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# Rumored declines in automobile-industry revenues are

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Director
Joined: 03 May 2007
Posts: 804
Schools: University of Chicago, Wharton School
Rumored declines in automobile-industry revenues are  [#permalink]

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Updated on: 10 Mar 2017, 09:53
1
18
00:00

Difficulty:

95% (hard)

Question Stats:

46% (02:06) correct 54% (02:16) wrong based on 501 sessions

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Rumored declines in automobile-industry revenues are exaggerated. It is true that automobile manufactures’ share of the industry’s revenues fell from 65 percent two years ago to 50 percent today, but over the same period suppliers of automobile parts had their share increase from 15 percent to 20 percent and service companies (for example, distributors, dealers, and repairers) had their share increase from 20 percent to 30 percent.

Which one of the following best indicates why the statistics given above provide by themselves no evidence for the conclusion they are intended to support?

(A) The possibility is left open that the statistics for manufactures’ share of revenues come from a different source than the other statistics.
(B) No matter what changes the automobile industry’s overall revenues undergo, the total of all shares of these revenues must be 100 percent.
(C) No explanation is given for why the revenue shares of different sectors of the industry changed.
(D) Manufactures and parts companies depend for their revenue on dealers’ success in selling cars.
(E) Revenues are an important factor but are not the only factor in determining profits.

Originally posted by Fistail on 24 Aug 2007, 10:50.
Last edited by Skywalker18 on 10 Mar 2017, 09:53, edited 1 time in total.
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Re: Rumored declines in automobile-industry revenues are  [#permalink]

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23 Jun 2018, 08:02
5
I narrowed it down to A and B, but selected A.

Thanks

Quote:
Rumored declines in automobile-industry revenues are exaggerated. It is true that automobile manufactures’ share of the industry’s revenues fell from 65 percent two years ago to 50 percent today, but over the same period suppliers of automobile parts had their share increase from 15 percent to 20 percent and service companies (for example, distributors, dealers, and repairers) had their share increase from 20 percent to 30 percent.

The conclusion of this argument is that rumored declines in automobile-industry revenues are exaggerated. Here's how the author gets there:

• Automobile manufacturers' share of industry revenues fell from 65% to 50%.
• Automobile part suppliers' share of industry revenues increased from 15% to 20%.
• Automobile service companies' share of industry revenues increased from 20% to 30%.

The first thing that stands out to me in the author's logic is that percentage shares don't tell us anything about the total amount of industry revenues. If I am splitting a dosa between three people, and I change the size of each person's share of that one dosa, I have not made the entire dosa any larger or smaller. Which is sad, because everyone deserves their own dosa, and I would really like to magically increase the size of any dosa that I see.

Quote:
Which one of the following best indicates why the statistics given above provide by themselves no evidence for the conclusion they are intended to support?

Getting back to the argument, the author's evidence of how the total revenue is broken down tells us nothing about whether overall industry revenues have declined. As a result, they don't really support the author's conclusion. The correct answer choice will match this observation.

Quote:
(A) The possibility is left open that the statistics for manufactures’ share of revenues come from a different source than the other statistics.

The reason why this conclusion is poorly founded is not the source of evidence. The prompt states plainly that the % figures are true, and nothing in the argument depends on proving that the sources of these figures are trustworthy.

Most importantly, we're not asked to pick the choice that would create the maximum amount of arbitrary doubt. We are asked to analyze the logic of the author's argument and pick the choice that shows why the author's evidence does not support the author's intended conclusion. That's why we eliminate (A) and continue looking for a choice that addresses the logical problem we've identified (% share does not tell us anything about absolute level of decline in revenue).

Quote:
(B) No matter what changes the automobile industry’s overall revenues undergo, the total of all shares of these revenues must be 100 percent.

Choice (B) very directly lays out what's wrong with the author's logic. By affirming that all of these revenues always add up to 100%, we confirm that we really know nothing about how much revenue the automobile industry brought in over the past two years. We only know how the industry pie (or dosa) was allocated in proportional terms.

I hope this explanation satisfied your appetite for pie, dosa, and critical reasoning! Mmm... dosas.
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##### General Discussion
VP
Joined: 09 Jul 2007
Posts: 1055
Location: London
Re: Rumored declines in automobile-industry revenues are  [#permalink]

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24 Aug 2007, 16:10
Fistail wrote:
Rumored declines in automobile-industry revenues are exaggerated. It is true that automobile manufactures’ share of the industry’s revenues fell from 65 percent two years ago to 50 percent today, but over the same period suppliers of automobile parts had their share increase from 15 percent to 20 percent and service companies (for example, distributors, dealers, and repairers) had their share increase from 20 percent to 30 percent.

Which one of the following best indicates why the statistics given above provide by themselves no evidence for the conclusion they are intended to support?

(A) The possibility is left open that the statistics for manufactures’ share of revenues come from a different source than the other statistics.
(B) No matter what changes the automobile industry’s overall revenues undergo, the total of all shares of these revenues must be 100 percent.
(C) No explanation is given for why the revenue shares of different sectors of the industry changed.
(D) Manufactures and parts companies depend for their revenue on dealers’ success in selling cars.
(E) Revenues are an important factor but are not the only factor in determining profits.

