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

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Director
Affiliations: FRM Charter holder
Joined: 02 Dec 2006
Posts: 726

Kudos [?]: 96 [0], given: 4

Schools: Stanford, Chicago Booth, Babson College
Mechanicorp s newest product costs so little to make that it [#permalink]

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09 Jan 2007, 08:07
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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.

Kudos [?]: 96 [0], given: 4

Senior Manager
Joined: 01 Feb 2005
Posts: 271

Kudos [?]: 109 [0], given: 1

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09 Jan 2007, 08:33
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.

P - Prod costs very little that the company will not be able to sell it because clients will be skecptical about the price and the functionality it provides.

E - Does not talk about Production process
D - Comparison with other devices costing less to manufacture... Out of Scope
C - Irrelevant
B - Weakens the argument. Mechanicorp talks about modest profits and fair pricing not large profits

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VP
Joined: 07 Nov 2005
Posts: 1116

Kudos [?]: 52 [0], given: 1

Location: India

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09 Jan 2007, 08:35
A on this one.
The company will have to increase the price to make the product credible without actually ruining it's reputation of fair prices.
_________________

Trying hard to conquer Quant.

Kudos [?]: 52 [0], given: 1

Senior Manager
Joined: 05 Aug 2005
Posts: 410

Kudos [?]: 73 [0], given: 0

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09 Jan 2007, 09:38
only A remains.....rest others are not discussed in the argument.

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Director
Affiliations: FRM Charter holder
Joined: 02 Dec 2006
Posts: 726

Kudos [?]: 96 [0], given: 4

Schools: Stanford, Chicago Booth, Babson College

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09 Jan 2007, 09:54
thanks guys. A is the OA.

Kudos [?]: 96 [0], given: 4

Manager
Joined: 08 Jan 2007
Posts: 66

Kudos [?]: 1 [0], given: 0

Location: D.C.

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10 Jan 2007, 15:24
Since the company is concerned about its reputation "without threatening to compromise the companyâ€™s reputation" I pick A!

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10 Jan 2007, 15:24
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