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

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Director
Joined: 09 Aug 2006
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The value of a product is determined by the ratio of its [#permalink]

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03 Jul 2007, 13:22
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18. 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.

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Manager
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03 Jul 2007, 13:34
I go for A because it gives support for the theory that if V=Q/P
from the stem:
if Q increase then Value increase then competitiveness increase
if P decrease then Value increase then Competitiveness increase

And A says: if P and Q increase Value can stay the same and competitiveness also, showing one more time that Q and P are active factors in determining competitiveness.

Vote for A

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Director
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04 Jul 2007, 12:01
'E'

If consumer is able to understand the quality as the actual quality, he/she can decide better which is the better quality product.

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Manager
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04 Jul 2007, 12:40
good point!! you are right

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Senior Manager
Joined: 06 Jul 2004
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Location: united states

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04 Jul 2007, 13:26
Amit05 wrote:
18. 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.

The conclusion is :

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.

Only A correctly takes both factors that define the quality of the product into account. E, although might be true, only talks abt quality and hence doesn't strengthen the conclusion fully.
_________________

for every person who doesn't try because he is
afraid of loosing , there is another person who
keeps making mistakes and succeeds..

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Manager
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04 Jul 2007, 14:00
But what if a consumer doesn't recognize an increase in quality...
will the relation about value with the likelihood of the consumer to buy the product still hold true?

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Manager
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04 Jul 2007, 14:10
Some take as by vshaunak@gmail.com.

~sara

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04 Jul 2007, 14:10
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