Printwells Ink Jet Division manufactures ink-jet printers and the ink

Question

Printwell’s Ink Jet Division manufactures ink-jet printers and the ink cartridges they use. Sales of its ink-jet printers have increased. Monthly revenues from those sales, however, have not increased, because competition has forced Printwell to cut the prices of its printers. Unfortunately, Printwell has been unable to bring down the cost of manufacturing a printer. Thus, despite the increase in printer sales, the Ink Jet Division must be contributing less to the company's profits than it used to.

Which of the following, if true, most seriously weakens the argument?

(A) Ink-jet printers in regular use frequently need new ink cartridges, and Printwell’s printers only accept Printwell’s ink cartridges.

(B) Unlike some competing companies, Printwell sells all of its printers through retailers, and these retailers’ costs account for a sizable proportion of the printers’ ultimate retail price.

(C) Some printer manufacturers have been forced to reduce the sale price of their ink-jet printers even more than Printwell has.

(D) In the past year, no competing manufacturer of ink-jet printers has had as great an increase in unit sales of printers as Printwell has.

(E) In the past year, sales of Printwell’s ink-jet printers have increased more than sales of any other type of printer made by Printwell.

ID 03782

pqhai · Accepted Answer

I'm Responding to a PM

ANALYZE THE STIMULUS:

Fact:  Printwell’s Ink Jet Division manufactures both ink-jet printers and the ink cartridges they use. 
 Fact:  Sales of its ink-jet printers have increased. 
 Fact:  But monthly revenues from those sales have not increased, because competition has forced Printwell to cut the prices of its printers. 
 Fact:  Printwell has been  unable to bring down the cost  of manufacturing a printer. 
 Conclusion:  Despite the increase in printer sales, the Ink Jet Division must be providing the company with much smaller than it used to.

Pre-thingking:  We know:  Ink Jet Division revenues = revenues from printer sales + revenues from cartridges sales.  The argument says  ONLY  “revenues from printers sales have NOT increased”, and concludes that “Ink Jet Division  TOTAL  revenues must be smaller”. To weaken this argument, we can show that even though revenues from printers sales DECREASES, but revenues from cartridges sales INCREASE ==> Total revenues will not be smaller.

ANALYZE EACH ANSWER:

A. Ink-jet printers in regular use frequently need new ink cartridges, and Printwell’s printers only accept Printwell’s ink cartridges.
  Correct.   A states that it’s possible that revenues from cartridges sales will increase.  KEY  word “in regular use frequently”.

B. Unlike some competing companies, Printwell sells all of its printers through retailers, and these retailers’ costs account for a sizable proportion of the printers’ ultimate retail price.
 Wrong.  B may strengthen the conclusion (. The retailers’ cost is additional cost that makes a negative effect for the Ink Jet Division.

C. Some printer manufacturers have been forced to reduce the sale price of their ink-jet printers even more than Printwell has.
 Wrong.  Ink Jet Division’s revenue may be still smaller if its sales from printers and cartridges do not increases. The argument clearly states that “revenue from printers sales have not increased”, so the fact that other manufactures reduces their printers prices DOES NOT affect the conclusion.

D. In the past year, no competing manufacturer of ink-jet printers has had as great an increase in unit sales of printers as Printwell has.
 Wrong.  We do not talk about “the past”. D is out.

E. In the past year, sales of Printwell’s ink-jet printers have increased more than sales of any other type of printer made by Printwell.
 Wrong.  Same as D. In this case, the fact in the past does not help you weaken a conclusion that talks about the future.

Hope it helps.

buckkitty · Answer

Must show a reason why Printwell is NOT providing the company with smaller profits. 

How?

by increasing sales of their other product, ink cartridges

A for me too. Only one that shows a direct impact on profits.

MzJavert · Answer

Guilty, I answered E. After rethinking, and reading everyone's comments, it's so obviously A

Total Division Profits = Printer Profits + Cartridge Profits

DollyS · Answer

Hi Umesh

the Ink Jet Division must be providing the company with much smaller than it used to” would be weakened.

This statement is the conclusion of the argument. It talks about the  contribution  of Ink Jet Division.  According to the statement, the contribution of Ink Jet Division must be smaller than it used to.

Let's look at the argument:

Sales  of its ink-jet printers have  increased .

Monthly  revenues  from those sales, however,  have not increased , because competition has forced Printwell to cut the prices of its printers.

Unfortunately, Printwell has been  unable to bring down the cost  of manufacturing a printer.

Now, we know from the passage that despite the increase in sales, the revenues have not increased and cost of manufacturing a printer has not declined. This would mean that profit per unit can be smaller than it used to be.

Revenue - cost= Profit (contribution to the company)

However, the conclusion is drawn upon the contribution of the Ink Jet Division and not just the contribution of the Ink Jet printers. As given, Ink Jet Division manufactures ink-jet printers and the ink cartridges they use. Hence, if the profit from the sales of cartridges is large enough to compensate or exceed the decline in contribution from the sales of printer, conclusion that “the Ink Jet Division must be providing the company with much smaller than it used to” would be weakened.

Does it help?
Dolly

umeshpatil · Answer

Hi Dolly, thanks for reply :-D

. First Kudo for you ! I only wanted to get little explanation on below unfinished sentence, which is conclusion that is required to weaken. "the Ink Jet Division must be providing the company with much smaller than it used to ??." Can you please tell me ? 1. must be providing the company... which company ? 2. smaller than it used to .. what it is used to ?

