Mechanicorps newest product costs so little to make that it appears

Question

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.

KarishmaB · Accepted Answer

Since we have multiple answers for this question, let us analyze it.

We are looking for 'the statements above support which of the following' so basically for the statement that can be inferred from the given premises i.e. for the conclusion.  Remember, a conclusion never gives us new information. It only re-states what is mentioned in the premises.

Premises:
1. Newest product costs very little to make
2. It appears doubtful the company will be able to sell it without increasing the markup the company usually allows for profit (lets say the company marks up its goods by 20% to allow for profit - it will need to increase this %) because potential clients would simply not believe that something so inexpensive would really work. 
3. Mechanicorp’s reputation is built on fair prices incorporating only modest profit margins.

So the new product costs very little to produce but the company will be unable to sell if it takes a modest profit because customers will not believe that a cheap product can work. To promote sales, it will have to take a higher profit margin. If the company does take a bigger profit, its reputation (of fair prices and modest margins) will be at stake.
 
(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.

This is what we can infer from the premises. Hence it is the correct option.

(B) Mechanicorp achieves large annual profits, despite small profits per unit sold, by means of a high volume of sales.

We do not know whether it achieves large annual profits. We only know that it makes modest profits per product. Overall whether its profits are modest or large, premises do not tell us. They also do not tell us whether the company has high volumes of sales. Hence this is not something we can infer from the argument.

AdamKnewton · Answer

You are correct, the above question is a "must-be-true," question, or an Inference question. It is NOT a Strengthener.

How to tell the difference? Many GMAT test-takers are confused on this because they focus on the word "support" in the question stem. Here are the two question stems to differentiate between:

i. The statements above, if true, support which of the following?
ii. Which of the following, if true, supports the argument above?

Now, the big clue in how I worded it is that only (ii) refers to an Argument. And that's the biggest difference for you to be aware of, too: Strengtheners are always about Arguments, and the answer will hinge upon correctly identifying the Conclusion and Evidence and deducing the Assumption from that. Inference questions, such as (i), may not refer to an Argument at all and may simply be based upon a set of Statements, that is, Evidence without a Conclusion, from which you must make a "must-be-true" deduction.

However, it's also worth noting the difference in word order that has logical significance. In (i), the Inference question, we're assuming that that STIMULUS is true -- we would never do this in a Strengthener question, as we're trying to strengthen an otherwise-specious Argument -- and using it to examine the ANSWERS, only one of which "must be true." In (ii), the Strengthener question, we're assuming the ANSWERS are all true, and seeing how each of them affects the STIMULUS differently.

So, to put it really simply: Inference or "must-be-true" questions will look like (i) above: they work down, with the Stimulus taken as true and used to affect the Answer Choices. Strengtheners, which refer to Arguments, take the form of (ii) above: they work up, so that you take the Answer Choices as true and apply to them to the Stimulus in question.

Hope that helps!

ajit257 · Answer

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.

I am trying to understand how to distinguish between a must be true and strengthen question. If the above question is must be true then the ans makes sense. Can some one please clarify this doubt for me. I am confused.

vineet474 · Answer

For those who seek explaination , Here,s mine. :wink:

After reading the stimulus, you must recognize that it is a MUST BE TRUE question. Hint: question stem states- If above statements are TRUE and NO CONCLUSION. Now, moving forward to answer choices. (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. Looks promising..Keep it as a contender and move on. (B) Mechanicorp achieves large annual profits, despite small profits per unit sold, by means of a high volume of sales. Eliminate: Nowhere in the stimulus does the author makes any point of the PROFITS per unit sold. New info..Eliminate (C) Mechanicorp made a significant computational error in calculating the production costs for its newest product. Eliminate: New info again:: Computational error. (D) Mechanicorp’s newest product is intended to perform tasks that can be performed by other devices costing less to manufacture. Eliminate: New info again:: Other devices. (E) Mechanicorp’s production processes are designed with the same ingenuity as are the products that the company makes. Eliminate: Processes designed with same ingenuity is not the point of the argument. Again new info. As always, suggestions are welcomed. Thanks -V

Lstadt · Answer

To identify Must Be True type your first hint will be the question.
Here are some types: 
 If the statements above are true, which of the following must be true?
Which of the following can be inferred from the passage?
"..most strongly supports which of the following?"
"..which can be drawn as a conclusion.."

Your stimulus (Argument) is taken for granted and you will need to find an answer from a set of suspicious choices (except for one).
Strengthen, on the other hand, will ask you to find support from the answer choices to a stimulus that is weak (either has a gap or error in reasoning, etc).

Once you identify the question then your job is to figure out what answer types are associated with that question type. For Must Be True question, you should find one of two types :
(a) Paraphrased stimulus or part of it.
(b) Answers that are the sum of two more or more stimulus.

Remember that the correct answer in Must Be True can always be proven by referring to the facts stated in the stimulus.

I hope this helps and good luck.

yashhw · Answer

I got this correct through process of elimination, but I still can't fully agree with the reasoning behind (A). Specifically, I'm struggling with the "threatening to compromise the company's reputation" part.
The passage clearly states that Mechanicorp's reputation is built on fair prices with modest profit margins. So if anything, offering a cheap product at a low price seems perfectly consistent with that reputation, and therefore, not a threat to it.
Why would pricing this product appropriately hurt the company's image? Am I misreading the passage, or is there something in the logic I'm missing?

guddo · Answer

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?

The point is that  Mechanicorp faces a pricing dilemma: pricing the product low may hurt sales because customers may distrust it, but pricing it higher may conflict with the company’s reputation for fair prices and modest profit margins . So the best answer is the one that captures this tension.

(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.

This is the best answer. If Mechanicorp uses its usual modest markup, the price may be so low that customers will doubt the product works. But if it raises the markup enough to make the product seem credible, it risks damaging its reputation for fair pricing.

(B) Mechanicorp achieves large annual profits, despite small profits per unit sold, by means of a high volume of sales.

The passage says nothing about annual profits or sales volume. That is outside the scope.

(C) Mechanicorp made a significant computational error in calculating the production costs for its newest product.

There is no reason to infer any calculation error. The passage treats the low production cost as real.

(D) Mechanicorp’s newest product is intended to perform tasks that can be performed by other devices costing less to manufacture.

The passage says nothing about competing devices or comparative manufacturing costs.

(E) Mechanicorp’s production processes are designed with the same ingenuity as are the products that the company makes.

This is unsupported. The passage discusses only customer perception, markup, and company reputation.

Answer: (A)

Mechanicorps newest product costs so little to make that it appears

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Mechanicorps newest product costs so little to make that it appears

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