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C- Jets high op. cost were responsible for decline in profits.

A. This is about other airlines.
B. If this is the case then more people would have used it and hence more revenue earned.
C. If the airline was operating efficiently then the profits should have increased and not declined.
D. Less fuel is used means money is saved. Wrong
E. Gives an alternate explanation of why profits might have decreased. If 35% of fares were promotional fares, then it explains the reason of less profits. And weakens the conclusion that operational costs are responsible for this. CORRECT

E
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Bunuel
Starting at the beginning of 2015, SunDog Airlines replaced its turboprop planes with regional jets for all routes longer than 300 miles. SunDog sold between 10 and 30 percent more fares in 2015 than in any of the previous five years, yet it recorded substantially lower profits for each quarter of 2015 than for the same quarter in any of the previous five years. SunDog’s chief executive concluded that the jets' higher operating costs were responsible for the decline in profits.

Which of the following, if true, most seriously weakens the chief executive’s conclusion?

(A) All of the other airlines that operate regional jets on the affected routes saw higher profits for 2015 than for any of the preceding five years.

(B) On passenger surveys conducted throughout 2015, passengers rated the regional jets significantly higher for both comfort and reliability than the turboprop planes that they replaced.

(C) SunDog has been able to reduce the total number of flights it operates per day on its routes over 300 miles, because its regional jets carry twice as many passengers as did the turboprop planes that they replaced.

(D) SunDog’s regional jets use less fuel per person aboard to fly a given distance than did the turboprop planes that they replaced.

(E) Approximately 35 percent of the fares that SunDog sold in 2015 were promotional fares that it sold to passengers on its new regional jets at a price equal to the airline’s own per passenger cost.

 


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A. Incorrect. Other airlines’ higher profits does not explain SunDog’s decline in profits.

B. Incorrect. This strengthens the argument.

C. Incorrect. We are told that SunDog sold more fares in 2015 than in any of the previous years so this is irrelevant.

D. Incorrect. This is a weak weakener. Fuel is just one component of operating cost, so maybe other components rose.

E. Correct. This means that the airline sold 35% of the fares at no profit. So promotional fares and not higher operating costs is what caused the decline in profits.
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more fares sold, but lower profits.

ceo says higher jet operating costs caused lower profits.

need another reason for lower profits

a) other airlines made higher profits. weakens a little

b) passengers liked jets more. irrelevant

c) fewer flights needed. could lower costs, weakens a bit

d) jets use less fuel per person. weakens a bit

e) 35% of tickets were sold at cost price (no profit). this directly explains why profits fell even though more tickets were sold. strongest alt explanation


ans: e
Bunuel
Starting at the beginning of 2015, SunDog Airlines replaced its turboprop planes with regional jets for all routes longer than 300 miles. SunDog sold between 10 and 30 percent more fares in 2015 than in any of the previous five years, yet it recorded substantially lower profits for each quarter of 2015 than for the same quarter in any of the previous five years. SunDog’s chief executive concluded that the jets' higher operating costs were responsible for the decline in profits.

Which of the following, if true, most seriously weakens the chief executive’s conclusion?

(A) All of the other airlines that operate regional jets on the affected routes saw higher profits for 2015 than for any of the preceding five years.

(B) On passenger surveys conducted throughout 2015, passengers rated the regional jets significantly higher for both comfort and reliability than the turboprop planes that they replaced.

(C) SunDog has been able to reduce the total number of flights it operates per day on its routes over 300 miles, because its regional jets carry twice as many passengers as did the turboprop planes that they replaced.

(D) SunDog’s regional jets use less fuel per person aboard to fly a given distance than did the turboprop planes that they replaced.

(E) Approximately 35 percent of the fares that SunDog sold in 2015 were promotional fares that it sold to passengers on its new regional jets at a price equal to the airline’s own per passenger cost.

 


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A Other airlines' financial results are not a reliable comparison to weaken the conclusion.

B Comfort and reliability may attract customers, but they are unrelated to the argument.

C Operating fewer flights with larger aircraft suggests greater efficiency, which actually makes higher operating costs a less obvious concern.

D The argument concerns total operating costs rather than fuel costs alone.

E Correct answer. Promotional fares sold at essentially no profit offer a clear alternative explanation for declining profits despite increased ticket sales.

The answer is E
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Number of fares increased by 10-30% in 2015 over the last 5 years
Quarterly profits decreased in 2015 over the same quarter of last 5 years

Chief's conclusion- Operating profit increase is responsible for lower profits

Prethinking-
Profit = Total Revenue- Total cost

Total cost is also comprised of operating and non operating cost. Two assumptions that need to hold true for conclusion to be true-
1. Total revenue must increase proportionally if total sales has increased
2. Total cost must increase for profit to decline and it should be the operating costs that are responsible for increase in total costs.

