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505-555 (Easy)|   Resolve Paradox|   Strengthen|                                 
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The Maxilux car company's design for its new luxury model, the Max 100 20 Sep 2022, 08:51
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The Maxilux car company's design for its new luxury model, the Max 100, included a special design for the tires that was intended to complement the model's image. The winning bid for supplying these tires was submitted by Rubco. Analysts concluded that the bid would only just cover Rubco's costs on the tires, but Rubco executives claim that winning the bid will actually make a profit for the company.

Which of the following, if true, most strongly justifies the claim made by Rubco's executives?


(A) In any Maxilux model, the spare tire is exactly the same make and model as the tires that are mounted on the wheels.

(B) Rubco holds exclusive contracts to supply Maxilux with the tires for a number of other models made by Maxilux.

(C) The production facilities for the Max 100 and those for the tires to be supplied by Rubco are located very near each other.

(D) When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type.

(E) When Maxilux awarded the tire contract to Rubco, the only criterion on which Rubco's bid was clearly ahead of its competitors' bids was price.


ID - CR04364

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Maxilux Car Company

Step 1: Identify the Question

The wording justifies the claim in the question stem indicates that this is either a Strengthen question or an Explain the Discrepancy question. You’ll need to read the argument itself to determine which it is.

Step 2: Deconstruct the Argument

M’s new car has special tire design

R submitted bid for tires

Bid just covers cost, BUT: R will still profit?

The evidence in the argument doesn’t actually support the executives’ claim. Instead, their claim is surprising—it runs counter to the evidence, which suggests that Rubco will not make a profit. Since the argument includes a surprising claim, and the question asks you to justify that claim, this is an Explain the Discrepancy question.

Step 3: Pause and State the Goal

On Explain the Discrepancy questions, the argument will describe a surprising phenomenon, and the right answer will give a reason why that phenomenon occurred. In this case, the right answer will present a way in which Rubco might actually make a profit on the tire bid.

Step 4: Work from Wrong to Right

(A) This answer choice states that the spare tire on the Max 100 will also be a Rubco tire. However, the argument doesn’t make a connection between how many tires Rubco supplies, and what its profit is. It isn’t clear whether supplying more tires will increase Rubco’s likelihood of making a profit.

(B) The executives claim that winning the specific Max 100 bid will lead to a profit for Rubco. They don’t claim that Rubco will make a profit in general, or on its other contracts. So, this answer choice does not address the executives’ specific claim. Also, holding exclusive contracts doesn’t necessarily imply that Rubco will make a profit, since the answer choice doesn’t state whether these contracts are profitable.

(C) This answer choice seems to imply that the cost for Rubco to transport the tires will be relatively low. The argument already provides information about Rubco’s total costs: the bid only just covers them. Since you already know the relationship between Rubco’s costs and their bid amount, knowing that the transportation costs were low would only tell you that the bid may have also been low. This information doesn’t explain how the bid will be profitable.

(D) CORRECT. In the argument, the Max 100 is described as a luxury automobile. According to this answer choice, if consumers want to replace worn tires on a Max 100, they will almost invariably replace them with Rubco tires. By winning the bid, Rubco isn’t just winning the right to supply tires for the Max 100; it’s also winning the future business of Max 100 buyers. This explains why the executives believe that Rubco will make a profit.

(E) This may explain why the bid only just covers Rubco’s costs: offering the lowest cost was what enabled Rubco to win the bid. However, that isn’t what the question asks you to justify. It specifically asks for a justification of the claim made by Rubco’s executives.
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A - Analyst included spare tyre cost in deriving his conclusion or not - unknown : Wrong
C - less transportation cost is out of scope, topic is about manufacturing cost and selling price, besides what if transportation cost is not included in bid price : Wrong
E - winning the bid is not same as making profit : Wrong


Its down to B and D :

B gives three possible scenarios
a) if tyre cost of other car models is less - loss
b)if tyre cost of other car models is more - profit
c)if tyre cost of other car models is equal - no profit, no loss

Compare B with two possible scenarios of E
a) If part changed is tyre, more tyres are sold - profit
b)if part changed is NOT tyre - No profit, No loss

So E is a better option as it eliminates risk of making a loss.
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The Maxilux car company's design for its new luxury model, the Max 100 02 Oct 2022, 05:47
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i feel next to option d , option a is kindof close contender, with an assumption bid doesnt cover the cost of spare. then it will add extra revenue . how come option B i dont know it is easy to eliminate as it dont talk about the bid in question..

anybody sharing same thought?
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Yes I marked A and saw only 2% think alike.
Had same thoughts - btw what company is giving spare tyres ?
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The Maxilux car company's design for its new luxury model, the Max 100 02 Oct 2022, 21:55
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san10789
Had same thoughts - btw what company is giving spare tyres ?
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Hi san10789,

Given that we're looking at "a special design for the tires that was intended to complement the model's image", it's quite likely that Rubco (the manufacturer of the special tires) would benefit from additional sales of those tyres.
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The Maxilux car company's design for its new luxury model, the Max 100 03 Oct 2022, 07:53
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san10789
Had same thoughts - btw what company is giving spare tyres ?
Hi san10789,

Given that we're looking at "a special design for the tires that was intended to complement the model's image", it's quite likely that Rubco (the manufacturer of the special tires) would benefit from additional sales of those tyres.
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Thanks AjiteshArun , Yes I got it from your previous explanation.
Just wondering why i am not able to think in this way.
Going for exam in 10 days. Still getting baffled by such simple questions.
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The Maxilux car company's design for its new luxury model, the Max 100 25 Oct 2022, 10:40
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In real world , (D) would not work.Changing of worn out tire of luxury car require time (say a year;unlike sports cars which gets worn out in few minutes)and hence earning an upfront profit is not easy.Also , it is mentioned that just for the looks people will buy the matching company's tire compulsorily , again, it means that the sale of the stepney is a slow process.
(B) can be a good deal upfront, so that the tire manufacturer will be able to adjust profit margin through the tires for other models of car.
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Incorrect assumption ! As tire manufacture quotes bulk rates to auto manufactures. Same rates are not applicable to the customer buying replacement tires
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The Maxilux car company's design for its new luxury model, the Max 100 09 Jul 2024, 21:19
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My thought process -

Conclusion - Analysts concluded that the bid would only just cover Rubco's costs on the tires, but Rubco executives claim that winning the bid will actually make a profit for the company.

Objective - Strengthen Rubco executives' claim - i.e. Company will make profile due to this win on things apart from tires

All the option choices talks more or less about making more profit because of "tires". Option D also states that its due to repair of tires, which is the reason I had rejected D.

Counterpoint to my thought process - I assumed that profit due to tires = profit due to tires as a whole. However, given the premise profit due to tires (in conclusion) = profile due to supply of tires (as highlighted in GMATNinja 's post.

Let me know if i have identified the falter point in my thought process correctly
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The Maxilux car company's design for its new luxury model, the Max 100 09 Jul 2024, 21:36
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All the option choices talks more or less about making more profit because of "tires". Option D also states that its due to repair of tires, which is the reason I had rejected D.

Counterpoint to my thought process - I assumed that profit due to tires = profit due to tires as a whole. However, given the premise profit due to tires (in conclusion) = profile due to supply of tires (as highlighted in GMATNinja 's post.

Let me know if i have identified the falter point in my thought process correctly
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­Hi glagad,

Just checking whether you recognised that option D is about replacing tires, not repairing them (more precisely, "replace a worn part").
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The Maxilux car company's design for its new luxury model, the Max 100 31 Jan 2025, 19:56
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My reasoning:
Conclusion is the Rubco (tire suplier company) executives claim: winning the bid will actually make a profit for the company (rubco).


(A) In any Maxilux model, the spare tire is exactly the same make and model as the tires that are mounted on the wheels.
Out of context

(B) Rubco holds exclusive contracts to supply Maxilux with the tires for a number of other models made by Maxilux.
This one I maintain for a couple of seconds, because if theres another source of income (i mean other contracts that assure sales) maybe Rubco will be profitable. But we dont know the costs of these exclusive contracts, and even more, our focus is to support that THE BID will make profit, not exclusive contracts.

(C) The production facilities for the Max 100 and those for the tires to be supplied by Rubco are located very near each other.
Again, this one was in my mind for a couple of seconds.....
But comparing to D, the choices want to show maybe that the logistc costs are low? and with this pretend to dimish the analyst opinion? mmmm.... but my goal is to JUSTIFY RUBCO EXECUTIVES...mmmm.. and even more, this is one cost, what about other costs or maybe the representation of this cost over the total costs on tires?.

(D) When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type.
Ok it makes sense, the tire design is an special one, so any replace will increase Rubco production so sales, and even more this is like a derived source of income from THE BID (needs to the existance of the winning bid to exists), comparing to D this justifies better.

(E) When Maxilux awarded the tire contract to Rubco, the only criterion on which Rubco's bid was clearly ahead of its competitors' bids was price.
Kind of weaken, if Maxilux only accept Rubco proposal because of the price (very low), this some how implies that Rubco sales will be low and maybe roughly enough to cover the production & other costs involved.
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The Maxilux car company's design for its new luxury model, the Max 100 17 Aug 2025, 10:36
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Logic to eliminate trap answer choice:

(B) Rubco holds exclusive contracts to supply Maxilux with the tires for a number of other models made by Maxilux.

-The above information does not affect paradox since we are talking about a specific deal of a specific tyre type. We don't want to go beyond that and include controversial assumptions like overall profits on tyre sales etc
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The Maxilux car company's design for its new luxury model, the Max 100 18 Aug 2026, 15:56
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