Toys4Them, an online toy merchant, generated $220 million in

Question

Toys4Them, an online toy merchant, generated $220 million in revenue last year, an 8.6 percent increase over the previous year. However, the number of toys sold did not increase significantly last year over the previous year.

Each of the following, if true, could explain the apparent discrepancy EXCEPT:
a)Last year, Toys4Them changed its accounting policy to no longer count toys given away to charities as sold toys.
b)Toys4Them sold a higher proportion of more expensive toys last year than the previous year.
c)Last year, the number of consumers shopping for toys increased over the previous year.
d)Last year, Toys4Them experienced an unprecedented boom in its divisions that do not sell toys.
e)Because of an economic downturn, Toys4Them heavily discounted its toys during the holiday season two years ago.

IMO , except C & E , all other options clearly resolve the discrepancy.
OA is C not E. However I could nt be able to figure out , how does option E resolve the discrepancy .
So help me to figure out the same ...

Thanks in advance .

Carcass · Answer

happy to clarify

When you deal with such question (indeed tough) try to understand really the argument.

Here we have an increase of revenue from one year to another year and a diminish of toys sold

E says that  Toys4Them heavily discounted its toys during the holiday season two years ago  (i.e 2012 during christmas holidays, could be an option) then the next year we have an increase of revenue BUT the toys are not purchased because people already have. May be they buy other stuffs from other compnany but not the same. As such, we end with more money in out bank account (the company) but with fewer toys sold.C instead, perfectly adheres to our case EXCEPT question

Plan B. always try to figure out a plane B, a second strategy to deal with because this exam is just this: seeing the things from an odd angle.

Even if you do not understand completely the stimulus (could happens) if you notice all options talk about toys  BUT  only C talks about  the number of consumers  . We care about ONLY of toys  NOT  consumers.

Please ask if something remains unclear

MOKSH · Answer

@carcass :Thanks for ur reply ,
I had no doubt abt option "C" , but I was more confused with option "E".
After reading ur reply , One more things , I figured out i.e. Discounted offer on toys may not be present => so it may be that toys are currently sold on its selling price => it may result in higher revenue , even though the number of toys sold did not increase significantly last year over the previous year=> hence it resolves the paradox .

thanks

Carcass · Answer

I'm not sure what you really mean

But I say do not infer too much. Never on GMAT. often students (me too) tend to see beyond the argument at stake. i.e if the discount is not present or offered

Stay in the "area" of the question. nothing more, nothing less.

Only in weaken or strengthen the argument almost always the time the answer is something out of scope, in somehow.

chiccufrazer1 · Answer

oh well,i think the best thing is to understand the question stem,the stimulus,and the answer choices themselves..check this one out.the arguement presented to answer makes a comparison of sales made last with a previous year under certain conditions(unstated assumptions)which brought in a difference in revenue collected..now the question stem asks to provide an option that does not explain the discrepancy in the arguement..the discrepancy they are talking about it the more revenue thing when less toys are sold out..all options except C explain that descrepancy..C is contradictory to the statement(the number of toys sold did not increase significantly last year over the previous year.)in a way that it says that consumers increased in number inferring that they bought more of the toys from that shop..hence C is the answer to the question.

Posted from my mobile device

kingston · Answer

Category : resolve the paradox.
For Paradox questions the correct answer will actively resolve the paradox, that is, it will allow both sides to be factually correct and it will either explain how the situation came into being or add a piece of information that shows how the two ideas or occurrences can coexist.

Because you are not seeking to disprove one side of the situation, you must select the answer choice that contains a possible cause of the situation. So, when examining answers, ask yourself if the answer choice could lead to the situation in the stimulus. If so, the answer is correct.

If an answer supports or proves only one side of the paradox, that answer will be incorrect. The correct answer must show how both sides
coexist.

The following types of answers are incorrect:
1. Explains only one side of the paradox If an answer supports or proves only one side of the paradox, that answer will be incorrect. The correct answer must show how both sides coexist.
2. Similarities and differences If the stimulus contains a paradox where two items are similar, then an answer choice that explains a difference between the two cannot be correct.
Conversely, if the stimulus contains a paradox where two items are different, then an answer choice that explains why the two are similar
cannot be correct. In short, a similarity cannot explain a difference, and a difference cannot explain a similarity.

