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# Surveys show that every year only 10 percent of cigarette

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Director
Joined: 15 Aug 2005
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Location: Singapore
Surveys show that every year only 10 percent of cigarette [#permalink]

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14 Sep 2005, 19:33
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Surveys show that every year only 10 percent of cigarette smokers switch brands. Yet the manufacturers have been spending an amount equal to 10 percent of their gross receipts on cigarette promotion in magazines. It follows from these figures that inducing cigarette smokers to switch brands did not pay, and that cigarette companies would have been no worse off economically if they had dropped their advertising.

Of the following, the best criticism of the conclusion that inducing cigarette smokers to switch brands did not pay is that the conclusion is based on

(A) computing advertising costs as a percentage of gross receipts, not of overall costs
(B) past patterns of smoking and may not carry over to the future
(C) the assumption that each smoker is loyal to a single brand of cigarettes at any one time
(D) the assumption that each manufacturer produces only one brand of cigarettes
(E) figures for the cigarette industry as a whole and may not hold for a particular company
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Cheers, Rahul.

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Senior Manager
Joined: 16 Jul 2005
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14 Sep 2005, 23:54
I think it is A because the passage mentioned that advertising costs 10% of the gross receipts. I dont think that is a good way to calculate it because it might be wrong.

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Director
Joined: 14 Sep 2005
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Location: South Korea

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15 Sep 2005, 00:03
Suppose this case:
- Company X's spending on the promotion amounts to only 1% of the gross receipts of the whole cigarette industry, and the same company X acquired 9% of the new smokers.

I believe the correct answer is (E).

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Current Student
Joined: 29 Jan 2005
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15 Sep 2005, 02:27
I'm going with C. What if many smokers smoke whatever cigarrettes are on sell? People would select packs based on random advertisements.

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Manager
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15 Sep 2005, 02:31
I'll go for A

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Manager
Joined: 11 Aug 2005
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15 Sep 2005, 03:51
E is better than the rest of the choices. i take E.
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------------------------------

only if i could choose....

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Intern
Joined: 04 Feb 2005
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15 Sep 2005, 07:25
"A" is the right answer for me.

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Director
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15 Sep 2005, 08:17
Precisely gamjatang's logic!

OA is E
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Cheers, Rahul.

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Director
Joined: 23 Jun 2005
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GMAT 1: 740 Q48 V42

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15 Sep 2005, 21:42
rahulraao wrote:
Precisely gamjatang's logic!

OA is E

But that means all other companies lost out and would've been better off without advertising, right?
I was thinking C since if people were smoking more than one brand already, they wouldn't need to switch at all.
Is there a flaw in my logic?

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Senior Manager
Joined: 07 Jul 2005
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Location: Sunnyvale, CA

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16 Sep 2005, 01:34
Rahul can you please share with us the source of this question?

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16 Sep 2005, 01:34
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