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# Mechanicorp s newest product costs so little to make that it

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Manager
Joined: 08 Jun 2011
Posts: 73

Kudos [?]: 12 [0], given: 32

Schools: NUS
Mechanicorp s newest product costs so little to make that it [#permalink]

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18 Dec 2011, 06:17
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Difficulty:

25% (medium)

Question Stats:

81% (01:10) correct 19% (01:57) wrong based on 74 sessions

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ssarkar wrote:
Mechanicorp’s newest product costs so little to make that it appears doubtful the company will be able to sell it without increasing the markup the company usually allows for profit: potential clients would simply not believe that something so inexpensive would really work. Yet Mechanicorp’s reputation is built on fair prices incorporating only modest profit margins.
The statements above, if true, most strongly support which of the following?
(A) Mechanicorp will encounter difficulties in trying to set a price for its newest product that will promote sales without threatening to compromise the company’s reputation.
(B) Mechanicorp achieves large annual profits, despite small profits per unit sold, by means of a high volume of sales.
(C) Mechanicorp made a significant computational error in calculating the production costs for its newest product.
(D) Mechanicorp’s newest product is intended to perform tasks that can be performed by other devices costing less to manufacture.
(E) Mechanicorp’s production processes are designed with the same ingenuity as are the products that the company makes.

+1 for A as the M's client will loose the faith in its extremely cheap product,M cannot increase the price of the product as its reputation is based on fair price fixing of the products.
[Reveal] Spoiler: OA

Kudos [?]: 12 [0], given: 32

Manager
Joined: 25 May 2011
Posts: 148

Kudos [?]: 74 [0], given: 71

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18 Dec 2011, 06:25
Based on the question, we should make conclusion from the stimulus's premises.
premise 1: Cost of new product is so too little to increase the markup
premise 2: potential clients would simply not believe that something so inexpensive would really work
premise 3: Mechanicorp’s reputation is built on fair prices incorporating only modest profit margins

we should choose the answer whose words are supported by these premises.

A

Kudos [?]: 74 [0], given: 71

BSchool Forum Moderator
Status: Flying over the cloud!
Joined: 17 Aug 2011
Posts: 888

Kudos [?]: 718 [0], given: 44

Location: Viet Nam
GMAT Date: 06-06-2014
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18 Dec 2011, 08:08
A
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Kudos [?]: 718 [0], given: 44

Manager
Joined: 07 Aug 2011
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Kudos [?]: 23 [0], given: 6

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26 Dec 2011, 10:41

Kudos [?]: 23 [0], given: 6

Senior Manager
Joined: 12 Oct 2011
Posts: 256

Kudos [?]: 61 [0], given: 110

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27 Dec 2011, 03:05
A is the only answer which connects all the premises and stays within the scope.

Kudos [?]: 61 [0], given: 110

Director
Status: Enjoying the GMAT journey....
Joined: 26 Aug 2011
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Kudos [?]: 584 [0], given: 264

Location: India
GMAT 1: 620 Q49 V24

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27 Dec 2011, 10:49
only possible ans is A
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Fire the final bullet only when you are constantly hitting the Bull's eye, till then KEEP PRACTICING.

A WAY TO INCREASE FROM QUANT 35-40 TO 47 : http://gmatclub.com/forum/a-way-to-increase-from-q35-40-to-q-138750.html

Q 47/48 To Q 50 + http://gmatclub.com/forum/the-final-climb-quest-for-q-50-from-q47-129441.html#p1064367

Three good RC strategies http://gmatclub.com/forum/three-different-strategies-for-attacking-rc-127287.html

Kudos [?]: 584 [0], given: 264

Re: 1000 cr 19.2   [#permalink] 27 Dec 2011, 10:49
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