Analyzing answer choices:
A. If they saw higher profits, their total revenue might have increased more than the total cost. So, it doesn't prove that with jets, their operating costs did not increase- Incorrect

B. Passengers preferred jets - this only explains the increase in fares- does nothing to explain the operating costs- Incorrect

C. This is tricky. Number of flights might have reduced by 50% lets say but what if the cost of operating per flight has more than doubled- that would also mean increase in operational costs - Incorrect

D. Less fuel per person would mean less variable cost. But operating cost can include fixed costs too which might be responsible for higher operating costs- Incorrect

E. This provides an alternate explanation to decline in profits. If 35% of the fares contributed nothing to revenue, then the 10-30% increase in fares might not have led to increase in revenue. In fact, it can lead to decrease in revenue which might be responsible for decline in profits despite the cost remaining the same- Correct
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A The success of other airlines doesn't affect the conclusion.

B Customer opinions have little relevance to determining the reason profits decreased.

C Fewer flights because of larger aircraft could lower several operating expenses. This contradicts in a way the idea that profits fell.

D Although improved fuel efficiency reduces costs, it doesn't surpass every other operating expense associated with regional jets.

E Best option. A 35% of tickets generated virtually no profit, making the promotional pricing strategy a much stronger explanation for the decline than higher operating costs alone.

The correct answer is E
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IMO ANS is E.
Conc - Operating cost is the reason for decline in profit.
But if we says we have send tickets in offer like marketing strategy it maybe the reason of decline in profit. so E is the answer in my opinion.
IMO Bunuel
Starting at the beginning of 2015, SunDog Airlines replaced its turboprop planes with regional jets for all routes longer than 300 miles. SunDog sold between 10 and 30 percent more fares in 2015 than in any of the previous five years, yet it recorded substantially lower profits for each quarter of 2015 than for the same quarter in any of the previous five years. SunDog’s chief executive concluded that the jets' higher operating costs were responsible for the decline in profits.

Which of the following, if true, most seriously weakens the chief executive’s conclusion?

(A) All of the other airlines that operate regional jets on the affected routes saw higher profits for 2015 than for any of the preceding five years.

(B) On passenger surveys conducted throughout 2015, passengers rated the regional jets significantly higher for both comfort and reliability than the turboprop planes that they replaced.

(C) SunDog has been able to reduce the total number of flights it operates per day on its routes over 300 miles, because its regional jets carry twice as many passengers as did the turboprop planes that they replaced.

(D) SunDog’s regional jets use less fuel per person aboard to fly a given distance than did the turboprop planes that they replaced.

(E) Approximately 35 percent of the fares that SunDog sold in 2015 were promotional fares that it sold to passengers on its new regional jets at a price equal to the airline’s own per passenger cost.

 


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Conclusion of the CEO: High ops cost is the main driver of declining profits

Evidences:
1. While revenue is 10-30% more than the previous 5 years, lower profits were recorded than the previous 5 years

Assumption
If revenue increased, cost is the responsible one for lower profit. What if there is another factor that causes cost?

Possible weakening E. 35% of the revenue/fares in 2015 were promotional fares
Meaning, it's not the cost that caused the declining profits, but charging fares too low for promotion part. So it's not yet reflecting the revenue capability. There is a possibility to get higher profit if promotional fares ended (back to normal rate).

Others are incorrect
A. Not relevant to compare with other airlines
B. Irrelevant to customer survey. No impact on profit argument.
C. Irrelavnt. It does not state how much cost is spent/revenue is gained.
D. Irrelevant. It doesn't state how much cost is spent/revenue is gained.

Bunuel
Starting at the beginning of 2015, SunDog Airlines replaced its turboprop planes with regional jets for all routes longer than 300 miles. SunDog sold between 10 and 30 percent more fares in 2015 than in any of the previous five years, yet it recorded substantially lower profits for each quarter of 2015 than for the same quarter in any of the previous five years. SunDog’s chief executive concluded that the jets' higher operating costs were responsible for the decline in profits.

Which of the following, if true, most seriously weakens the chief executive’s conclusion?

(A) All of the other airlines that operate regional jets on the affected routes saw higher profits for 2015 than for any of the preceding five years.

(B) On passenger surveys conducted throughout 2015, passengers rated the regional jets significantly higher for both comfort and reliability than the turboprop planes that they replaced.

(C) SunDog has been able to reduce the total number of flights it operates per day on its routes over 300 miles, because its regional jets carry twice as many passengers as did the turboprop planes that they replaced.

(D) SunDog’s regional jets use less fuel per person aboard to fly a given distance than did the turboprop planes that they replaced.

(E) Approximately 35 percent of the fares that SunDog sold in 2015 were promotional fares that it sold to passengers on its new regional jets at a price equal to the airline’s own per passenger cost.

 


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A. Incorrect as it doesent tell us anythng at all about SunDog's profits in particular by talking about other airlines
B. Incorrect as even if passengers are seen to behappy, it doesent explain the profit issue
C. Incorrect as its not weakening significantly. Even if there is fewer flights, the other operation costs could vary, which could still cause an operation cost increase
D. Incorrect as it doesent weaken significantly. Even if the fuel cost is reduced, the overall operation costs could vary, which could still cause an operational cost increase
E. Correct as it basically tells us the alternative reason as to why the profits have plummeted. Even if more fares are sold but if 35% of the promotional fares are sold at zero profit then we will surely see less profit even though there is higher amount of sales observed

E.
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simple thing to remember when a question is asking about profit / revenue is
profit=revenue - Expenditure
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