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Mechanicorp s newest product costs so little to make that it

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Director
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Affiliations: FRM Charter holder
Joined: 02 Dec 2006
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Schools: Stanford, Chicago Booth, Babson College
Mechanicorp s newest product costs so little to make that it [#permalink]

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New post 09 Jan 2007, 08:07
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A
B
C
D
E

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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.

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

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

 [#permalink]

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New post 09 Jan 2007, 08:33
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.

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
A - BEST ANSWER

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VP
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New post 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.

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

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Director
Director
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Schools: Stanford, Chicago Booth, Babson College
 [#permalink]

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

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Manager
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Location: D.C.
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New post 10 Jan 2007, 15:24
Since the company is concerned about its reputation "without threatening to compromise the company’s reputation" I pick A!

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  [#permalink] 10 Jan 2007, 15:24
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Mechanicorp s newest product costs so little to make that it

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