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# On Monday, Daisy’s Lemonade Stand sold lemonade at 20 cents per cup. T

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Senior Manager
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Updated on: 23 Sep 2017, 22:42
11
00:00

Difficulty:

55% (hard)

Question Stats:

60% (01:36) correct 40% (01:31) wrong based on 806 sessions

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On Monday, Daisy’s Lemonade Stand sold lemonade at 20 cents per cup. The Lemon Shack sold lemonade at 30 cents per cup. At the end of the day, Daisy’s Lemonade Stand and the Lemon Shack reported identical revenues and identical profits.

The statements above best support which of the following assertions?

(A) On Monday, Daisy’s Lemonade Stand sold fewer cups of lemonade than did the Lemon Shack.

(B) The Lemon Shack sells higher quality lemonade than does Daisy’s Lemonade Stand.

(C) On Monday, Daisy’s Lemonade Stand and the Lemon Shack incurred identical costs to run their businesses.

(E) The Lemon Shack would not increase its revenues by lowering its prices.

Originally posted by Financier on 11 Aug 2010, 12:03.
Last edited by hazelnut on 23 Sep 2017, 22:42, edited 2 times in total.
Edited the question.
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11 Aug 2010, 17:36
3
2
Profit = revenue - cost of operations
if profit and revenue are the same for both Daisy’s Lemonade Stand and Lemon Shack in the above equation then the cost of operations should be same also.

This is only provided by
C.On Monday, Daisy’s Lemonade Stand and the Lemon Shack incurred identical costs to run their businesses. <answer>
##### General Discussion
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11 Aug 2010, 21:24
1
Financier wrote:
On Monday, Daisy’s Lemonade Stand sold lemonade at 20 cents per cup. The Lemon Shack sold lemonade at 30 cents per cup. At the end of the day, Daisy’s Lemonade Stand and the Lemon Shack reported identical revenues and identical profits.

The statements above best support which of the following assertions?

A.On Monday, Daisy’s Lemonade Stand sold fewer cups of lemonade than did the Lemon Shack.
B.The Lemon Shack sells higher quality lemonade than does Daisy’s Lemonade Stand.
C.On Monday, Daisy’s Lemonade Stand and the Lemon Shack incurred identical costs to run their businesses.
E.The Lemon Shack would not increase its revenues by lowering its prices.

Nice one. IMO C. Since Costs(expenses) = Revenues-Profits, and since the costs were identical for both stands the answer automatically converges towards C. Another point to note here is the argument mentions the situation for Monday only so it becomes more likely that the assertion for the argument would be based on what concludes on Monday and would seldom be a generic one.

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11 Aug 2010, 23:12
C can replace the the argument itself. D means that Daisy's make more revenue and profits.
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12 Aug 2010, 05:06
2
between C and D .. C
is better ...as it is indorectly given in the question itself ... however D would be a slighlty exaggerated assertion regarding consumer liking
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14 Aug 2010, 05:08
IMO D

C.On Monday, Daisy’s Lemonade Stand and the Lemon Shack incurred identical costs to run their businesses.

I believe C means that Daisy and Shack had similar input costs to run their business. But this should not be true. As Shack's price > Daisy's price, so Shack mush have reached the profit value by selling less than daisy.
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28 Dec 2012, 15:28
Experts,

Isn't this question ill-framed and vague.

Clearly D is a good answer choice

It's fair to assume that since customers prefer Daisy over Shack, Daisy would sell more cups.
And since Daisy sells at 20cents & Shack at 30cents, we need to show that daisy sold more to make the revenue equal.

Choice C can also be substantiated but is weaker as the costs being the same, and selling the same number of cups, Shack > Daisy.

M thirsty now.

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01 Oct 2014, 22:12
The passage gives information about Monday’s business at two lemonade stores. The question asks us to make an assertion, or conclusion, based on the information provided. The answer choice that requires no additional assumptions will be the correct answer.

(A) This conclusion is incorrect. If Daisy’s sells its lemonade at a lower price than the Lemon Shack, and if the stores reported identical revenues for the day, then Daisy’s sold more cups of lemonade than the Lemon Shack, not less.

(B) We know nothing about the quality of lemonade at either store.

(C) CORRECT. If the stores reported identical revenues and identical profits, the profit equation Profit = Revenue – Cost tells us that their costs must have been identical as well.

(E) We know nothing about the market conditions surrounding either store. Therefore, we cannot make any conclusions about what might happen if the Lemon Shack were to lower its prices. It is very possible that the Lemon Shack could in fact sell many more cups per day at lower prices, and it’s possible this could lead to higher revenues.
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06 Jan 2017, 05:33
Profit = Revenue - Cost

Since , profit and revenue are same for both Daisy’s Lemonade Stand and the Lemon Shack , then costs must also be same .

C.On Monday, Daisy’s Lemonade Stand and the Lemon Shack incurred identical costs to run their businesses. - Correct answer
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10 Sep 2018, 16:12
(C) On Monday, Daisy’s Lemonade Stand and the Lemon Shack incurred identical costs to run their businesses.

same revenue ,same profit ....got to have same cost
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10 Sep 2018, 16:27
Financier wrote:
On Monday, Daisy’s Lemonade Stand sold lemonade at 20 cents per cup. The Lemon Shack sold lemonade at 30 cents per cup. At the end of the day, Daisy’s Lemonade Stand and the Lemon Shack reported identical revenues and identical profits.

The statements above best support which of the following assertions?

(A) On Monday, Daisy’s Lemonade Stand sold fewer cups of lemonade than did the Lemon Shack.

(B) The Lemon Shack sells higher quality lemonade than does Daisy’s Lemonade Stand.

(C) On Monday, Daisy’s Lemonade Stand and the Lemon Shack incurred identical costs to run their businesses.

(E) The Lemon Shack would not increase its revenues by lowering its prices.

An inference is a statement that MUST BE TRUE, given the information in the passage.
One approach is to apply the NEGATION TEST.

C, negated:
On Monday, Daisy’s Lemonade Stand and the Lemon Shack incurred UNEQUAL costs.
If the two stands incurred UNEQUAL costs, then the identical revenues earned at each stand would have to yield UNEQUAL profits, contradicting the given information that the two stands reported IDENTICAL profits.
Since the negation of C contradicts the passage, C is a valid inference: a statement that MUST BE TRUE, given the information in the passage.

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14 Oct 2018, 09:18
The passage gives information about Monday’s business at two lemonade stores. The question asks us to make an assertion, or conclusion, based on the information provided. The answer choice that requires no additional assumptions will be the correct answer.

(A) This conclusion is incorrect. If Daisy’s sells its lemonade at a lower price than the Lemon Shack, and if the stores reported identical revenues for the day, then Daisy’s sold more cups of lemonade than the Lemon Shack, not less.

(B) We know nothing about the quality of lemonade at either store.

(C) CORRECT. If the stores reported identical revenues and identical profits, the profit equation Profit = Revenue – Cost tells us that their costs must have been identical as well.

(E) We know nothing about the market conditions surrounding either store. Therefore, we cannot make any conclusions about what might happen if the Lemon Shack were to lower its prices. It is very possible that the Lemon Shack could in fact sell many more cups per day at lower prices, and it’s possible this could lead to higher revenues.
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Re: On Monday, Daisy’s Lemonade Stand sold lemonade at 20 cents per cup. T   [#permalink] 14 Oct 2018, 09:18
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