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

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Manager
Joined: 15 May 2006
Posts: 110
Location: Louvain, Belgium
The value of a product is determined by the ratio of its [#permalink]

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18 Jun 2006, 21:20
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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) Consumersâ€™ perceptions of the quality of a product are based on the actual quality of the product.

Kindly explain your answers ......
VP
Joined: 07 Nov 2005
Posts: 1118
Location: India

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18 Jun 2006, 21:31
Should be E.

A-----> The passgae states that either increase the quality or decrease the price. Hence it is wrong.
B----->Weakens the argument.
C----->Out of scope.
D----->No support offered and seems out of scope.
VP
Joined: 25 Nov 2004
Posts: 1483

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18 Jun 2006, 21:44
go with E too.
GMAT Club Legend
Joined: 07 Jul 2004
Posts: 5043
Location: Singapore

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18 Jun 2006, 22:01
E is the best choice. It says that a customer is able to gauge the value of a product himself and can make a reasoned decision whether to acquire the product or not.

B,C,D --> weakens
A --> irrelevant
Director
Joined: 28 Dec 2005
Posts: 752

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19 Jun 2006, 13:48
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) Consumersâ€™ perceptions of the quality of a product are based on the actual quality of the product.

I got E too, but here is how I solved it:

Fact 1:. V is proportional to Q/P.
Fact 2. Comp. Pos is proportional to V, therefore proportional to Q/P
Conclusion: CC is proportional to V

E proves that costumer's perception is proportional to Q, so it does support the conclusion.

Interestingly although E is the best choice, it is still not the ideal supporting statement. The argument is that if V is increased, the customer will prefer this product. It does not say that V must be increased by increase in Q. Therefore if V is increased by a decrease in P, even statement E has no effect of strengthening the conclusion
Director
Joined: 06 May 2006
Posts: 791

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19 Jun 2006, 13:56
Agree with E.

But only because the others are pretty far off the mark...
_________________

Uh uh. I know what you're thinking. "Is the answer A, B, C, D or E?" Well to tell you the truth in all this excitement I kinda lost track myself. But you've gotta ask yourself one question: "Do I feel lucky?" Well, do ya, punk?

CEO
Joined: 20 Nov 2005
Posts: 2894
Schools: Completed at SAID BUSINESS SCHOOL, OXFORD - Class of 2008

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19 Jun 2006, 14:31
E is the unstated assumption and assumptions may also support the conclusions.

BTW its my 1000th post.
_________________

SAID BUSINESS SCHOOL, OXFORD - MBA CLASS OF 2008

VP
Joined: 02 Jun 2006
Posts: 1260

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19 Jun 2006, 14:38
(E) Consumersâ€™ perceptions of the quality of a product are based on the actual quality of the product.

Direct relation to the quality metric outlined above.
Senior Manager
Joined: 07 Jul 2005
Posts: 404
Location: Sunnyvale, CA

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19 Jun 2006, 14:44
One more for (E)..
Director
Joined: 16 Aug 2005
Posts: 938
Location: France

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19 Jun 2006, 15:15
Hmmm...thats interesting no one picked A
I think that one is a good contender.
_________________

I believe its yogurt!

Director
Joined: 16 Aug 2005
Posts: 938
Location: France

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21 Jun 2006, 05:54
whats the OA and OE here?
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I believe its yogurt!

Manager
Joined: 11 Oct 2005
Posts: 94

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21 Jun 2006, 07:18
E for me - higher quality = better competitive advantage
Intern
Joined: 11 Apr 2005
Posts: 5
Location: UA-->IE

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21 Jun 2006, 09:20
A. It states that increasing both, Q and P, can keep CP same supporting the argument.

E is not good enough as it does not mention P, therefore cannot strengthen the conclusion well.
VP
Joined: 14 May 2006
Posts: 1402

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21 Jun 2006, 15:06
gmatmba wrote:
Hmmm...thats interesting no one picked A
I think that one is a good contender.

IMHO, A is incorrect, because the statement may or may not be true....

first of all... how do you judge the quality and increase it by the same amount as price, so ratio stays the same?

second, if you could have the value to quality, then statement may or may not be true, meaning that you would have to increase the quality and price by the same amount so that ratio of value itself doesn't change... as it is stated in A

on the only issue from this seems like... how do you judge the quality, which is answered in E

(B) certain segments... don't need to read further... we care about all consumers
(C) again same as B
(D) completely out of scope

hope this helps and makes sense
Director
Joined: 16 Aug 2005
Posts: 938
Location: France

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21 Jun 2006, 15:12
u2lover wrote:
gmatmba wrote:
Hmmm...thats interesting no one picked A
I think that one is a good contender.

IMHO, A is incorrect, because the statement may or may not be true....

first of all... how do you judge the quality and increase it by the same amount as price, so ratio stays the same?

second, if you could have the value to quality, then statement may or may not be true, meaning that you would have to increase the quality and price by the same amount so that ratio of value itself doesn't change... as it is stated in A

on the only issue from this seems like... how do you judge the quality, which is answered in E

(B) certain segments... don't need to read further... we care about all consumers
(C) again same as B
(D) completely out of scope

hope this helps and makes sense

that line in bold above makes it very clear...E remains as the only option!
_________________

I believe its yogurt!

VP
Joined: 14 May 2006
Posts: 1402

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21 Jun 2006, 15:18
gmatmba wrote:
u2lover wrote:
gmatmba wrote:
Hmmm...thats interesting no one picked A
I think that one is a good contender.

IMHO, A is incorrect, because the statement may or may not be true....

first of all... how do you judge the quality and increase it by the same amount as price, so ratio stays the same?

second, if you increase the quality and price, then statement may or may not be true, meaning that you would have to increase the quality and price by the same amount so that ratio of value itself doesn't change... as it is stated in A

on the only issue from this seems like... how do you judge the quality, which is answered in E

(B) certain segments... don't need to read further... we care about all consumers
(C) again same as B
(D) completely out of scope

hope this helps and makes sense

that line in bold above makes it very clear...E remains as the only option!

sorry read it again and realized that didn't finish the thought
Manager
Joined: 15 May 2006
Posts: 110
Location: Louvain, Belgium

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22 Jun 2006, 01:36
sorry for the delayed post, OA is E
22 Jun 2006, 01:36
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# The value of a product is determined by the ratio of its

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