The fee a certain plumber charges for service is based on a "cost-plus" pricing method. The plumber charges for all items used in the work, and adds a set percentage.
Which of the following statements, if true, would be the best basis for a criticism of "cost-plus" pricing as an economically advantageous method for customers of the plumber's service?
A. It is in the economic interest of the plumber to use expensive items, even if their use is not warranted by the circumstances.
B. The percentage added to the cost of an item has decreased over the past several years.
C. The plumber does not charge for labor costs, despite the extensive time requirements of some repair jobs.
D. Some past clients have criticized the quality of the plumber's work.
E. The "cost-plus" pricing method has been used by other plumbers in the region.
I'm happy to help.
This prompt argument is unusually short. In that sense, I believe it may be a bit unrepresentative of what you will see on the GMAT.
We want a fact that will be bad for the customer of this plumber --- a reason it might be disadvantageous for a customer to choose a plumber who uses "cost-plus" pricing. Presumably, this could mean that the customer is overcharged --- bad for the customer, good for the plumber. (A) It is in the economic interest of the plumber to use expensive items, even if their use is not warranted by the circumstances
If the plumber uses expensive items, especially unnecessarily, this will inflate his fee, which is good for the plumber, not good for the customer. This is a promising answer to the question. (B) The percentage added to the cost of an item has decreased over the past several years.
First of all, this would be vaguely beneficial to the customer, and it's not clear that this speaks to anything inherently fair or unfair about the "cost-plus" price scheme itself. This is not correct. (C) The plumber does not charge for labor costs, despite the extensive time requirements of some repair jobs.
Well, this definitely would be to the disadvantage of the plumber and the advantage of the customer. This is not correct. (D) Some past clients have criticized the quality of the plumber's work.
Hmmm. Tempting. This, though, is more a problem with the plumber himself, not really a problem with the "cost-plus" scheme of charging. In other words, if this plumber actually does low quality work, than that would be a detriment regardless of the pricing scheme he used. This is not correct. (E) The "cost-plus" pricing method has been used by other plumbers in the region.
This is neutral. Perhaps it's a good sign, meaning that it's a fair practice, or perhaps it's a bad sign --- it's a slanted scheme that allows plumbers to exploit their customers. This may be relevant or may not be. We don't have enough information. This is not correct.
The only possible answer is (A)
, the OA.
Here's a blog about weakening the argument.http://magoosh.com/gmat/2012/how-to-wea ... reasoning/
Does this make sense?
Magoosh Test Prep