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The Circle Multiplex has seen tremendous growth in the number of custo

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The Circle Multiplex has seen tremendous growth in the number of custo  [#permalink]

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New post 22 Oct 2019, 12:22
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Question Stats:

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The Circle Multiplex has seen tremendous growth in the number of customers since it signed an exclusive contract with a leading distributor. For the last seven months, unlike previous months, almost all the shows have been booked completely. A number of customers have even been turned away for most of the shows. Consequently, the management proposes to increase its profits by raising the ticket prices slightly above the competition’s as it believes that invariably the Multiplex will be able to fill its capacity.

Which of the following statements is an assumption made by the management of The Circle Multiplex?

A. The Circle Multiplex has lower ticket prices than other Multiplexes in the region.

B. Factors other than ticket prices such as ambiance are very important for the customers in choosing the Multiplex.

C. No existing customer of The Circle Multiplex is going to shift for minor economic considerations.

D. Not a significant number of customers of The Circle Multiplex are extremely sensitive to ticket prices.

E. Most other Multiplexes around The Circle Multiplex run most of the shows with less than half the capacity filled.
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The Circle Multiplex has seen tremendous growth in the number of custo  [#permalink]

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New post Updated on: 29 Oct 2019, 07:31
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iamsiddharthkapoor wrote:
The Circle Multiplex has seen tremendous growth in the number of customers since it signed an exclusive contract with a leading distributor. For the last seven months, unlike previous months, almost all the shows have been booked completely. A number of customers have even been turned away for most of the shows. Consequently, the management proposes to increase its profits by raising the ticket prices slightly above the competition’s as it believes that invariably the Multiplex will be able to fill its capacity.

Which of the following statements is an assumption made by the management of The Circle Multiplex?

A. The Circle Multiplex has lower ticket prices than other Multiplexes in the region.

B. Factors other than ticket prices such as ambiance are very important for the customers in choosing the Multiplex.

C. No existing customer of The Circle Multiplex is going to shift for minor economic considerations.

D. Not a significant number of customers of The Circle Multiplex are extremely sensitive to ticket prices.

E. Most other Multiplexes around The Circle Multiplex run most of the shows with less than half the capacity filled.


Pre-thinking

Falsification scenario: a significant number of customers will be drawn away if the ticket price increases.
Assumption: A significant number of people won't be drawn away if the ticket price increases.

Option D matches with pre-thinking. Hence correct



sandeep211986 option C first of all is too extreme. Let's try to negate it : All existing customers of The Circle Multiplex are going to shift for minor economic considerations.

As we can see this is not a MUST BE TRUE statement.

Second: we don't really know what minor economic shifts are in this context. We know that the price for the ticket will be slightly higher than the price of tickets of the competition BUT the absolute change in the price for tickets could be major or minor. (if competitor price=50 and CM's price= 49 then the change will be minor; if competitor price=50 and CM's price = 20 then the change will be major).

Hence for the following two reasons option C does not work.

sandeep211986 Does this make sense?:)

Originally posted by auradediligodo on 29 Oct 2019, 02:53.
Last edited by auradediligodo on 29 Oct 2019, 07:31, edited 2 times in total.
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Re: The Circle Multiplex has seen tremendous growth in the number of custo  [#permalink]

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New post 29 Oct 2019, 04:14
auradediligodo wrote:
iamsiddharthkapoor wrote:
The Circle Multiplex has seen tremendous growth in the number of customers since it signed an exclusive contract with a leading distributor. For the last seven months, unlike previous months, almost all the shows have been booked completely. A number of customers have even been turned away for most of the shows. Consequently, the management proposes to increase its profits by raising the ticket prices slightly above the competition’s as it believes that invariably the Multiplex will be able to fill its capacity.

Which of the following statements is an assumption made by the management of The Circle Multiplex?

A. The Circle Multiplex has lower ticket prices than other Multiplexes in the region.

B. Factors other than ticket prices such as ambiance are very important for the customers in choosing the Multiplex.

C. No existing customer of The Circle Multiplex is going to shift for minor economic considerations.

D. Not a significant number of customers of The Circle Multiplex are extremely sensitive to ticket prices.

E. Most other Multiplexes around The Circle Multiplex run most of the shows with less than half the capacity filled.


Pre-thinking

Falsification scenario: a significant number of customers will be drawn away if the ticket price increases.
Assumption: A significant number of people won't be drawn away if the ticket price increases.

Option D matches with pre-thinking. Hence correct


Why is the answer not option C.
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Re: The Circle Multiplex has seen tremendous growth in the number of custo  [#permalink]

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New post 29 Oct 2019, 06:34
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The Circle Multiplex has seen tremendous growth in the number of customers since it signed an exclusive contract with a leading distributor. For the last seven months, unlike previous months, almost all the shows have been booked completely. A number of customers have even been turned away for most of the shows. Consequently, the management proposes to increase its profits by raising the ticket prices slightly above the competition’s as it believes that invariably the Multiplex will be able to fill its capacity.

Type- assumption
Conclusion- The management proposes to increase its profits by raising the ticket prices slightly above the competition’s as it believes that invariably the Multiplex will be able to fill its capacity.
Pre-thinking- increase in profits because of higher ticket price vs decrease in customers
Also we know that in the last several months, the shows have been a full house and a number of customers were turned away.

A. The Circle Multiplex has lower ticket prices than other Multiplexes in the region.- incorrect, this need not be true for our conclusion to be valid. Even if the CM's ticket prices were at par to begin with, our argument will hold true.

B. Factors other than ticket prices such as ambiance are very important for the customers in choosing the Multiplex.- irrelevant

C. No existing customer of The Circle Multiplex is going to shift for minor economic considerations.- incorrect, if one customer(or a small number) is going to shift, even then the profits at Circle Multiplex will increase since in the last several months, the shows have been a full house and a number of customers were turned away.

D. Not a significant number of customers of The Circle Multiplex are extremely sensitive to ticket prices.- Correct, if a significant number of customers of the Circle Multiplex is sensitive to ticket prices, then they will be less likely to watch a movie at Circle Multiplex.
Thus, the additional profit due to increased ticket prices might be lesser than the decline in revenue(thereafter profit) because of a significant number of customers leaving Circle Multiplex.

E. Most other Multiplexes around The Circle Multiplex run most of the shows with less than half the capacity filled.- irrelevant, the capacity of the most other multiplexes does not matter. It might be a weakener though.

Answer D
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Re: The Circle Multiplex has seen tremendous growth in the number of custo   [#permalink] 29 Oct 2019, 06:34
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