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Newspaper publishers earn their profits primarily from a

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Newspaper publishers earn their profits primarily from a  [#permalink]

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New post Updated on: 26 Jul 2014, 22:47
16
00:00
A
B
C
D
E

Difficulty:

  95% (hard)

Question Stats:

28% (02:25) correct 72% (02:26) wrong based on 354 sessions

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Newspaper publishers earn their profits primarily from advertising revenue, and potential advertisers are more likely to advertise in newspapers with a wide circulation a large number of subscribers and other readers than with other newspapers. But the circulation of the newspaper that is currently the most profitable one in this city has steadily declined during the last two years, while the circulation of one of its competitors has steadily increased.

Any of the following, if true, would help explain the apparent discrepancy between the two statements above EXCEPT:

A. Advertisers generally switch from the most widely circulated newspaper to another one only when the other one becomes the most widely circulated newspaper instead.
B. Advertising rates charged by the most profitable newspaper in the city are significantly higher than those charged by its competitors.
C. The most profitable newspaper in the city receives revenue from its subscribers as well from advertisers.
D. The circulation of the most profitable newspaper in the city is still greater than than of any of its competitors.
E. The number of newspapers competing viably with the most profitable newspaper in the city has increased during the last two years.



Why does C resolves the paradox?

Originally posted by pretzel on 21 Jul 2014, 20:24.
Last edited by pretzel on 26 Jul 2014, 22:47, edited 1 time in total.
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Re: Newspaper publishers earn their profits primarily from a  [#permalink]

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New post 21 Jul 2014, 22:34
pretzel wrote:
Newspaper publishers earn their profits primarily from advertising revenue, and potential advertisers are more likely to advertise in newspapers with a wide circulation—a large number of subscribers and other readers than with other newspapers. But the circulation of the newspaper that is currently the most profitable one in this city has steadily declined during the last two years, while the circulation of one of its competitors has steadily increased.

Any of the following, if true, would help explain the apparent discrepancy between the two statements above EXCEPT:

A. Advertisers generally switch from the most widely ...........circulated newspaper to another one only when the ...........other one becomes the most widely circulated ...........newspaper instead.
B. Advertising rates charged by the most profitable ...........newspaper in the city are significantly higher than ...........those charged by its competitors.
C. The most profitable newspaper in the city receives ...........revenue from its subscribers as well from advertisers.
D. The circulation of the most profitable newspaper ...........in the city is still greater than than of any of its ...........competitors.
E. The number of newspapers competing viably with the ...........most profitable newspaper in the city has increased ...........during the last two years.



Why does C resolves the paradox?


Here's why C still fits as an explanation:

The question is testing your ability to distinguish between some key terms here: circulation, advertising costs, revenue and profit. Knowing that profit consist of (Revenue - Expenses), and Revenue = (number of units * price), let's evaluate a scenario in which C could be true.

Answer choice C is expanding the scope of the facts given and basically saying that "advertising revenue is not the only factor in determining profit." So the newspaper can earn profit from advertisement sales, but they could also earn it from charging their subscribers. (If you want to take the answer choice to the extreme, you could imagine a scenario where Newspaper A has only 1 subscriber, but he pays a billion dollars to have the paper delivered to his home. Whereas Newspaper B has thousands of subscribers but they get the paper for free (junk in your mailbox). Therefore, Answer C could explain the situation, and is therefore not the correct answer.

Answer E doesn't even address the question at hand, which is why it is the correct answer.
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New post 22 Jul 2014, 03:01
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Pretzel why are all your questions formatted like some senile congressman's ramblings?
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Re: Newspaper publishers earn their profits primarily from a  [#permalink]

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New post 25 Jul 2014, 21:51
Dear Pretzel

The dots in the choices were unnecessary.Especially between two words in a sentence.

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New post 22 Sep 2014, 20:14
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[quote="pretzel"]Newspaper publishers earn their profits primarily from advertising revenue, and potential advertisers are more likely to advertise in newspapers with a wide circulation a large number of subscribers and other readers than with other newspapers. But the circulation of the newspaper that is currently the most profitable one in this city has steadily declined during the last two years, while the circulation of one of its competitors has steadily increased.

Any of the following, if true, would help explain the apparent discrepancy between the two statements above EXCEPT:

A. Advertisers generally switch from the most widely circulated newspaper to another one only when the other one becomes the most widely circulated newspaper instead.
B. Advertising rates charged by the most profitable newspaper in the city are significantly higher than those charged by its competitors.
C. The most profitable newspaper in the city receives revenue from its subscribers as well from advertisers.
D. The circulation of the most profitable newspaper in the city is still greater than than of any of its competitors.
E. The number of newspapers competing viably with the most profitable newspaper in the city has increased during the last two years.

Can someone please explain me why the OA is E and not D.
While D clearly states that the circulation of the most profitable newspaper is still greater than competitors and hence it may help us to resolve the paradox.

Please correct me if there is some flaw in my reasoning.

Please be generous in giving Kudos if you like my Post.
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Re: Newspaper publishers earn their profits primarily from a  [#permalink]

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New post 23 Sep 2014, 00:27
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abhishekhurkat wrote:
pretzel wrote:
Newspaper publishers earn their profits primarily from advertising revenue, and potential advertisers are more likely to advertise in newspapers with a wide circulation a large number of subscribers and other readers than with other newspapers. But the circulation of the newspaper that is currently the most profitable one in this city has steadily declined during the last two years, while the circulation of one of its competitors has steadily increased.