Toys4Them, an online toy merchant, generated $220 million in revenue last year, an 8.6 percent increase over the previous year. However, the number of toys sold did not increase significantly last year over the previous year.

Each of the following, if true, could explain the apparent discrepancy EXCEPT:

There are no conclusion in paradox questions, so all we got are facts. Examine the facts very closely.
 toys4Them, an online toy merchant, generated $220 million in revenue last year, an 8.6 percent increase over the previous year

It tells about the revenue last year $220 million, an 8.6 percent increase over the previous year. Does not tell anything about operating cost or profit. However, the number of toys sold did not increase significantly last year over the previous year.

a)Last year, Toys4Them changed its accounting policy to no longer count toys given away to charities as sold toys.--  Fair enough, if previously they were counting charity toys as sold and accounting for its sale, then changing that policy will increase there revenues and will actively resolve the paradox. 
b)Toys4Them sold a higher proportion of more expensive toys last year than the previous year. ---  This resolves the paradox if last year they hold more expensive toys than previous year, the increase revenue could be explained given the fact the total number of toys sold did not increased. 
c)Last year, the number of consumers shopping for toys increased over the previous year. ---  hmnnn. Classic example of what i mentioned above.If an answer supports or proves only one side of the paradox, that answer will be incorrect. The correct answer must show how both sides coexist. This only explains what may have caused the increase in revenue but does not address the fact that number of toys sold did not increased significantly. Correct Answer 
d)Last year, Toys4Them experienced an unprecedented boom in its divisions that do not sell toys. ---  This again holds both side of the conversation. If this is true then the increased revenue could be from this division and not from the sale of the toys. 
e)Because of an economic downturn, Toys4Them heavily discounted its toys during the holiday season two years ago---  This hold both side of the conversation. More revenue generated but not significant increase in the number of toys sold. So this indeed resolve the paradox.

Take Away:

Resolve the paradox only gives you facts and facts are indisputable. So any answer choice that validate one of the facts but invalidate another one is always going to be wrong.
Right answer should explain you how this situation came into existence.

ikulm · Answer

Great explanation Kingston. This surely helps.

chiccufrazer1 · Answer

@kingston..i think it wouldnt be proper if you call the answer choices facts..the answer choices remain as unstated assumptions as long as we assume them true inorder to resolve the paradox..the above arguement is paradoxical in a way that it suggests maxumum profit in few sold items, i.e toys..i am not disproving any of the arguement in the question stem but rather i qualified one of the arguement inorder of reaching the needed equillibrium..a good example is that of two girls with different weights on a seesaw..you wouldnt measure the same distance from the pivot or fulcrum to each sitting place but rather you might want to shift one of girls in the right place to maintain the proper balance and that exactly what i have done..thanks :-)

[/quote]

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Posted from my mobile device

kingston · Answer

@chiccufrazer1: Firstly, assumptions are always unstated. If they state the assumption, then i guess it would no longer be an assumption. Secondly. in paradox question you dont want to qualify one or the other statement. They are facts and they are indisputable. 
When first presented with a Resolve question, most student seek an answer choice that destroys or disproves one side of the situation. They follow the reasoning that if one side can be proven false, then the paradox will be eliminated. While this is true, the test makers know that such an answer would be obvious (it would simply contradict part of the facts given in the stimulus) and thus this type of answer does not appear in these questions. Instead, the correct answer will actively resolve the paradox, that is, it will allow both sides
to be factually correct and it will either explain how the situation came into being or add a piece of information that shows how the two ideas or occurrences can coexist. Because you are not seeking to disprove one side of the situation, you must
select the answer choice that contains a possible cause of the situation. So, when examining answers, ask yourself if the answer choice could lead to the situation in the stimulus. If so, the answer is correct.

ygdrasil24 · Answer

Looks pretty straightforward to me.

Sales has gone down, and revenue gone up.
Possibilties ?

