggled between A and C, one word in option A really helps ("all"),
and these three words in C really do not help.

Quote:
(D) Did XT or any of its gasoline stations have to pay other businesses to provide the car washes that customers were offered in the promotion?

Irrelevant. Neither the prompt nor the conclusion mentions costs.
Does this option tell us anything about whether the promotion increased the sales? Nope. Eliminate

Quote:
(E) Are XT’s gasoline sales in August [which August?] usually significantly higher than one twelfth of XT’s annual gasoline sales?

Neither the prompt nor the conclusion mentions average sales.
We need an August #2 compared to August #1. Average sales do not matter. August #1 and August #2 matter. Eliminate.

I am left with (A).
Quote:
(A) In the areas in which XT’s gasoline stations operate, how did total combined gasoline sales for all gasoline stations last August compare with sales for the previous August?

Ah. ALL gas stations = XT gas stations plus all OTHER non-XT gas stations

What happened to sales at the other gas stations during August #1 vs. August #2?
-- If other gas stations also experienced a 10% sales increase, then the XT promotion had no effect. Sales increased 10% everywhere.
-- If the other gas stations experienced no increase (no change) in sales, then the promotion almost certainly had an effect. (What else explains why ONLY XT gas stations had a 10% increase in sales?)
-- If the other gas stations experienced a decrease in sales, then the promotion almost certainly had an effect—same as above, but maybe the promotion even tempted customers away from other stations.

Option A would give us an answer we could use to evaluate the issue in the conclusion.

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12 May 2019, 17:38
sayan640 wrote:
C) Were there any customers who bought ten or more gallons at an XT gasoline station during the promotion who would have or more gallons at an XT gasoline in lower quantities, but more frequently, if the promotion had not been in effect?

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Can you please explain why option C is incorrect here ?

sayan640 , please read my explanation immediately above this post.

If you still have questions, please ask specific questions and tag me. I will be happy to answer.
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Re: Last August the XT chain of gasoline stations had a temporary sales  [#permalink]

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13 May 2019, 02:40
sayan640 wrote:
imhimanshu wrote:
Last August the XT chain of gasoline stations had a temporary sales promotion in effect. In the promotion, any customer who made a purchase of ten or more gallons of gasoline was entitled to a free car wash. For the month of August, XT experienced a ten percent increase in gasoline sales as compared to sales in August the previous year, so evidently the promotion was successful as a means of boosting sales.

In evaluating the argument, it would be most helpful to answer which of the following?

(A) In the areas in which XT’s gasoline stations operate, how did total combined gasoline sales for all gasoline stations last August compare with sales for the previous August?

(B) Was the money that XT earned from the increase in gasoline sales enough to offset the cost of providing free car washes during the promotion?

(C) Were there any customers who bought ten or more gallons at an XT gasoline station during the promotion who would have or more gallons at an XT gasoline in lower quantities, but more frequently, if the promotion had not been in effect?

(D) Did XT or any of its gasoline stations have to pay other businesses to provide the car washes that customers were offered in the promotion?

(E) Are XT’s gasoline sales in August usually significantly higher than one twelfth of XT’s annual gasoline sales?

VeritasKarishma generis GMATNinja chetan2u

Can you please explain why option C is incorrect here ?

Check out my (A) vs (C) discussion here:
https://gmatclub.com/forum/last-august- ... l#p2197034
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Re: Last August the XT chain of gasoline stations had a temporary sales  [#permalink]

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26 Jun 2019, 00:17
suntwin wrote:
I think its C
Even if the sales compared to previous year were high how does it tell that campaign didnt play his role.

C shows that is there are customers a who bought.more than 10 gallons frequently but not upfront then they did irrespective of the campaign.

If they didn't do then clearly campaign helped.
If they did then campaign did not help.

Sent from my GT-N7105 using Tapatalk 2

c-talks about frequency of purchase in promotion period
suppose gasoline 1 gallon cost 1inr . if any person bought 10 gallon in 10 day total sale will be of 10inr
if 10 gallon bought in 1 day total sale will be the same 10 inr.

so frequency cannot be the criterion for judging promotion here
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Re: Last August the XT chain of gasoline stations had a temporary sales  [#permalink]

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26 Jun 2019, 00:30
imhimanshu wrote:
Last August the XT chain of gasoline stations had a temporary sales promotion in effect. In the promotion, any customer who made a purchase of ten or more gallons of gasoline was entitled to a free car wash. For the month of August, XT experienced a ten percent increase in gasoline sales as compared to sales in August the previous year, so evidently the promotion was successful as a means of boosting sales.

In evaluating the argument, it would be most helpful to answer which of the following?

(A) In the areas in which XT’s gasoline stations operate, how did total combined gasoline sales for all gasoline stations last August compare with sales for the previous August?

(B) Was the money that XT earned from the increase in gasoline sales enough to offset the cost of providing free car washes during the promotion?

(C) Were there any customers who bought ten or more gallons at an XT gasoline station during the promotion who would have or more gallons at an XT gasoline in lower quantities, but more frequently, if the promotion had not been in effect?

(D) Did XT or any of its gasoline stations have to pay other businesses to provide the car washes that customers were offered in the promotion?

(E) Are XT’s gasoline sales in August usually significantly higher than one twelfth of XT’s annual gasoline sales?

In the promotion, any customer who made a purchase of ten or more gallons of gasoline was entitled to a free car wash.
For the month of August, XT experienced a ten percent increase in gasoline sales as compared to sales in August the previous year,

Conclusion: the promotion was successful as a means of boosting sales.

Here was the first thing that came to my mind: They are comparing sales in aug this time vs sales in aug last year. That's too much of a time gap. What if this year, the revenue has anyway gone up?
Note that the conclusion is based on "increase in total sales". There is no distinction between transactions of less than 10 gallons and more than 10 gallons.

What would help us evaluate this conclusion?

The only relevant options are (A) and (C) so let's look at them.

(A) In the areas in which XT’s gasoline stations operate, how did total combined gasoline sales for all gasoline stations last August compare with sales for the previous August?

This questions whether the overall gasoline revenue has seen arise this time.
- Say combined gasoline sales for all stations this time is 10% more than the previous August. Then most gasoline stations would have seen this 10% rise in August sales. Hence the promotion would have had no impact.
- Say combined gasoline sales for all stations this time is no more than the previous August. Then we can say with more certainty that the promotion has had impact.
Hence how we answer this question affects our conclusion.

(C) Were there any customers who bought ten or more gallons at an XT gasoline station during the promotion who would have or more gallons at an XT gasoline in lower quantities, but more frequently, if the promotion had not been in effect?

Here is the reason this is not helpful to evaluate. The station is trying to increase its overall revenue - whether it is through 10 gallons sales or fewer gallons sale is immaterial. The overall sales has increased.
When we compare customers who bought 10 or more gallons fewer times compared to earlier when they bought the SAME amount of fuel but by visiting more frequently, it doesn't impact the station. These people are today also buying the same amount of fuel that they were buying a year ago. Whether they did it in small amounts or one big, it doesn't impact the success of the promotion at all. What impacts is whether there are people who were not buying at this station or were buying less total amount in the month before but are now buying higher amount. That is what we need to evaluate. That is what will define the success of the promotion.

Here was the first thing that came to my mind: They are comparing sales in aug this time vs sales in aug last year. That's too much of a time gap.

just for the information. in retail world sales are actually compared with last year same mth sales everywhere. and it is considered as a very very imp factor for comparison. So it is not at all surprising .
Re: Last August the XT chain of gasoline stations had a temporary sales   [#permalink] 26 Jun 2019, 00:30

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