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Mechanicorp s newest product costs so little to make that it

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

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09 Feb 2006, 23:00
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Mechanicorpâ€™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 Mechanicorpâ€™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 companyâ€™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) Mechanicorpâ€™s newest product is intended to perform tasks that can be performed by other devices costing less to manufacture.
(E) Mechanicorpâ€™s production processes are designed with the same ingenuity as are the products that the company makes.
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vazlkaiye porkalam vazltuthan parkanum.... porkalam maralam porkalthan maruma

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09 Feb 2006, 23:36
My pick would be A.

IMO, B is not strongly supported by the argument. It is just mentioned that Mechanicorp has a reputation built on fair pricing policy. Nothing is stated about the profitability of the company.

C/D/E are way off.
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09 Feb 2006, 23:37
A. It's the most strongly supported option.

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10 Feb 2006, 15:30
A.

I will go with A as well.

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11 Feb 2006, 09:42
thnks girish for the explanation , the OA is A
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vazlkaiye porkalam vazltuthan parkanum.... porkalam maralam porkalthan maruma

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11 Feb 2006, 11:06
Late, but IMO A is correct.

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11 Feb 2006, 19:33
Agree with Giddi's explanation, A it is
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11 Feb 2006, 20:37
A is my pick too

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12 Feb 2006, 09:06
yup A for me as well

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13 Feb 2006, 23:14
A....if the company sets a fair price...clients won't trust.
.....if the company adds markup..reputation goes down the drain...CATCH 22.

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16 Feb 2006, 15:03
Can anybody explain why it can't be B ? Because in the argument it is written that the mechanicorps earn moderate amount of profit per unit sale and is able to maintain fair reputation on fair price.So can;t it be true that the company is earning profits despite of small profits per unit sold.

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16 Feb 2006, 15:21

So can;t it be true that the company is earning profits despite of small profits per unit sold.

It could be true that the company could earn profits but "How much" is not mentioned in the question stem.
Where as the problems with low Price and company reputation is mentioned in the stem.
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16 Feb 2006, 15:21
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