In the third quarter of 2008, a rise in the price of oil caused the de

Profit = Revenue -Cost

If profit has to increase revenues must go up and cost must go down or remain the same.

A. Costs go up, prices for manufacturing the a car goes up. Does not support the conclusion

B. Even if it gained immense popularity due to advertising the company can have zero revenue from zero sales due to hike in petroleum prices. Secondly, an advertising campaign would only add to an increase in cost of thr company.

C. After reorganisation, Company Z became a more streamlined and efficient company --> costs went down while revenue remains the same--> exactly what is said in the paragraph. Revenues for Q2 and Q3 are the same. After becoming streamlined and efficient, the costs of the company went down. CORRECT ANSWER.

D. Company Z could charge higher price for its products - Revenues would have rose if for 10 cars they now generate $120000 as revenue instead of previously $100000. But the revenues are same for 2008 Q2 and 2008 Q3.

E. Procuring new manufacturing sites and subsidiaries would have only adder to the cost of the company.

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In the third quarter of 2008, a rise in the price of oil caused the demand for automobiles to come to a halt. However, international automobile manufacturer Corporation Z managed to increase its profit in that quarter by 13%, despite the fact that its revenues in that quarter were the same as those of the second quarter of 2008.

Which of the following, if true, would most contribute to an explanation of the facts above?


A. Along with oil, the price of steel soared and dramatically increased the price of manufacturing a car. Incorrect

oil prices halt car sales, so steel price will decrease car sales or with the increased price steel and oil how it can increase profit by 13%

B. Corporation Z's brand cars gained immense popularity in recent weeks due to a successful advertising campaign. Incorrect

it cant ensure about same revenue with higher profits

C. A global reorganization, finalized in the beginning of the third quarter of 2008, made Corporation Z a far more streamlined and efficient company. Correct

this can reduce cost, as a results increase profits

D. Due to flattering reviews, Corporation Z was able to charge a higher price for its products. Incorrect

higher price cant ensure higher profits

E. At the end of the 3rd quarter, Corporation Z completed a massive acquisition of five new manufacturing sites and twelve new subsidiaries which will provide its cars with new innovative features. Incorrect

it is not related with higher profits

Despite the fact that demand for automobiles during the quarter waned, the organisation was able to garner same revenues as it did in previous quarter and even generated a higher profit. Now lets a look at options

option C, reorganisation definitely might help to increase the profits but might not help the organisation with revenues, since the latter is a function of sales.

option D, flattering reviews helped the organisation to charge higher for its products; even when sales are on a decline, the organisation could make up for the loss in revenue and even make higher profits.

IMO D