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# S92-16

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Math Expert
Joined: 02 Sep 2009
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16 Sep 2014, 00:46
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Difficulty:

25% (medium)

Question Stats:

71% (01:19) correct 29% (02:04) wrong based on 55 sessions

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Manufacturers of staplers make the majority of their profit on staples rather than on the staplers themselves. The Office Supply Company, which cannot sell its staples as cheaply as other manufacturers can, plans to alter the design of its stapler so that it will only accept a newly designed Office Supply Company staple, which will be sold at the same price as the Office Supply Company's current staple.

Which of the following, if true, most strongly supports the Office Supply Company's projection that its plan will lead to an increase in its sales of staples?

A. First-time buyers of staplers tend to buy the least expensive staplers available.
B. Annual sales of staplers are expected to double over the next three years.
C. An Office Supply Company cost analyst is studying ways to reduce the cost of manufacturing staples.
D. A competing manufacturer recently announced similar plans to introduce a stapler that would accept only the staple produced by that manufacturer.
E. In extensive test marketing, stapler users found the new Office Supply Company stapler to be noticably superior to other staplers they had used.

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Joined: 02 Sep 2009
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16 Sep 2014, 00:47
Official Solution:

Manufacturers of staplers make the majority of their profit on staples rather than on the staplers themselves. The Office Supply Company, which cannot sell its staples as cheaply as other manufacturers can, plans to alter the design of its stapler so that it will only accept a newly designed Office Supply Company staple, which will be sold at the same price as the Office Supply Company's current staple.

Which of the following, if true, most strongly supports the Office Supply Company's projection that its plan will lead to an increase in its sales of staples?

A. First-time buyers of staplers tend to buy the least expensive staplers available.
B. Annual sales of staplers are expected to double over the next three years.
C. An Office Supply Company cost analyst is studying ways to reduce the cost of manufacturing staples.
D. A competing manufacturer recently announced similar plans to introduce a stapler that would accept only the staple produced by that manufacturer.
E. In extensive test marketing, stapler users found the new Office Supply Company stapler to be noticably superior to other staplers they had used.

This question asks for something that would make it likely that the Office Supply Company's sales will increase.

Stapler makers make most of their money on staples instead of on staplers. The Office Supply Company is not making as much money because it cannot sell its staples as cheaply, so it has decided to change the design of its stapler so that it will only hold staples manufactured by the Office Supply Company. The new staples will cost the same amount of money as the staples now made by the Office Supply Company.

To make the success of this plan likely, consumers would have to like the Office Supply Company's staplers more than the staplers of the company's competitors, even though the Office Supply Company's staples will still be more expensive than those of its competitors.

Choice A states that people buying staplers for the first time generally buy the cheapest staplers. Nothing is known about the price of the Office Supply Company's staplers (although the staples are known to be more expensive).

Choice B states that yearly sales of staplers are expected to increase twofold during the next three years. This expectation applies to all manufacturers and does not show that the Office Supply Company's plan will lead to an increase in its sales of staplers specifically.

Choice C states that a cost analyst for the Office Supply Company is looking at ways to reduce the expense involved in making staples. There is no reason to assume that changing the cost of manufacturing staples would enable the Office Supply Company to lower its costs, or sell more staples.

Choice D states that a rival staple manufacturer recently said that it also plans to come out with a stapler that would only hold staples made by that manufacturer. Without further knowledge of the rival staple manufacturer, little can be inferred about its decision to follow the same plan or how this plan would affect the Office Supply Company's sales.

Choice E states that when stapler users tried the Office Supply Company's new stapler, they said it was markedly better than other staplers they had used. Based on the consumer preference for the Office Company's redesigned stapler, the Office Supply Company can reasonably expect to sell more staplers, and therefore more of their higher-priced staples.

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Joined: 09 Oct 2016
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10 Dec 2017, 00:17
option b vs e

in b annual sales are expected to double. say company sells x staplers so in 3 years it will sell 2x staplers, considering all other factors not changing
in e what if the the price of staplers is so much that the difference in quality is not a factor
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Joined: 26 Apr 2018
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06 May 2018, 09:58
As no information is given about consumer behaviour, one should not make assumptions about consumer preferences regarding Price VS Quality of staples.
In addition, the fact that the superior stapler only works with staples from one company, might require a higher effort when buying staples as you cannot just buy any staple available. Therefore it is not safe to assume that a superior and more expensive product necesarily leads to higher sales.

In a market that is doubling in just three years, it is very likely to achieve an increased sales of staples. Otherwise it means your market share drops drastically and , assuming all variables are constant, no reason is given to assume such a drastic drop in market share. As a result of increased sales of staplers that only function with the staple produced by the same company, the plan enables the company to secure higher revenues for the future.
Therefore answer B is correct in my opinion.
S92-16 &nbs [#permalink] 06 May 2018, 09:58
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# S92-16

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