I would go with C.
The stem says that manufacturers' share of revenue is decreased while dealers' increased. it is negative correlation, which is very rarely seen in between those two sectors. Overal, no reasoning is give to support the rumored decline. Probably, new entrants in manufacturing have started sharing the sector revenue. Thus ones like Ford lost their revenue to Japanese ones while dealers started upping by diversifying their portfolios with new entrants' cars. But no evidence give to support that makes the statistics weak.
Manager
Joined: 20 Nov 2006
Posts: 188
Re: Rumored declines in automobile-industry revenues are  [#permalink]

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25 Aug 2007, 04:18
1
To show that there is decrease in the total revenue of the automobile industry, data to be given supporting the rumored decline. But the premises are showing the percentages of different market segments of the automobile industry. From these percentages we cannot make out whether there is a decline in the revenue. B-correctly states that.

Manager
Joined: 13 May 2011
Posts: 241
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Re: Rumored declines in automobile-industry revenues are  [#permalink]

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24 Apr 2012, 08:24
The source of this Question is PowerScore CR Bible, pg 273. Moderator:please tag.

Knowing total market share is 100%, no matter what happen, direct you to B only.
Manager
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Re: Rumored declines in automobile-industry revenues are  [#permalink]

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25 Feb 2018, 22:49
1
the question is tough, but POE helps to choose B.
C,D,E are OFS.
A is wrong b/c the argument never mentions any details or information about the sources.
B looks strange, but B is logical. B tells that other parts must have declined shares.
Director
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Re: Rumored declines in automobile-industry revenues are  [#permalink]

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26 Feb 2018, 04:11
4
Fistail wrote:
Rumored declines in automobile-industry revenues are exaggerated. It is true that automobile manufactures’ share of the industry’s revenues fell from 65 percent two years ago to 50 percent today, but over the same period suppliers of automobile parts had their share increase from 15 percent to 20 percent and service companies (for example, distributors, dealers, and repairers) had their share increase from 20 percent to 30 percent.

Which one of the following best indicates why the statistics given above provide by themselves no evidence for the conclusion they are intended to support?

(A) The possibility is left open that the statistics for manufactures’ share of revenues come from a different source than the other statistics.
(B) No matter what changes the automobile industry’s overall revenues undergo, the total of all shares of these revenues must be 100 percent.
(C) No explanation is given for why the revenue shares of different sectors of the industry changed.
(D) Manufactures and parts companies depend for their revenue on dealers’ success in selling cars.
(E) Revenues are an important factor but are not the only factor in determining profits.

Question stem says :
Conclusion : Rumored declines in automobile-industry revenues are exaggerated.
Premise : It is true that automobile manufactures’ share of the industry’s revenues fell from 65 percent two years ago to 50 percent today, but over the same period suppliers of automobile parts had their share increase from 15 percent to 20 percent and service companies (for example, distributors, dealers, and repairers) had their share increase from 20 percent to 30 percent.

So, we can see here that automobile manufactures' share has decreased and suppliers of automobile parts & service companies has increased.
Overall initially 65+15+20 = 100 %
Finally 50+20+30 = 100%

So, We are comparing only among automobiles manufacturers, suppliers and service companies, but this comparison doesn't reflect the share of revenue of automobile industry as a whole with respect to the other industries and the total volume of revenue.

(A) The possibility is left open that the statistics for manufactures’ share of revenues come from a different source than the other statistics.
It comes from different sources will not matter much as all sources are reliable unless stated.

(B) No matter what changes the automobile industry’s overall revenues undergo, the total of all shares of these revenues must be 100 percent.
This is talking correctly, the total of all share will always be 100% irrespective of automobile industry's overall revenues.

(C) No explanation is given for why the revenue shares of different sectors of the industry changed.
Doesn't matter as it is not giving the overall picture of automobile industry with respect to other industries in the market.

(D) Manufactures and parts companies depend for their revenue on dealers’ success in selling cars.
This if true will actually show a flaw in the argument. But the question is not asking for such thing.

(E) Revenues are an important factor but are not the only factor in determining profits.
out of scope. Here the stem talks about revenues and we should stick to it.
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Re: Rumored declines in automobile-industry revenues are  [#permalink]

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17 Jun 2018, 03:20
GMATNinja abhimahna

I narrowed it down to A and B, but selected A.

Thanks

Fistail wrote:
Rumored declines in automobile-industry revenues are exaggerated. It is true that automobile manufactures’ share of the industry’s revenues fell from 65 percent two years ago to 50 percent today, but over the same period suppliers of automobile parts had their share increase from 15 percent to 20 percent and service companies (for example, distributors, dealers, and repairers) had their share increase from 20 percent to 30 percent.

Which one of the following best indicates why the statistics given above provide by themselves no evidence for the conclusion they are intended to support?

(A) The possibility is left open that the statistics for manufactures’ share of revenues come from a different source than the other statistics.
(B) No matter what changes the automobile industry’s overall revenues undergo, the total of all shares of these revenues must be 100 percent.
(C) No explanation is given for why the revenue shares of different sectors of the industry changed.
(D) Manufactures and parts companies depend for their revenue on dealers’ success in selling cars.
(E) Revenues are an important factor but are not the only factor in determining profits.

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Re: Rumored declines in automobile-industry revenues are &nbs [#permalink] 17 Jun 2018, 03:20
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