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# The value of a product is determined by the ratio of its

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CEO
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The value of a product is determined by the ratio of its [#permalink]

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22 Aug 2003, 18:41
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The value of a product is determined by the ratio of its quality to its price. The higher the value of a product, the better will be its competitive position. Therefore, either increasing the quality or lowering the price of a given product will increase the likelihood that consumer will select that product rather than a competing one.

Which of the following, if true, would most strengthen the conclusion drawn above?

(A) It is possible to increase both the quality and the price of a product without changing its competitive position.
(B) For certain segments of the population of consumers, higher-priced brands of some product lines are preferred to the lower-priced brands.
(C) Competing products often try to appeal to different segments of the population of consumers.
(D) The competitive position of a product can be affected by such factors as advertising and brand loyalty.
(E) Consumers' perceptions of the quality of a product are based on the actual quality of the product.

Thanks
Praetorian
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23 Aug 2003, 02:00
Is the correct response (E) ?

Cheers
Soumala
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23 Aug 2003, 02:34
Soumala wrote:
Is the correct response (E) ?

Cheers
Soumala

I believe it is E because .... (state your reason).

It will teach you to articulate your rationale for picking the correct choice and give you more confidence as you get these correct more often.
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Best,

AkamaiBrah
Former Senior Instructor, Manhattan GMAT and VeritasPrep
Vice President, Midtown NYC Investment Bank, Structured Finance IT
MFE, Haas School of Business, UC Berkeley, Class of 2005
MBA, Anderson School of Management, UCLA, Class of 1993

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23 Aug 2003, 19:46
Soumala wrote:
Is the correct response (E) ?

Cheers
Soumala

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25 Aug 2003, 09:46
I believe it is E.

B,C, and D are beyond the scope, so they are out.

I beilieve that A can be inferred from the information given (which is why I pondered it for about 20 seconds), but only E would strengthen the conclusion that consumers' perception of value is the same as the ratio provided.
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25 Aug 2003, 20:08
This one is a toughie. I agree that B, C, and D are out. However, I believe that A is the correct answer. My reasoning is that the statement defines that the value of a product can be changed by manipulating either the quality or the price. Statement E says that the consumer's perception of quality is always based on the "actual quality of the product". Therefore, the perception of quality cannot be changed by lowering of the price.

Statement A is consistent with the information given. Increasing quality and increasing price at the same time can keep the value of a product the same.
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26 Aug 2003, 13:18
I beleive the answer is E.

B,C, D are out of scope and although A is logical it does not strenghthem the conclusion which is what the question asked.

E, howwever, confirms how consumers perceive the quality of a product.

Imagine if E was not true. In other words, negate E. Then the whole argument falls apart. Thus E is my choice.
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26 Aug 2003, 13:24
EssQ wrote:
This one is a toughie. I agree that B, C, and D are out. However, I believe that A is the correct answer. My reasoning is that the statement defines that the value of a product can be changed by manipulating either the quality or the price. Statement E says that the consumer's perception of quality is always based on the "actual quality of the product". Therefore, the perception of quality cannot be changed by lowering of the price.

Statement A is consistent with the information given. Increasing quality and increasing price at the same time can keep the value of a product the same.

You are absolutely right that A is consistent with the information given...but that is not what the question asks. It wants something to strengthen the conclusion, i.e. something that may not quite be stated, but would really help solidify the argument if it was there.

Be careful with this and don't move on from this q until you understand why. In many study books, you will find that the first step on these is to read the question. Try that.
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26 Aug 2003, 15:14
EssQ wrote:
This one is a toughie. I agree that B, C, and D are out. However, I believe that A is the correct answer. My reasoning is that the statement defines that the value of a product can be changed by manipulating either the quality or the price. Statement E says that the consumer's perception of quality is always based on the "actual quality of the product". Therefore, the perception of quality cannot be changed by lowering of the price.

Statement A is consistent with the information given. Increasing quality and increasing price at the same time can keep the value of a product the same.

hi Essq and all

Thanks for your attempt. It was a good discussion.

In CR, i think its important to read the paragraph carefully.

The value of a product is determined by the ratio of its quality to its price. The higher the value of a product, the better will be its competitive position. Therefore, either increasing the quality or lowering the price of a given product will increase the likelihood that consumer will select that product rather than a competing one.

A ..contradicts our argument ..says its possible to hold competitive position by "Both" increasing quality and price...our argument talks about increasing value by increasing the quality or decreasing the value...so A weakens our arugment.

B weakens our argument..says for certain segments of customers, high priced goods are preferable...so obviously "lowering prices" will not work. so our idea of VALUE does not hold true here.

C ..outside the scope of the agrument...doesnt strengthen or weaken.

D...weakens the argument...says the advertising and brand loyalty also affect the purchase of a product..its doesnt help our cause.

Best Answer is E. it clearly mentions that customers will buy good quality products...so it means High Quality = High Value. its then possible to compete by producing high quality products.

Thanks
Praetorian
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26 Aug 2003, 16:56
Thanks for clearing this up for me praetorian. I spent a good deal of time pondering why E was better but I should have looked at why A was not better. That subtle "both" really changes the meaning of the statement.
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Re: Critical Reasoning --- Good Q [#permalink]

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30 Jul 2012, 06:59
Praetorian wrote:
The value of a product is determined by the ratio of its quality to its price. The higher the value of a product, the better will be its competitive position. Therefore, either increasing the quality or lowering the price of a given product will increase the likelihood that consumer will select that product rather than a competing one.

Which of the following, if true, would most strengthen the conclusion drawn above?

(A) It is possible to increase both the quality and the price of a product without changing its competitive position.
(B) For certain segments of the population of consumers, higher-priced brands of some product lines are preferred to the lower-priced brands.
(C) Competing products often try to appeal to different segments of the population of consumers.
(D) The competitive position of a product can be affected by such factors as advertising and brand loyalty.
(E) Consumers' perceptions of the quality of a product are based on the actual quality of the product.

Thanks
Praetorian

given that
V = Q/P , higher V, better C.P
so conclusion...either higher Q or lower P would give better C.P

1. increasing both Q and P, the ratio can be maintained...hence CP can remain same..hence this supports the conclusion....
2. out of scope
3. again out of scope
4. nothing of this sort is mentioned in the para, hence ignored
5. again, this does not support the conclusion....

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Re: Critical Reasoning --- Good Q   [#permalink] 30 Jul 2012, 06:59
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