V01-07

Question

During a single hour of a pledge drive for a public radio station, anyone making a pledge of a stated amount was given a free gift. Pledges were encouraged by the announcement that the retail cost of the gift was equal to the amount of the pledge. Yet, at the end of the hour, the total money raised from pledges accounted for a larger dollar amount than the amount organizers had paid for all the free gifts.
 
Which of the following, if true, is the best explanation for the fact that funds raised from pledges during the hour accounted for more money than the cost of the free gifts?

A. The cost of postage was included in the total cost assigned to the gifts, making them seem more expensive to potential donors.
B. Organizers underestimated the amount of money that would be raised during the hour and were surprised by the actual total of pledges.
C. Organizers overestimated the number of donors who would respond to the offer and were forced to offer gifts at half price when there were fewer pledges than expected.
D. Half of the free gifts were sponsored by the companies from which they were purchased. 
E. More money was raised during this hour than during the previous three hours, driving down the average out-of-pocket cost of the free gifts.

Bunuel · Answer

Official Solution:

During a single hour of a pledge drive for a public radio station, anyone making a pledge of a stated amount was given a free gift. Pledges were encouraged by the announcement that the retail cost of the gift was equal to the amount of the pledge. Yet, at the end of the hour, the total money raised from pledges accounted for a larger dollar amount than the amount organizers had paid for all the free gifts.
 
Which of the following, if true, is the best explanation for the fact that funds raised from pledges during the hour accounted for more money than the cost of the free gifts?

A. The cost of postage was included in the total cost assigned to the gifts, making them seem more expensive to potential donors.
B. Organizers underestimated the amount of money that would be raised during the hour and were surprised by the actual total of pledges.
C. Organizers overestimated the number of donors who would respond to the offer and were forced to offer gifts at half price when there were fewer pledges than expected.
D. Half of the free gifts were sponsored by the companies from which they were purchased. 
E. More money was raised during this hour than during the previous three hours, driving down the average out-of-pocket cost of the free gifts.

Situation:  Organizers of a public radio fund drive find that they have received more money in pledges than they must pay for free gifts they send to donors.
 
 Reasoning:   Which is the best explanation for the excess in money?  Because the retail cost of the gift and the amount each donor’s pledge are assumed to be equal, it is expected that organizers will not see a net gain in funds during this hour. It is important to note, however, that the amounts of money being compared are the pledge amount and the  retail cost  of the free gifts. If organizers do not spend the entire money on the free gifts they send to donors, a certain amount of the pledges received during the hour represent a net gain.
 
A. Whether the gifts seem more expensive has no impact on the net amount raised or paid during the hour. Even if the postage cost was included in the “retail” cost of the gifts, the organizers had to still pay this postage cost to the sellers and hence this option does not account for the lower amounts paid by the organizers than the pledge amount collected.
 
B. The organizers’ surprise may influence their  perceptions  of the amount of money raised, but would not influence an actual count.
 
C.  Free gifts  are not being sold in the passage, and therefore can not be offered at  half price. 
 
 D. CORRECT.  If only half of the cost of the gifts need to be subtracted from the dollar amount raised during the hour, half of the pledges count as net gain and represent a larger dollar amount than the total retail cost of all gifts. Moreover this statement is not in contradiction to anything stated in the passage: the announcement was that the retail cost of the gifts were equal to the pledge - this statement doesn't necessarily mean that the organizers had to pay the retail costs to the sellers.
 
E. The amount of money raised during previous hours has no bearing on the situation described in the passage.

Answer: D

Bunuel · Answer

The question or/and solution has been revised and edited. Thank you  sayantanc2k  !!!

MacroMX · Answer

so, they got half of the gifts from sponsors for free and total cost of free gifts is less than pledge fund
is that correct

MarcoPag · Answer

I don’t quite agree with the solution. Am I alone in thinking B also makes sense ? They raised more money than expected through pledges. I agree D also fits though... but this one feels like it sits in a gray area

hr1212 · Answer

Hi  MarcoPag ,

Option B doesn’t fit here because it introduces a completely different point that doesn’t address the discrepancy being discussed. Even if the organizers received more pledges than expected, say 100 instead of 10, we are still dealing with the difference in the dollar value of pledges versus the actual gifts received, which has nothing to do with how many pledges there were. The number of pledges, whether 10, 100, or 1,000, doesn’t explain the gap between pledged and gift cost, so it remains irrelevant to the argument.

whollyshiv · Answer

Hi  MarcoPag  Option B would explain the numbers only if one adds an unstated assumption such as “the organizers pre-purchased a fixed, limited number of gifts at high cost and could not procure more during the hour.” Without that extra assumption, underestimating pledges just means they were surprised. They could still order more gifts, negotiate similar unit costs, or get sponsors, none of which explains why pledges exceeded total gift cost.

Arunava7393 · Answer

Option C , organizers are giving them at half the price.

We are looking at something, where organizers need to pick them at lower price and not give them out at lower price.

RJ_Joker · Answer

I did not quite understand the solution. Why option C is wrong?

Gladiator59 · Answer

Option C leads to a NET Loss. We are looking for an option which will lead to NET Gain!

V01-07

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