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12 Days of Christmas GMAT Competition 2025 - Day 1: Marketing analyst:

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prepapr

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It is given that the greater the number of coupon downloads, greater the monthly revenue. This is the premises. From this statement, there is a logical gap to the conclusion which says that the online discount coupons increases profits. The premises talks about revenue/sales but conclusion directly correlates increased revenue to increased profits. This is vulnerable to criticism.
For example, if the selling price after applying discount coupon equals the cost price, then there is zero profit.

Bunuel

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While reading the argument, you should be able to spot the scope shift here. The premise talks about increased overall sales and revenue, however, the conclusion is about increased profits. Profit = Revenue - Cost

A. This flaw attacks the link between coupons and revenue, but it doesn't point out the flaw in the conclusion. Incorrect.

B. This could be true, however, this doesn't impact the conclusion about increased profits. Incorrect.

C. This perfectly captures the flaw. The evidence was about increased revenue, however, the conclusion was made for profit. The argument doesn't mention anything about the cost. Cost could've gone up or down or perhaps stayed the same. Correct.

D. The argument doesn't assume this. It provides evidence for this. It's a part of premise. Incorrect.

E. This is irrelevant. The flaw is about increased profits from the coupons, not the difference between businesses who offer them and who deosn't.

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It is a clear cause effect relation. Hence for a statement a causes b, a clear flaw is c causes a and b.
Hence A is the correct answer.

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This is a classic "Revenue is not the same as profit" question. Increased revenues does not automatically mean increased profit.
Let me give an example: Say the company's revenue was $100k, before offering the online discount coupons, with a profit margin of 40%, then profit was: 40% * $100k = $40k profits. And say that after the offer, the revenues increased to 120k, but the coupons were offering a 30% discount, which reduced profit margins to, say, 10%, then the profit becomes: 10% * $120k= $12k. Hence, in this example revenues increase, but profits decreased.
Therefore the argument: "offering discount coupons clearly increases profits rather than reduces them", is weak, as it fails to consider the above possibility.

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Example :
Without Coupons ;
Revenue = 100
Cost = 70 ;
Profit = 30;
With Coupons ;
Revenue = 120
Cost = 110
Profit = 10
Rev ↑ profit ↓
So coupons can increase revenue but reduce profit .

Option C : Correct

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Bunuel

Hint -> The premise talks about revenue while the conclusion jumps to profits.

A --> How the correlation is caused is not the point here
B --> No, it does not assume that. This can still happen with the monthly revenue increase
C --> Correct.
D --> Sales growth is not discussed
E --> Irrelevant

Option C

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Profit = Revenue - Costs
Revenue is high, but costs can also be high to reduce profit

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Marketing analyst: Several small businesses complain that offering online discount coupons reduces their revenue, since customers who use the coupons pay less. However, companies that have issued such coupons in the past year have seen substantial growth in overall sales. Moreover, there is a strong correlation between increases in the number of coupon downloads and increases in a company’s monthly revenue. Therefore, offering online discount coupons clearly increases profits rather than reduces them.

The analyst’s reasoning is most vulnerable to criticism on which of the following grounds?

The biggest flaw in argument is increased revenues doesn't necessarily mean increasing profits. The profits might decrease due to discount coupon, operational costs etc but the revenue might still increase.

A. It overlooks the possibility that two correlated trends may result from an independent factor rather than one causing the other.
(Even if another independent factor causes both to increase, it still confused the revenue with increased profit). Wrong
B. It assumes, without justification, that customers who use coupons would not have purchased goods at full price.
(Irrelevant)
C. It fails to consider that increased revenue does not necessarily imply increased profits.
(Discounts can reduce the profits, increase revenue doesn't mean increased profits)....Correct

D. It presumes that the growth in overall sales occurred only after coupons were introduced.
(What is assumed doesn't matter). Wrong
E. It ignores the possibility that businesses offering coupons differ in important ways from those that do not. (Coupon offering businesses differ from other ....doesn't matter to the conclusion) Wrong

C

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Increase in revenue does not necessarily mean increase in profit. As customer may buy the product on which profit margin of company is very low. in that case, the revenue will increase but profit may not increase. profit is basically revenue less cost. if we do not know about cost than concluding about profit increase is not appropriate.

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Here Marketing Analyst concludes that offering online discount coupon increases profit
Evidence: companies issuing coupon in past have seen substantial growth in sales. Correlation between coupon download and sales.

Problem: Sales increase cannot justify increase in profit always. This is exactly option C. Just because sales increase, it can be that profit is reducing.

Bunuel

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If we read carefully, then we can see that Analyst mixed revenue with increased profits.

Because coupons are used it is possible that revenue increased, but we can not claim that profit also increased.

Hence, option C is correct.