DollyS · Answer

Thanks for the appreciation!

A company can hold several divisions. A division is a part of the company such as sales division, marketing division and operations division. 1) The company mentioned in the argument is the one that holds Ink Jet division. Suppose you have a company U. It has several divisions such as Ink Jet division, laser division and other divisions. Ink Jet division used to provide 40% of company's overall profit. This means if the total profit of the company used to be $100. Ink Jet provided $40 to the company. Now the conclusion is that Ink Jet division must be providing smaller than it used to. 2) This means that the contribution of the Ink Jet division must be lesser than $40. Used to refer to the contribution of Ink Jet Division to the company in the past. Does this help? Dolly

CrackverbalGMAT · Answer

When you have data, it is better to write them down as an equation -

for the printer division 
Profits = Revenues - costs. We have been told that costs have increased. We have been told that revenues have either reduced or remained the same (because the prices of printers have dropped) and the costs have either increased or remained the same. 
Obviously then, the profits for the printer division must decline.

However, notice carefully what the conclusion says - "despite the increase in printer sales, the  Ink Jet Division  must be providing the company with much smaller than it used to."
The conclusion now talks about the entire division, not just the printers.
Hence,
profits for inkjet division = profits for inkjet printers + profits for ink cartridges.
we know that the first term on the RHS has reduced. To weaken the argument (that is to say that profits from the inkjet division have increased) the second term on the RHS must increase. Only option A says this.

A - correct answer. It states that since sales of inkjet printers have increased, the sales of ink cartridges must also increase, leading to higher profits in the ink cartridge department.
B - Not relevant to the argument, unless we are told that retailers have substantially reduced their costs. (this can then compensate for the reduction in prices).
C- We are not concerned with other manufacturers. Not relevant.
D- does not affect the argument. We know that revenues = unit sales * price. Even though unit sales have increased, the price has reduced. The revenues have not increased.
E - Not relevant. We are concerned only with the inkjet division.

Kurtosis · Answer

Printwell’s Ink Jet Division manufactures ink-jet printers and the ink cartridges they use. Sales of its ink-jet printers have increased. Monthly revenues from those sales, however, have not increased, because competition has forced Printwell to cut the prices of its printers. Unfortunately, Printwell has been unable to bring down the cost of manufacturing a printer. Thus, despite the increase in printer sales, the Ink Jet Division must be providing the company with much smaller than it used to.

Which of the following, if true, most seriously weakens the argument?

A. Ink-jet printers in regular use frequently need new ink cartridges, and Printwell’s printers only accept Printwell’s ink cartridges.
B. Unlike some competing companies, Printwell sells all of its printers through retailers, and these retailers’ costs account for a sizable proportion of the printers’ ultimate retail price.
C. Some printer manufacturers have been forced to reduce the sale price of their ink-jet printers even more than Printwell has.
D. In the past year, no competing manufacturer of ink-jet printers has had as great an increase in unit sales of printers as Printwell has.
E. In the past year, sales of Printwell’s ink-jet printers have increased more than sales of any other type of printer made by Printwell.

dcummins · Answer

The argument is that the Ink Jet division is contributing less to the company's profits than it used to despite the increase in printer sales.

This is supported by the fact that monthly revenues from the sale of ink-jet printers has not increased since competition has forced Printwell to cut the sale prices of printers, and Printwell has been unable to bring down the cost of manufacturing.

We are asked to weaken the argument

A - is correct because even though the sales price of printers has decreased the inkjets frequently require bespoke cartridges, so the most probably indicator is that this would lead to more profit at least on the ink itself, so it would run counter to the argument that the inkjet division actually contributes less to profit.
B - is incorrect because it doesn't necessarily weaken the argument. If prices are reduced and retailer costs are added then relatively the prices still come down.
C is incorrect because it provides information on what the competitors are doing. If Competitors reduce their prices then it's hard to see how this would weaken the argument that profits are down for this division.
D is incorrect - competition is irrelevant here and we are talking relatively.
E is incorrect - if the sale of ink jets are more than the sales of other types of printers then at first it seems as if this would mean inkjet contributes more to profits, but we are told that sales prices have been reduced while costs remain the same, so comparatively the argument still holds true.

Dinesh654 · Answer

Hello experts,

In the prompt, revenues from those sales have not increased -->this could mean that revenues are same or decreased from last year.
now, unable to bring down the cost, --> means cost is either same or increased.

Hence, we can say that profits are either same or decreased. but in the conclusion, it says-profits must be less.

profits can remain the same, if not, then we are doubting premise. I mean promt itself has flaws. It is telling us to reject a possibility that profit could remain the same.

Is there a rule that I am missing? Is it implied that we should reject that profits can't remain the same?

GMATNinja · Answer

The idea that "the Ink Jet Division must be contributing less to the company's profits than it used to" is the  conclusion  of the argument and NOT a premise. The question then asks us to find an answer choice that weakens this argument.

In other words, our job is to find an answer choice that suggests that the conclusion/logic of the argument may not be true. So, while you're correct that the argument isn't rock-solid (the profit could have remained the same based on what we're told in the passage), the whole point of the question is to find an answer choice that suggests the argument may not hold true.

With that in mind, maybe revisit the passage, and see if that helps at all?

VerbalBot · Answer

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.

Printwells Ink Jet Division manufactures ink-jet printers and the ink

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards

GMAT Critical Reasoning (CR) Questions

Printwells Ink Jet Division manufactures ink-jet printers and the ink

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards