betterscore wrote:
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
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.
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 scenariosa) if tyre cost of other car models is less -
lossb)if tyre cost of other car models is more -
profitc)if tyre cost of other car models is equal - no profit, no loss
Compare B with two possible scenarios of Ea) If part changed is tyre, more tyres are sold -
profitb)if part changed is NOT tyre - No profit, No loss
So
E is a better option as it eliminates risk of making a loss.
close
20 Sep 2022, 08:51
