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Updated on: 07 Nov 2018, 07:22
Originally posted by dancinggeometry on 10 Sep 2008, 23:30.
Last edited by Bunuel on 07 Nov 2018, 07:22, edited 1 time in total.
Last edited by Bunuel on 07 Nov 2018, 07:22, edited 1 time in total.
Renamed the topic and edited the question.
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A
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
35%
(medium)
Question Stats:
74% (01:53) correct
26%
(02:07)
wrong
based on 2984
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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.
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.
20 Dec 2010, 13:22
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dancinggeometry
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.
05 Jan 2011, 15:49
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ajit257
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!
