The internet boom and subsequent bust of the turn of the

Question

The internet boom and subsequent bust of the turn of the century led to an oversupply of manufacturing facilities for integrated circuits, resulting in fierce competition among manufacturers of computer components like CD-ROMs and video cards. Due to advances in the underlying technology used in video cards, the quality of the average unit has increased dramatically and prices have risen for the past consecutive five years. During the same period, prices of CD-ROMs have remained flat. Since profit margins for both components are approximately the same, we can conclude that video card manufacturers have enjoyed larger profits than CD-ROM manufacturers for the past five years.

Which of the following describes an unsupported assumption made in the passage above?

A) Video card manufacturers have managed to adapt to the oversupply of production better than CD-ROM manufacturers.

B) The demand for CD-ROM components has fallen significantly over the past five years.

C) Five years ago, the price of the average video card was equal to or greater than the price of the average CD-ROM.

D) The advanced technology present in video cards has allowed manufacturers to demand higher profit margins.

E) Video card manufacturers are managed more effectively than CD-ROM manufacturers, resulting in higher returns on assets.


guys, when choosing your answer, please provide explanation as well!

thanks!

asdert · Answer

A touhg one for me. And I'm not sure abou my answer.

I'd go with D. Passage assumes that video card manufacturers have increased profits because of the improvements in technology, rather than any other reason. No evidence that supports this is present.

For a while B was my best option, until I realised that that's not assumed. B could be a good option if this were a weaken-the-conclusion question.

GMATBLACKBELT · Answer

I would say C. but im not sure if I understand what im actually suppose to answer for here. 

C, in my opinion. Ex/ lets say CD-roms sold for 100$ and yielded a 50$ profit. VC's sold for 1$ and yielded a 1$ profit. Over the past few years VC's could have increased by 1000% to 10$ and thus a profit of lets say 
5$. Without C, this scenario could exist. 

If the prices were equal 5 years ago. Then the above is impossible and indeed VC's are selling for a higher profit. 

I still am vonfused with the statement "an unsupported assumption." If I understand it the way I think its suppose to be taken, then I still say C. Even though C removes the above scenario, it doesnt say that the costs of producing the video card didnt go up. So we could have VC @ 150$ and it costs 149$ to make while the CD-Rom sells for 100$ and costs only 50$.

I think the question is asking for an assumption that the argument makes, but that this assumption does not leave the argument flawless (or greatly less flawed) as normal assumption questions are suppose to do.

asdert · Answer

I faced the same, lol. I was going for C for a while, then switched to D, then again to C. then I reread, then B, then C, then D. Hahaha!

what's the OA?

tarek99 · Answer

ok guys, the OA is C here is the exact explanation given in my CAT practice test, which I couldn't understand and would need your input:

The passage makes the assumption that CD-ROMs were NOT priced higher than video cards five years ago. If they had been, then the rise in the price of video cards over the past give years would not necessarily mean that video cards are priced higher than CD-ROMs today. Since profit margins are approximately the same, the higher priced component will generate the larger profit.


But here is my problem, doesn't the first sentence of the explanation mean the same exact thing as answer choice C? when the price of the CD-ROMs is not higer than that of the video cards, shouldn't that mean that the price of the video card is either equal to or higher than that of the CD-ROMs? I honestly didn't understand the explanation and need your input! thanks

GMATBLACKBELT · Answer

Yes it does mean the exact same thing as C. C is the necessary assumption here. 

Im not sure what you don't understand here. im not the best at explaining these, but I think my original post kinda explains why C is the correct answer.

I wasn't sure what the question was really asking in my original post, but regardless C would be the answer for both. 

This type of problem requires some quantitative thinking. Your gunna have to use examples to really see it. 


I hope that kinda helps.

tarek99 · Answer

GMATBLACKBELT, now i realised where my mistake was! I didn't understand the question properly. The "unsupported assumption" made me think that I was suppose to look for an assumption that doesn't agree with the statement! heheh....i was confused cause answer choice C is perfectly assumed, but I found it conflicting with the question! i just remembered that because assumptions are never stated, they lack as tangible evidence in supporting the conclusion! heheheh.... now C makes perfect sense to me

The internet boom and subsequent bust of the turn of the

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