GMAT Question of the Day - Daily to your Mailbox; hard ones only

 It is currently 14 Aug 2018, 10:10

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# Newtronix, a technology company that sells only one product, recently

Author Message
TAGS:

### Hide Tags

GMAT Tutor
Joined: 24 Jun 2008
Posts: 1345
Re: Newtronix, a technology company that sells only one product, recently  [#permalink]

### Show Tags

17 Aug 2017, 07:55
1
The choices are ambiguous.
If the logic is like "A is wrong since Total market revenue before and after is not mentioned"..then all the other choices are equally vulnerable.
C-How can we decide total profit based on rise in cost of a single component. What if price of all other major components have gone down??
I mean to say ..these choices are equally good or bad.

I agree with this. Normally if your market share declines, that's a bad thing. It can mean your sales have dropped, or that your competitors are selling more than before (or a combination of those two things). Of course, the fact alone that a company's market share has dropped doesn't guarantee that the company's profit has dropped, but none of the answer choices here guarantee that the company's profit drops. For any of the five answer choices to be "convincing as an explanation" for the drop in profit (which is what the question asks), we need more information. Was the tax increase mentioned in E large or small? Was the increase in the cost of the raw material mentioned in C large or small? And so on.

None of the answers is "convincing as an explanation" without additional assumptions, and any of them can be "convincing" if you do make assumptions. So how do we decide which assumptions we're supposed to make, and which we're not supposed to make? There's no way to tell. So I don't think this is a well-designed question.
_________________

GMAT Tutor in Toronto

If you are looking for online GMAT math tutoring, or if you are interested in buying my advanced Quant books and problem sets, please contact me at ianstewartgmat at gmail.com

Senior Manager
Joined: 04 Sep 2015
Posts: 473
Location: India
WE: Information Technology (Computer Software)
Re: Newtronix, a technology company that sells only one product, recently  [#permalink]

### Show Tags

22 Aug 2017, 14:49
Newtronix, a technology company that sells only one product, recently raised prices on its signature product, the ePod. Analysts had predicted that increased prices would translate into higher profits for Newtronics. However, Newtronix saw its profits decline after the price increase.

Each of the following, if true, is convincing as an explanation for the decline in Newtronix’s profit EXCEPT

A. Newtronix’s market share has declined since the price increase.
B. A recent patent dispute led to the ban of sales of ePods in several countries.
C. Materials necessary to the production of a necessary component of the ePod recently went up in price.
D. The average customer purchased fewer ePods as a result of the price increase, while the number of customers purchasing ePods remained the same.
E. The government imposed higher taxes on Newtronix just prior to the price increase.

The choice that does not expalin why the profits declined is the correct choice.

A is the onl coice that does not help in the understanding of the decline in the profits adn thus is correct.
Re: Newtronix, a technology company that sells only one product, recently &nbs [#permalink] 22 Aug 2017, 14:49

Go to page   Previous    1   2   [ 22 posts ]

Display posts from previous: Sort by

# Events & Promotions

 Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.