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V32-05

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Joined: 19 Mar 2012
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V32-05  [#permalink]

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New post 26 Apr 2018, 02:30
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Difficulty:

  15% (low)

Question Stats:

92% (01:05) correct 8% (01:29) wrong based on 13 sessions

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Although domestic airfares have risen over each of last 14 quarters, a recent pullback in the wholesale price of jet fuel has opened up at least a 15% decrease in airline expenses for all of the domestic airline carriers. Accordingly, passengers can expect to see the price of domestic airfares fall soon. Which of the following would be most useful to establish in evaluating the argument?

A. Whether the airfares between popular destinations increased as much as airfares to other destinations over the last 14 quarters
B. Whether the number of airline carriers will remain the same in the coming quarters
C. Whether the prices that domestic carriers plan to charge will reflect the reduction in expenses
D. Whether domestic airline carriers will advertise and promote a drop in airfares
E. Whether the collective negotiating power of the airline industry contributed to the reduction in jet fuel prices

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Current Student
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Joined: 19 Mar 2012
Posts: 4263
Location: India
GMAT 1: 760 Q50 V42
GPA: 3.8
WE: Marketing (Non-Profit and Government)
Re V32-05  [#permalink]

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New post 26 Apr 2018, 02:31
Official Solution:

Although domestic airfares have risen over each of last 14 quarters, a recent pullback in the wholesale price of jet fuel has opened up at least a 15% decrease in airline expenses for all of the domestic airline carriers. Accordingly, passengers can expect to see the price of domestic airfares fall soon. Which of the following would be most useful to establish in evaluating the argument?

A. Whether the airfares between popular destinations increased as much as airfares to other destinations over the last 14 quarters
B. Whether the number of airline carriers will remain the same in the coming quarters
C. Whether the prices that domestic carriers plan to charge will reflect the reduction in expenses
D. Whether domestic airline carriers will advertise and promote a drop in airfares
E. Whether the collective negotiating power of the airline industry contributed to the reduction in jet fuel prices



Question Type: Evaluate

Boil It Down (Simplified & Abbreviated Summary of the Prompt): Cost of jet fuel down -> Airfares down

Missing Information (assumption): The savings will be factored in to airfares

Goal: Find the option that helps us evaluate whether airfares will fall.

Analysis: This argument automatically presumes that because the cost of jet fuel has decreased, that airfares will follow suit. That could be the case, but we need an option that helps us confirm.

Ⓐ This question doesn't help us evaluate whether airfares will go down because the price of jet fuel went down. Whether the airfares between popular destinations increased as much as airfares to other destinations over the last 14 quarters (or not) is irrelevant to our investigation.

Ⓑ The number of airlines can increase, decrease, or stay the same, and that wouldn't have any clear impact on whether airfares will or will not go down.

Ⓒ Yes! This is EXACTLY what we need to investigate. Whether the prices that domestic carriers plan to charge will reflect the reduction in expenses. If yes, then the prediction looks pretty good (I say pretty good because there could still be other increases in costs that could offset the fuel savings). On the other hand, if airfares don't reflect the savings from jet fuel, then the prediction looks very unlikely. Depending on how this option is answered, it could either make or break the prediction.

Ⓓ Whether domestic airline carriers will advertise and promote a drop in airfares is not relevant to an investigation as to whether the airfares will go down. Whether the carriers advertise that drop in prices doesn't matter as to whether the fare ACTUALLY drop.

Ⓔ Whether the collective negotiating power of the airline industry contributed to the reduction in jet fuel prices is entirely irrelevant because we don't care at all how or why jet fuel prices went down. What we need to investigate is whether the savings from the cost of jet fuel will be factored in to airfares.

Answer: C
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Re: V32-05  [#permalink]

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New post 15 Feb 2019, 02:04
Hi

Why is option B incorrect? If the number of airline goes down then won't that impact the overall price charged by the domestic airlines?
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Re: V32-05   [#permalink] 15 Feb 2019, 02:04
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