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# Manufacturers of mechanical pencils make most of their profit on penci

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Re: Manufacturers of mechanical pencils make most of their profit on penci [#permalink]
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Manufacturers of mechanical pencils make most of their 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 newly 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. The new Write Company pencil will be introduced at a price higher than the price the Write Company charges for its current model. -- This weakens the plan by making the pencil costlier for the customer
B. In the foreseeable future, manufacturers of mechanical pencils will probably have to raise the prices they charge for mechanical pencils. -- We can't predict about the future sales of the pencil
C. The newly designed Write Company lead will cost somewhat more to manufacture than the Write Company's current lead does. -- IRRELEVANT info, customer only sees the selling price
D. A rival manufacturer recently announced similar plans to introduce a mechanical pencil that would accept only the leads produced by that manufacturer. -- At best it can weaken the company's plan or at worst it is irrelevant (because we don't know whether rival company will price its pencil competitively)
E. In extensive test marketing, mechanical-pencil users found the new Write Company pencil markedly superior to other mechanical pencils they had used. -- CORRECT, this survey tells us customers prefer new model even though it's costlier than the current model. Our best choice

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Manufacturers of mechanical pencils make most of their profit on penci [#permalink]
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I've broken down this passage into smaller bits so that it becomes easier to grasp whats going on in the passage.

1. Lead in pencils is more profitable than the mechanical pencils themselves.
2. A company called Write Company (WC) cannot lower its price of the lead used in its current design
3. WC makes a newly designed mechanical pencil that accepts only WC modeled lead.
4. This newly designed mechanical pencil will be sold at the same price as the price of current lead sold by WC

We have been asked to strengthen the idea that this newly designed pencils (by WC) will lead WC to experience an increase in the sale of its leads.

Generally speaking, a new product/design will lead to increased sales if the benefit experienced by the users make them feel that they will not enjoy the same benefits if they switch over to other products sold by competitors.

The right answer to this question will also be in line with this general thought.

So, let's take a look at the answer choices to see which one fits this general description:

A. The new Write Company pencil will be introduced at a price higher than the price the Write Company charges for its current model.- Okay. this means that whatever WC came up with (the new design) is now more expensive for customers to purchase than the current price of its lead. This option itself does not tell us whether WC enjoys massive customer loyalty to offset the potential loss of customers (assuming that some customers won't be able to purchase its product at this new price). How does a price increase lead to increased sales? As you can see, there are a lot of moving terms here that does not generate a solid reason why WC will experience increased sales. Hence, (A) is eliminated.

B. In the foreseeable future, manufacturers of mechanical pencils will probably have to raise the prices they charge for mechanical pencils. - What this option conveys is that there will be an industry-wide increase in the price of mechanical pencils. But how does this industry wide action explain why WC will experience an increase in sales of its lead? Just like in (A), (B) leaves a room of doubt. Hence, eliminate (B)

C. The newly designed Write Company lead will cost somewhat more to manufacture than the Write Company's current lead does. - Now we know that it is more expensive for WC to roll out its newly designed mechanical pencil. What would still explain the potential for increased sales of WC lead? This is not made clear in (C). Hence, eliminate (C).

D. A rival manufacturer recently announced similar plans to introduce a mechanical pencil that would accept only the leads produced by that manufacturer. - A competitor announcing the same plan still does nothing to prove that WC will experience an increase in the sale of its lead. Hence, eliminate (D)

E. In extensive test marketing, mechanical-pencil users found the new Write Company pencil markedly superior to other mechanical pencils they had used. - (E) gives a solid reason why customers would love the new WC mechanical pencil design. if they love this new design, they would purchase more of it. More purchases made = more sales. BINGO. This is what we are looking for. Notice that this answer choice is perfectly in line with what's described in the highlighted section. Hence, (E) is the right answer.
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Manufacturers of mechanical pencils make most of their profit on penci [#permalink]
This question is very similar to another one, from the free 15 CR questions on "GMAT Official Practice": https://gmatclub.com/forum/manufacturer ... 49439.html
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Re: Manufacturers of mechanical pencils make most of their profit on penci [#permalink]
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Manufacturers of mechanical pencils make most of their 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 newly designed Write Company lead, which will be sold at the same price as the Write Company's current lead.

P: Manufacturers of mechanical pencils make most of their profit on lead rather than on penciles
P: Write Company cannot sell its lead as cheaply compared to other manufacturers
C: Write Company will alter the design of the pencil to only accept the company’s lead
P: The new lead will be sold at the same price as the 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. The new Write Company pencil will be introduced at a price higher than the price the Write Company charges for its current model.

This can’t be it. Generally speaking, anytime the price of a product increases, people will be less likely to buy.

B. In the foreseeable future, manufacturers of mechanical pencils will probably have to raise the prices they charge for mechanical pencils.

Similar rationale as B.

C. The newly designed Write Company lead will cost somewhat more to manufacture than the Write Company's current lead does.

This goes in the opposite direction compared to the choice that we are looking for.

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

We aren’t concerned with what other manufacturers do.

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

Correct. This gives us reason to believe that the newly designed pencil will attract sales. So, if people are going to buy the new pencil, then surely they would also have to buy the lead that goes with it because that’s the only lead that the pencil accepts.
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Re: Manufacturers of mechanical pencils make most of their profit on penci [#permalink]
I chose the correct option, but I have one doubt regarding the correct choice.
Option E says that people will find out that Writing company pencils are of superior choice but where is it mentioned that superior quality pencils will lead people to buy the pencil more in the question stem? Are we not using external knowledge in this case?
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Re: Manufacturers of mechanical pencils make most of their profit on penci [#permalink]
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