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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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30 Jul 2009, 04:15
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Question Stats:

84% (02:22) correct 16% (02:04) wrong based on 224 sessions

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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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Re: a la carte subscribers [#permalink]

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30 Jul 2009, 06:06
noboru 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

A-irrelevant since the customer's choosing.
B-out of scope - not one mention of revenue
C-MAYBE - if majority of customers buy those channels in the packages they wouldve have bought anyway it might be more expensive
D - not relevant
E - not relevant.

Seems only relevant one is C
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Re: a la carte subscribers [#permalink]

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30 Jul 2009, 06:50
shaselai wrote:
noboru 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

A-irrelevant since the customer's choosing.
B-out of scope - not one mention of revenue
C-MAYBE - if majority of customers buy those channels in the packages they wouldve have bought anyway it might be more expensive
D - not relevant
E - not relevant.

Seems only relevant one is C

Why is E not relevant?

If new TV set top pox is required, that will economicaly impact the customer, right? Since the government wants in fact to reduce customer´s costs, E is relevant for the discussion...
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Re: a la carte subscribers [#permalink]

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30 Jul 2009, 07:02
noboru wrote:
shaselai wrote:
noboru 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

A-irrelevant since the customer's choosing.
B-out of scope - not one mention of revenue
C-MAYBE - if majority of customers buy those channels in the packages they wouldve have bought anyway it might be more expensive
D - not relevant
E - not relevant.

Seems only relevant one is C

Why is E not relevant?

If new TV set top pox is required, that will economicaly impact the customer, right? Since the government wants in fact to reduce customer´s costs, E is relevant for the discussion...

is E the correct answer? Yes they might need to buy new television sets but we dont know how much that sets them back and since it is most likely a one time fee i dont think it has a much bigger impact in the long run for the consumer. You could also argue B is relevant by saying lowering the revenue may cause companies to raise the price. But staying on the topic which is subscribing channels I think C is probably the right one... OA?
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Re: a la carte subscribers [#permalink]

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30 Jul 2009, 07:34
A seems to go little out of scope

I will go with C.
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Re: a la carte subscribers [#permalink]

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30 Jul 2009, 08:22
[/quote]
is E the correct answer? Yes they might need to buy new television sets but we dont know how much that sets them back and since it is most likely a one time fee i dont think it has a much bigger impact in the long run for the consumer. You could also argue B is relevant by saying lowering the revenue may cause companies to raise the price. But staying on the topic which is subscribing channels I think C is probably the right one... OA?[/quote]

OA is C
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Re: a la carte subscribers [#permalink]

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30 Jul 2009, 08:47
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IMO C.

Here is a strategy to attack this type of question. Since this is an evaluate argument type question, consider each answer choice and give a positive and negative response to it. Check whether the different response has just the opposite effect on the conclusion. The answer choice which will have the opposite effects on the conclusion for positive and negative response is the correct choice.
For example, let's consider each answer choice.

Here the industry concludes that bundled channels will be cheaper for consumer.

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
positive response- YES . That means total no. of channel will decrease, but that does not provide any info about the cheapness of the bundle. so, effect on conclusion is nothing.
negative response - NO. That means total no. of channel will either increase or remain same, but again no info about cost. so irrelevant.

B) Whether advertising revenue for the cable television companies would decrease as a result of the a la carte pricing structure
Yes/ NO , in both cases no effect on the cost of the bundled channels

C) Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually
positive response- Yes.now if the consumers reduce the number of channels and they are allowed to opt for only the desired channels then the bundled channels will not be cheaper.hence this weakens the conclusion.
negative response- NO. if the consumers increase the number of channels and are allowed to opt for their desired channels then the package will be cheaper for them. This strengthen the industry's claim.
--------hence C is the correct option.

D) Whether cable and satellite companies currently have the ability to buy channels individually from programmers and content providers
YES/No does not have any effect on the conclusion.
E) Whether a la carte subscribers would be required to have new television set-top boxes
YES. But the cost of set-top box has nothing to do with the cost of bundled channel
No-does not effect the cost of the bundled channels.
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Re: a la carte subscribers [#permalink]

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31 Jul 2009, 08:21
Yep C.
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Re: a la carte subscribers [#permalink]

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19 Nov 2010, 11:46
Good job!

sudiptak wrote:
IMO C.

Here is a strategy to attack this type of question. Since this is an evaluate argument type question, consider each answer choice and give a positive and negative response to it. Check whether the different response has just the opposite effect on the conclusion. The answer choice which will have the opposite effects on the conclusion for positive and negative response is the correct choice.
For example, let's consider each answer choice.

Here the industry concludes that bundled channels will be cheaper for consumer.

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
positive response- YES . That means total no. of channel will decrease, but that does not provide any info about the cheapness of the bundle. so, effect on conclusion is nothing.
negative response - NO. That means total no. of channel will either increase or remain same, but again no info about cost. so irrelevant.

B) Whether advertising revenue for the cable television companies would decrease as a result of the a la carte pricing structure
Yes/ NO , in both cases no effect on the cost of the bundled channels

C) Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually
positive response- Yes.now if the consumers reduce the number of channels and they are allowed to opt for only the desired channels then the bundled channels will not be cheaper.hence this weakens the conclusion.
negative response- NO. if the consumers increase the number of channels and are allowed to opt for their desired channels then the package will be cheaper for them. This strengthen the industry's claim.
--------hence C is the correct option.

D) Whether cable and satellite companies currently have the ability to buy channels individually from programmers and content providers
YES/No does not have any effect on the conclusion.
E) Whether a la carte subscribers would be required to have new television set-top boxes
YES. But the cost of set-top box has nothing to do with the cost of bundled channel
No-does not effect the cost of the bundled channels.

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Re: a la carte subscribers [#permalink]

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19 Nov 2010, 13:32
C is the only one seems relevant ..because of this sentence in the question stem:

Subscribers would pay less, argue the consumer groups, because they could purchase only the desired channels This will cost to the company.
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Re: Most cable television companies currently require customers [#permalink]

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11 Oct 2014, 15:52
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Re: Most cable television companies currently require customers [#permalink]

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30 Nov 2015, 10:15
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
Re: Most cable television companies currently require customers   [#permalink] 30 Nov 2015, 10:15
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