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The analyst concludes that offering coupons increases profits, but the evidence cited concerns revenue and sales, not profits.

Revenue can increase while profits decrease if, for example, margins are reduced due to discounts, increased marketing costs, or higher fulfillment expenses. Thus, the conclusion does not logically follow from the premises.

Therefore, the reasoning is most vulnerable because it confuses revenue growth with profit growth. The only option that indicates this point is C.

A This could be true, but even if coupons really do cause higher revenue, the argument still fails. So this is not the main flaw.

B The argument doesn't depend on this.

D The argument doesn't clearly rely on this timing, so this is not the key weakness.

E This could matter, but it's less direct than the basic revenue-vs-profit mistake.

IMO C

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Big Companies - are seeing increased sales more revenue - compared to the scenario without coupons.
Small Businesses are seeing decreased revenue - compared to the scenario without coupons.

Possible when many small businesses see some increase in sales, but lowered revenues, but for Big companies, the cumulative increase in sales from many small businesses can translate cumulatively to a higher volume of sales than seen by just one small business.

a) Possible - but does not explain the increase in Profit. - REJECTED.
b) Wrong - clearly mentioned in the question that customers using coupons pay less.
c) Correct - THe analyst keeps talknig of revenues, but jumps to profits in his conclusion.
d) Not presumed, but mentioned in the question. Rejected.
e) Irrelevant - Rejected.

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The analysis is based on the assumption that increase in revenue reflected after introduction of coupons would ultimately result in increased profits. However, it fails to consider that coupon discounts are subtracted from the profit margins since the cost of production would not be reduced for the restaurant. Ultimately, even after increased revenue from higher number of clients, profit could shrink. Eg. profit margin of $2 on 100 orders (i.e. profit of $200) is higher than profit margin of $1 on 180 orders (i.e. profit of $180).

Option C best reflects the scenario, and hence, would be the answer.

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The analyst's reasoning is "Offering online discount coupons clearly increases profits rather than reduces them."
Evidence is about revenue (sales), not profits directly (Profit = Revenue – Costs).

A Talks about correlation vs. causation. It's relevant, but not the main flaw because the analyst already sees correlation and seems to infer causation, but the bigger leap is revenue to profits, not just correlation.

B It addresses whether coupons cause lost revenue, but analyst already says overall revenue increased, so maybe less relevant here.

C Increased revenue is not equal to increased profits. That matches the jump in reasoning.

D It presumes growth only after coupons. That's not necessarily wrong. They could be comparing before and after within the same coupon-issuing companies.

E It differences between coupon-issuing and non-issuing businesses. But the argument is not comparing those groups, it's concluding coupons increase profits based on evidence from coupon issuers.

Answer C

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There is correlation between increase in number of coupons download and increase in revenue.
Revenue increase not necessarily means profit is also increasing.

So, only option C explains this scenario. Hence, C is the correct answer.

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A This is a valid criticism of correlation-based arguments in general. However, even if coupon downloads and revenue increases are caused by a third factor, the argument would still fail more fundamentally because it equates revenue with profit. This option is weaker than the core flaw.

B The analyst's claim is about overall profits, not about individual customers' purchasing decisions.

C Profits depend on costs as well as revenue, and discount coupons can reduce margins or increase costs. The evidence cited supports, at most, increased revenue, not increased profits.

D The argument states that companies issuing coupons in the past year saw growth, but it does not explicitly rely on a before and after causal timeline. This is not the key vulnerability.

E This could weaken a causal comparison, but the argument's primary flaw is not selection bias

The answer is C

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A. Not as relevant but is a possible flaw, since even if coupons cause revenue growth, profits wont necessarily increase always
B. Irrelevant as the argument doesent necessarily assume that coupon users would otherwise pay full price
C. Relevant as it fails to consider that increased revenue does not necessarily mean increased profits
D. Irrelevant as the timing of the sales growth isnt as essential to the conclusion we have.
E. The differences in the business isnt as relevant as compared to the jump we see from revenue to profit

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I think the answer is C since the argument provides the premise of correlation between revenue and coupon but fail to establish the relation between revenue and profit. A firm can be generating more revenue due to more coupon but still not be profitable.

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Solution :
A => This option tries to nudge thinking to the fact that something else is causing the revenue increase. But the question states a strong correlation between downloads and increase in revenue. Eliminate.
B => Vague option. Coupon will certainly decrease price. Eliminate.
C=> Revenue = cost + profit. If More products are sold then cost of goods sold will go up. So, more revenue does not mean more profit. Correct.
D=> No such assumption mentioned. coupon discount vs monthly correlation is strong. Eliminate.
E=> Vague option. Different type of businesses are not in discussion. Eliminate.

Correct Answer => C