Most cable television companies currently require customers : GMAT Critical Reasoning (CR)
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# Most cable television companies currently require customers

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Most cable television companies currently require customers [#permalink]

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13 Feb 2009, 04:56
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Most cable television companies currently require customers to subscribe to packages of channels, but consumer groups have recently proposed legislation that would force the companies to offer a la carte pricing. Subscribers would pay less, argue the consumer groups, because they could purchase only the desired channels. However, the cable industry argues that under the current package pricing, popular channels subsidize less-popular ones, providing more options for viewers. For this reason, the industry claims that it is always cheaper for the consumer to purchase many bundled channels than to buy them individually.

Which of the following would be most important for the government to determine before deciding whether to require
cable television companies to offer a la carte pricing in order to reduce consumer costs?
a Whether the total number of channels offered to consumers would decrease, along with programming diversity, as a
result of the a la carte pricing structure
b Whether advertising revenue for the cable television companies would decrease as a result of the a la carte pricing structure
c Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually
d Whether cable and satellite companies currently have the ability to buy channels individually from programmers and content providers
e Whether a la carte subscribers would be required to have new television set-top boxes
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13 Feb 2009, 05:06
I think, D is the correct answer.
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13 Feb 2009, 05:54
In for A
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13 Feb 2009, 06:22
IMO A.

cunclusion based on "cheaper for the consumer" because "many channels". If A is true, la carte will still provide bundle of channels and thus will criticize cable industries' argument.
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13 Feb 2009, 09:27
IMO C.
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13 Feb 2009, 09:40
ritula wrote:
Most cable television companies currently require customers to subscribe to packages of channels, but consumer groups have recently proposed legislation that would force the companies to offer a la carte pricing. Subscribers would pay less, argue the consumer groups, because they could purchase only the desired channels. However, the cable industry argues that under the current package pricing, popular channels subsidize less-popular ones, providing more options for viewers. For this reason, the industry claims that it is always cheaper for the consumer to purchase many bundled channels than to buy them individually.

Which of the following would be most important for the government to determine before deciding whether to require
cable television companies to offer a la carte pricing in order to reduce consumer costs?
a Whether the total number of channels offered to consumers would decrease, along with programming diversity, as a
result of the a la carte pricing structure
b Whether advertising revenue for the cable television companies would decrease as a result of the a la carte pricing structure
c Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually
d Whether cable and satellite companies currently have the ability to buy channels individually from programmers and content providers
e Whether a la carte subscribers would be required to have new television set-top boxes

Gov is looking to reduce consumer costs and not any thing else as whether C & S companies can buy or not. Such a requirement will only be helpful if vast majority use AL pricing. If it is just a small percentage, it does not help the consumer base and the cable companies and most importantly money is not being saved for customers. Hence C
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13 Feb 2009, 19:40
A

main intension of this paragraph is

Subscribers would pay less, argue the consumer groups, because they could purchase only the desired channels.
Cable industry - under the current package pricing, popular channels subsidize less-popular ones, providing more options for viewers.

now one should ask about the number of such less popular channels. to see weather the pricing model as proposed by
consumer groups above will make sense.

if there is very less less popular channels, then pricing model described abve will not make sense.
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13 Feb 2009, 20:18
ritula wrote:
Most cable television companies currently require customers to subscribe to packages of channels, but consumer groups have recently proposed legislation that would force the companies to offer a la carte pricing. Subscribers would pay less, argue the consumer groups, because they could purchase only the desired channels. However, the cable industry argues that under the current package pricing, popular channels subsidize less-popular ones, providing more options for viewers. For this reason, the industry claims that it is always cheaper for the consumer to purchase many bundled channels than to buy them individually.

Which of the following would be most important for the government to determine before deciding whether to require cable television companies to offer a la carte pricing in order to reduce consumer costs?
a Whether the total number of channels offered to consumers would decrease, along with programming diversity, as a
result of the a la carte pricing structure
b Whether advertising revenue for the cable television companies would decrease as a result of the a la carte pricing structure
c Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually
d Whether cable and satellite companies currently have the ability to buy channels individually from programmers and content providers
e Whether a la carte subscribers would be required to have new television set-top boxes

C too

1. The goverment cares WHETHER OR NOT to help reduce the customers cost. So No matter what the results are of the Cable companies, if it forces the companies to offer a la carte pricing. A and B out

2. The Govt. does not care from WHERE the companies can buy channels, then sell them. D out

3. The argument does not mention "new TV st-top boxes", E out

C is the best
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13 Feb 2009, 22:05
OA is C.
OE is :
If consumers would not choose to order all of the channels they currently buy as part of a package subscription, then the cable television industries' claim that a la carte costs always would increase is faulty. If most consumers only watch and wish to pay for a few of their favorite channels, a la carte pricing could very well result in lower cable bills for those consumers. Consumers who want to purchase more channels could still choose the package subscriptions, so a la carte pricing would not harm them.
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13 Feb 2009, 22:54
ritula wrote:
OA is C.
OE is :
If consumers would not choose to order all of the channels they currently buy as part of a package subscription, then the cable television industries' claim that a la carte costs always would increase is faulty. If most consumers only watch and wish to pay for a few of their favorite channels, a la carte pricing could very well result in lower cable bills for those consumers. Consumers who want to purchase more channels could still choose the package subscriptions, so a la carte pricing would not harm them.

Exactly. This is the only relevant issue when deciding whether or not to approve this legislation.
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14 Feb 2009, 00:25
I understand where I went wrong.
I read the argument and when moved on to the option , I mistakenly believed that it is from Customer point of view. That means it is sure customers want the Al A Carte in the first place.

But indeed , I was wrong.
Re: CR:cable   [#permalink] 14 Feb 2009, 00:25
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