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# Manufacturers of mechanical pencils make most of the profit

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Manager
Joined: 05 Nov 2005
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Manufacturers of mechanical pencils make most of the profit [#permalink]

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11 Nov 2005, 01:45
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Manufacturers of mechanical pencils make most of the profit on pencil leads rather than on the pencils themselves. The Write Company, which cannot sell its leads as cheaply as other manufacturers can, plans to alter the design of its mechanical pencil so that it will accept only a new designed Write Company lead, which will be sold at the same price as the Write Company's current lead.

Which of the following, if true, most strongly supports the Write Company's projection that its plan will lead to an increase in its sales of pencil leads?

(A) First-time buyers of mechanical pencils tend to buy the least expensive mechanical pencils available.

(B) Annual sales of mechanical pencils are expected to triple over the next five years.

(C) A Write Company executive is studyiing ways to reduce the cost of manufacturing pencil leads.

(D) A rival manufacturer recently announced similar plans to introduce a mechanical pencil that would accept only the leads produced by that manufacturer.

(E) In extensive test marketing, mechanical-pencil users found the new Write Company pencil markedly superior to other mechanical pencils they had used.

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VP
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11 Nov 2005, 02:04
between B and E

I would go for B because B has a direct link with sales and profit.

E is good but a pencil can be very good and very expensive, so maybe nobody will ever buy that pencil...and the only way to make big profit on the leads is to sell specific pencils that can only be used with Write Leads.

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Intern
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11 Nov 2005, 05:22
Antmavel wrote:
between B and E

I would go for B because B has a direct link with sales and profit.

E is good but a pencil can be very good and very expensive, so maybe nobody will ever buy that pencil...and the only way to make big profit on the leads is to sell specific pencils that can only be used with Write Leads.

I would say E. The company assumes that if they change the design then other leads can't be used. E strengthes the arguemnt by stating that their pencil is superior and people buy it.

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SVP
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11 Nov 2005, 07:05
A. Does not affect the sales at all.

B. manufacturer makes money not by selling its pencil but by selling the lead.
so even if the sale is tripling, the manufacturer might not make any profit.

C. Cost is out of scope.

D. weakens the conclusion.

E. is the only one remaining. if the new product is markedly superior to the other pencil, the lead as well as the pencil will sell a lot. that is when they can increase the sale of pencil lead.
_________________

hey ya......

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Manager
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11 Nov 2005, 09:01
Vote for E.

Only with E, Write Company will compete successfully.

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Director
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11 Nov 2005, 11:24
E it is.

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Director
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11 Nov 2005, 11:25
e it is

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Director
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11 Nov 2005, 12:48
I go with E too. B could be a possible answer, but I think E is better.

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Manager
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11 Nov 2005, 13:18
OA is E

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Manager
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11 Nov 2005, 13:19
OA is E

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Senior Manager
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15 Nov 2005, 05:23
It is E.
I think this is a OG Q.

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15 Nov 2005, 05:23
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# Manufacturers of mechanical pencils make most of the profit

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