Any of the following, if true, would help explain the apparent discrepancy between the two statements above EXCEPT:

A. Advertisers generally switch from the most widely circulated newspaper to another one only when the other one becomes the most widely circulated newspaper instead.
B. Advertising rates charged by the most profitable newspaper in the city are significantly higher than those charged by its competitors.
C. The most profitable newspaper in the city receives revenue from its subscribers as well from advertisers.
D. The circulation of the most profitable newspaper in the city is still greater than than of any of its competitors.
E. The number of newspapers competing viably with the most profitable newspaper in the city has increased during the last two years.

Can someone please explain me why the OA is E and not D.
While D clearly states that the circulation of the most profitable newspaper is still greater than competitors and hence it may help us to resolve the paradox.

Please correct me if there is some flaw in my reasoning.

Please be generous in giving Kudos if you like my Post.


would help explain the apparent discrepancy between the two statements above EXCEPT

I think u missed that.
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New post 23 Sep 2014, 10:30
Thanks Varun. Ya i missed that.

:(
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New post 21 Jun 2016, 07:33
Newspaper publishers earn their profits primarily from advertising revenue, and potential advertisers are more likely to advertise in newspapers with a wide circulation a large number of subscribers and other readers than with other newspapers. But the circulation of the newspaper that is currently the most profitable one in this city has steadily declined during the last two years, while the circulation of one of its competitors has steadily increased.

Any of the following, if true, would help explain the apparent discrepancy between the two statements above EXCEPT:

A. Advertisers generally switch from the most widely circulated newspaper to another one only when the other one becomes the most widely circulated newspaper instead.
B. Advertising rates charged by the most profitable newspaper in the city are significantly higher than those charged by its competitors.
C. The most profitable newspaper in the city receives revenue from its subscribers as well from advertisers.
D. The circulation of the most profitable newspaper in the city is still greater than than of any of its competitors.
E. The number of newspapers competing viably with the most profitable newspaper in the city has increased during the last two years.

Can someone please explain the OA ?
Acc to me (Yes i got it right) if the # of newspaper competitors have increased then its circulation share will go down, but it can still remain the most profitable one in the city
Lets say :
Before competition :
A -----> 1000 subs (A gets all the ads and hence makes the max profits)
B -----> 100 subs
TOTAL subs 1100
After some time
A -----> 500 (Subs went down steadily)
B -----> 200 (Subs went up steadily)
C -----> 100
D -----> 100
E -----> 150
F -----> 50

But A is still making the most profit (E helps explaining this)

Please correct me if I am wrong. Thanks in advance.
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Re: Newspaper publishers earn their profits primarily from a  [#permalink]

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New post 24 Jun 2016, 09:39
aniketm.87@gmail.com wrote:
Newspaper publishers earn their profits primarily from advertising revenue, and potential advertisers are more likely to advertise in newspapers with a wide circulation a large number of subscribers and other readers than with other newspapers. But the circulation of the newspaper that is currently the most profitable one in this city has steadily declined during the last two years, while the circulation of one of its competitors has steadily increased.

Any of the following, if true, would help explain the apparent discrepancy between the two statements above EXCEPT:

A. Advertisers generally switch from the most widely circulated newspaper to another one only when the other one becomes the most widely circulated newspaper instead.
B. Advertising rates charged by the most profitable newspaper in the city are significantly higher than those charged by its competitors.
C. The most profitable newspaper in the city receives revenue from its subscribers as well from advertisers.
D. The circulation of the most profitable newspaper in the city is still greater than than of any of its competitors.
E. The number of newspapers competing viably with the most profitable newspaper in the city has increased during the last two years.

Can someone please explain the OA ?
Acc to me (Yes i got it right) if the # of newspaper competitors have increased then its circulation share will go down, but it can still remain the most profitable one in the city
Lets say :
Before competition :
A -----> 1000 subs (A gets all the ads and hence makes the max profits)
B -----> 100 subs
TOTAL subs 1100
After some time
A -----> 500 (Subs went down steadily)
B -----> 200 (Subs went up steadily)
C -----> 100
D -----> 100
E -----> 150
F -----> 50

But A is still making the most profit (E helps explaining this)

Please correct me if I am wrong. Thanks in advance.


There is one scenario that you missed aniketm.87@gmail.com. The most profitable newspaper's circulation could remain intact while the other non-profitable newspapers became profitable. Note we are talking about profits and not revenue and profit is a function of both revenue and cost. In this case, we can assume that the non-profitable newspapers became profitable by cutting down costs. Revenues or the number of subscription had nothing to do with it. Additionally, the profitability of a newspaper has no effect on how much advertising revenue the newspaper will get. So, the costs and the revenues of a newspaper are independent functions.
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New post 22 Sep 2017, 11:37
can you help me with this question.
I personally chose C as the answer. I do know EXCEPT.

OA is E.
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New post 22 Sep 2017, 11:44
so far, in my opinion, the question is hard because the passage does not clearly address the issue. In addition, options seem similar, so there are only 30% of people that get the right answer.

E does not explain why the most profitable company still gets profit even though the circulation has reduced.
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Re: Newspaper publishers earn their profits primarily from a  [#permalink]

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New post 11 Mar 2019, 10:07
can someone help me in explaining this question please
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Re: Newspaper publishers earn their profits primarily from a  [#permalink]

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New post 11 Mar 2019, 22:34
kushipk10 wrote:
can someone help me in explaining this question please


Hey,

Don't worry too much on these sort of questions as they are not the Official GMAT questions. Based on my personal experience, working with the official questions is the best, as they are properly formed and are set to test us precisely.
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Re: Newspaper publishers earn their profits primarily from a   [#permalink] 11 Mar 2019, 22:34
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