In 2000, Gregory's Grocery had a total of 50 stores in the

Question

In 2000, Gregory's Grocery had a total of 50 stores in the United States and reported profits of $50 million in 2000. During the next five years, the chain added 20 stores per year for a total of 150 stores in the United States and Canada in 2005. Profits increased each year at a rate of 10 percent.

Which of the following can be concluded based on the passage above?

A. The stores in Canada were not as profitable as those in the United States.
B. Between 2000 and 2005, average revenue per store decreased.
C. On average, the stores were less profitable in 2005 than in 2000.
D. Profit per store, or average profit, will continue to decrease if the chain continues to expand the number of stores.
E. If Gregory’s Grocery shuts down some of its stores, average profitability will increase.

fluke · Accepted Answer

C)
In 2000: 50 stores; 50$ profit; Average profit=1
In 2001: 70 stores; 55$ profit; Average profit=55/70<1
In 2002: 90 stores; 61$ profit; Average profit=61/90<1 and also less than previous.
So, the average profit per store is decreasing.

B) Sole possible contender.
We know nothing about the revenue; So, we can't comment.

2000; Expenditure=50 million; Revenue=100 mill; Profit= 50 mil
2001; Expenditure=200 million; Revenue=255 mill; Profit= 55 mil
OR
2001; Expenditure=1 million; Revenue=56 mill; Profit= 55 mil

We saw that revenue could have increased or decreased. So, not must be true.

Ans: "C"

TargetGmatt · Answer

It's C, I actually did a quick mental calculation of profits earned each year but I don't think it's necessary.

Good explanation fluke, I spent more than 1.5 min calculating profits, what a waste of time

TheMechanic · Answer

Why is D wrong again? Isnt D kinda same as C? What am I missing here?

aisaKyu · Answer

It should be D i think bcoz as per calculation..
avg profit in 2000 50/50 = 1
avg profit in 2001 (50+5)/50+20 < 1
avg profit in 2002 (55+5.5)/90 < 1.....

its decreasing in this manner....
whereas in C,it is not clear what we mean by avg profit.The stores might be profitable compared to previous yeras and still the profit per store might come out less.

BeckyRobinsonTPR · Answer

This is an inference question so you evaluate whether the answers must be true based on the facts provided in the paragraph, any answers with information outside the scope of the paragraph cannot be the answer.

suyash23n · Answer

Choosing D would be based on hypothesis and not based on the info available. Option C, however, is clearly based on the available info.

BeckyRobinsonTPR · Answer

D Discusses future events - which can never be 100% guaranteed unless the paragraph says they are. There are many things which could influence the trend and make D not necessarily true. C does not discuss the future but events which have already occurred and is thus a proper inference.

VeritasPrepRon · Answer

The problem with D is that it could be true or it could be false. Either way is possible and we really don't know. Just because something is trending one way doesn't mean it will be that way forever. The next batch of expansions could be in a very prosperous region and then the profits will double instantly. C must be true based on the facts given, so at the very least we should be able to confirm the math using a couple of quick examples (started by AisaKyu):
avg profit in 2000 50/50 = 1 Million / store
avg profit in 2001 (50+5)/50+20 --) 55/70 --) 0.78
avg profit in 2002 (55+5.5)/90 --) 60.5/90 --) 0.67
...
avg profit in 2005: 80.53 / 150 = 0.54

You don't have to do all the math, just enough to prove to yourself that answer choice C is factually correct.

Hope this helps!
-Ron

Divyadisha · Answer

Profit in 2000 is given and in 2005 can be calculated.

Split of US and Canada stores is not given

Total stores at the end of each year is known.

A. The stores in Canada were not as profitable as those in the United States.  Since we don't know the split between the stores, we can't conclude the profit split between the stores. 
B. Between 2000 and 2005, average revenue per store decreased.  Cost is not given, and hence revenue can not be calculated. 
C. On average, the stores were less profitable in 2005 than in 2000.  Hold it as the choice talks about profits. 
D. Profit per store, or average profit, will continue to decrease if the chain continues to expand the number of stores.  We don't know the trend will continue. 
E. If Gregory’s Grocery shuts down some of its stores, average profitability will increase.  What if it closes high profit stores. We are not sure about this statement to b true.

C is the answer.

Senthil1981 · Answer

Answer is C. On average, the stores were less profitable in 2005 than in 2000.

Try drawing a table

Year No. of Stores Revenue Avg revenue per store
2000 50 50m 1 m/s
2001 70 55m 11/14 m/s
2002 90 60.5 ~2/3 m/s

D is a trap, since it does speak about Average Profit per store, but we dont know it will continue to decrease.

Bharat010 · Answer

D give surety it will decrease but I can't conclude with present data to estimate future

Axwe7 · Answer

But C) only mentions "profits on average". This could also mean "profits on average per day", or "profits on average per store". It's unclear from the answer choice, which is why we can't assume it automatically means average profit per store.

If profits increase by 10% per year for five years, then it's very much the case that "profits on average per day" would've increased over the 5 years. However, "profits on average per store" decreased.

guddo · Answer

In 2000, Gregory's Grocery had a total of 50 stores in the United States and reported profits of $50 million in 2000. During the next five years, the chain added 20 stores per year for a total of 150 stores in the United States and Canada in 2005. Profits increased each year at a rate of 10 percent. 
 
Which of the following can be concluded based on the passage above?

In 2000, Gregory’s Grocery had 50 stores and $50 million in profit, so the average profit per store was $1 million.

In 2005, total profit was $50 million increased by 10 percent per year for 5 years, which is about $80.5 million. The chain had 150 stores in 2005, so the average profit per store was about $80.5 million / 150, or about $0.54 million.

So average profit per store decreased.

A. The stores in Canada were not as profitable as those in the United States.

Wrong. The passage gives no separate profit information for Canadian stores and United States stores.

B. Between 2000 and 2005, average revenue per store decreased.

Wrong. The passage gives profit, not revenue.

C. On average, the stores were less profitable in 2005 than in 2000.

Correct. Average profit per store was $1 million in 2000 and about $0.54 million in 2005.

D. Profit per store, or average profit, will continue to decrease if the chain continues to expand the number of stores.

Wrong. The passage gives no basis for predicting what will happen in the future.

E. If Gregory’s Grocery shuts down some of its stores, average profitability will increase.

Wrong. The passage does not tell us whether closing stores would increase average profit.

Answer: (C)

In 2000, Gregory's Grocery had a total of 50 stores in the

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