Tony: A new kind of videocassette has just been developed. It lasts

Question

Tony: A new kind of videocassette has just been developed. It lasts for only half as many viewings as the old kind does but costs a third as much. Therefore, video rental stores would find it significantly more economical to purchase and stock movies  recorded on the new kind of videocassette than on the old kind.

Anna: But the videocassette itself only accounts for 5 percent of the price a video rental store pays to buy a copy of a movie on video; most of the price consists of royalties the store pays to the studio that produced the movie. So the price that video rental stores pay per copy would decrease by considerably less than 5 percent, and royalties would have to be paid on additional copies.

Anna’s reply is structured to lead to which one of the following conclusions?

Anna’s reply is structured to lead to which one of the following conclusions?

(A) The royalties paid to movie studios for movies sold on videotape are excessively large.
(B) Video rental stores should always stock the highest-quality video cassettes available, because durability is more important than price.
(C) The largest part of the fee a customer pays to rent a movie from a video rental store goes toward the royalties the store paid in purchasing that movie. 
(D) The cost savings to video rental stores that buy movies recorded on the cheaper videocassettes rather than movies recorded on the more durable ones will be small or nonexistent.
(E) If the price a video rental store pays to buy a movie on videocassette does not decrease, the rental fee the store charges on the movie will not decrease.

Bunuel · Answer

Similar question to practice: https://gmatclub.com/forum/tony-a-new-k ... 55474.html

LamboWalker · Answer

Anna counters Tony's argument by claiming that even though the cost per video casette will go down, the rental store will have to pay more in royalties, as there will now be a higher number of video casettes.

Option A is out of scope of the argument.
Option B is not what Anna is suggesting.

Option C is tricky. Anna is talking about what the STORE is paying per casette, it is not at all talking about what in turn the store is charging the customer. Therefore this is a runner up.

Option D correctly states Anna's conclusion.

Option E is again, not in scope of the argument.

Therefore, OA is   D  .

playthegame · Answer

Thank you, yes sounds good I was not sure why I was not able to find it there were two questions with this passage on LSAT so I posted them seprately.

playthegame · Answer

Thanks, I was able to get to B and D pretty quickly. Between B and D I chose D because it was more relevant to cost savings and likely a better conclusion. Durability may be better than price or the two could also be interconnected....

Thanks,

Axwe7 · Answer

Bunuel

Can you please explain, in very simple terms and layman language, what the following means?
"But the videocassette itself only accounts for 5 percent of the price a video rental store pays to buy a copy of a movie on video"

I'm having a difficult time just trying to understand what it means how royalties fit into this discussion.

Appreciate the help!

Bunuel · Answer

It means the  actual tape is only a very small part of the total price .

Most of the money the store pays is not for the cassette itself. It is for the right to rent the movie out, and that money goes to the studio as royalties.

guddo · Answer

Tony: A new kind of videocassette has just been developed. It lasts for only half as many viewings as the old kind does but costs a third as much. Therefore, video rental stores would find it significantly more economical to purchase and stock movies recorded on the new kind of videocassette than on the old kind.

Anna: But the videocassette itself only accounts for 5 percent of the price a video rental store pays to buy a copy of a movie on video; most of the price consists of royalties the store pays to the studio that produced the movie. So the price that video rental stores pay per copy would decrease by considerably less than 5 percent, and royalties would have to be paid on additional copies.

Anna’s reply is structured to lead to which one of the following conclusions?

Anna’s reply is structured to lead to which one of the following conclusions? 
Tony says the new cassette is much cheaper, so it should be more economical for rental stores. Anna replies that the cassette itself is only a tiny part of the total purchase price. Most of the cost is royalties, and because the new cassette wears out faster, stores would need to buy extra copies sooner.  So Anna’s point is that the supposed savings are tiny and may disappear altogether.

(A) The royalties paid to movie studios for movies sold on videotape are excessively large.

This is not Anna’s conclusion. She mentions royalties only to show why the cheaper cassette does not save much money.

(B) Video rental stores should always stock the highest-quality video cassettes available, because durability is more important than price.

Too broad. Anna is not stating a general rule about always buying the highest-quality cassette.

(C) The largest part of the fee a customer pays to rent a movie from a video rental store goes toward the royalties the store paid in purchasing that movie.

Anna talks about what the store pays to buy a copy, not how the rental fee is divided.

(D) The cost savings to video rental stores that buy movies recorded on the cheaper videocassettes rather than movies recorded on the more durable ones will be small or nonexistent.

This is correct.  That is exactly where Anna’s reasoning leads.  The cassette is only 5 percent of the purchase price, so the cheaper cassette barely lowers cost per copy, and its lower durability means more copies must be bought.

(E) If the price a video rental store pays to buy a movie on videocassette does not decrease, the rental fee the store charges on the movie will not decrease.

Anna says nothing about what rental fees will do.

Answer: (D)

Tony: A new kind of videocassette has just been developed. It lasts

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Tony: A new kind of videocassette has just been developed. It lasts

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