imhimanshu
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?
Context: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.
Premises: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.
We need to evaluate whether the increase in sales this year is due to the promotion or some other factor.
(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 a rise.
If we answer
“Yes” – 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.
“No” – 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 an impact.
The two answers affect the conclusion differently. Hence, this is the correct option.
(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? We are talking about sales, not profits. So, whether we made overall profits from the promotion is irrelevant.
(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? The most common incorrect answer.
The station is trying to increase its overall revenue - whether it is through 10 gallons sales or fewer gallons sale is irrelevant. 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.
If we answer
“Yes” – there were some customers who bought 10 gallons in a go due to the promotion but would have bought 2 gallons each on 5 visits without promotion. The promotion did not increase sales in their case. They were buying total 10 gallons and are still buying total 10 gallons. Hence the promotion would have had no impact. It doesn’t help in explaining why 10% increase in gasoline sales was seen with the promotion.
“No” – there were no such customers who bought 10 gallons in a go due to the promotion but would have bought 2 gallons each on 5 visits without promotion. It doesn’t help in explaining why 10% increase in gasoline sales was seen with the promotion.
Both answers affect the conclusion in the same way i.e. they have no effect on the conclusion.
(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?As discussed previously, cost of the promotion is out of scope.
(E) Are XT’s gasoline sales in August usually significantly higher than one twelfth of XT’s annual gasoline sales?It doesn’t matter how we answer this question. Whether August sales are usually higher than average sales doesn’t matter. We know that this August sales were higher than last August. So the comparison is between the two August months only.
Answer (A)Discussion on Useful to Evaluate Questions:
https://youtu.be/1JtHjH1lWZc
11 Dec 2023, 13:34 