A. Direct increase in price (option B)
B. Previously selling at lower price( option E)
C. Any other factor that had increased revenue, not related to sales(option D)
D. Not counting few non billed items - no effect ( A)

Left is C, # of consumers has no bearing on # of toys they are buying.

ramannanda9 · Answer

Sales have not gone down , they have remained same or slightly increased. But you are correct in saying that the increase in the number of consumers buying the toys does not impact the actual sales of those toys. For example a consumer earlier could be buying 2 toys on an average, whereas the new average maybe lower let' say 1.5. So even though the consumers might have increased, they might not impact the overall sales.

animanga008 · Answer

Question: which answer does not explain why revenue increased while toys sold stayed roughly the same?

(A) changed accounting methods --> artificially increased revenue
(b) more expensive toys were sold than cheap toys, total is still same --> increased revenue
 (c) more consumers bought toys --> increased toys sold --> conflicts with what paragraph explicitly says --> this is unhelpful and thus the answer 
(d) another department did well --> increased revenue
(e) economic downturn two years ago --> sold their toys less two years ago --> this year, prices were back to normal --> increased revenue

mvictor · Answer

C for me. any other answer helps to explain the discrepancy.

22gmat · Answer

I agree with C). Nevertheless I have a question how to eliminate A)
 "a)Last year, Toys4Them changed its accounting policy to no longer count toys given away to charities as sold toys."

If the company does not account the toys given away to charities as sold toys then the revenue should be lower and not greater or?
Example:
Year 2000: Revenue = 220 Mio (including 10 Mio for toys given away to charities)
Year 2001: Revenue = 210 (new accounting approach without the 10 Mio )

Can me someone explain how this argument helps to clarify that the revenue increased?

Thank you!
Kind regards.

sayantanc2k · Answer

Option A implies that there is actually an increase in no.of toys that were sold at a price and not given away free to charities:

Last year sold toys S1 = toys donated to charities D1 + toys exchanged for money E1 (I use the term "exchange" just not to use the term "sold" twice, in both sides of the equation)
This year sold toys S2 = toys exchanged for money E2.

S2 no longer includes D2, but S2 is slightly greater than S1.This implies E2 -E1 > D1. That is the number of toys exchanged for money increased by a number greater than the number of toys donated to charity last year. Mathematically,

S1 = D1 + E1
S2 = E2

S2>S1
Thus E2> D1 + E1

That means E2 is greater than E1 by a number greater than D1 - this in other words imply that there is an increase is number of toys exchanged for money, justifying the increased revenue.

22gmat · Answer

Got it, thank you sayantanc2k.

I only thought about the decrease in revenue because of the changed approach (not counting donated toys) and did not consider anymore that the question states that the revenue increased.

Thank you

mikeyg51 · Answer

that was my reasoning as well, hence I eliminated e and chose c. And everyone else makes valid points as well but I definitely thought like you for option "e."

shashankism · Answer

This seems to be a very easy question :

Stem : Toys4Them, an online toy merchant, generated $220 million in revenue last year, an 8.6 percent increase over the previous year. However, the number of toys sold did not increase significantly last year over the previous year.

Paradox is if the increase in sales is very less, how did the revenue shoot up by 8.6%.

So, lets solve this paradox.
Pre-thought : 1. Cost per toy has increased.
2. Even if the cost of toys is same, sale of Higher Cost toys is more than lower cost toys ultimately increasing average cost of toys.
3. There is some external source of income which has increased the revenue.
What else.....mmm...
4. Actual no. of toys sold may be higher and we have wrong figure of toys (weird but here it helps to resolve option A).

So, lets come to options now.
a)Last year, Toys4Them changed its accounting policy to no longer count toys given away to charities as sold toys.
Resembles with Pre-thought 4, the actual no. of toys sold (sold + given in charity) is more than last year similar to increase in revenue but we are not counting the number 
of toys given to charity this year and hence relative to previous year we can't see the same change in the no. of toys.

b)Toys4Them sold a higher proportion of more expensive toys last year than the previous year.
Resembles Pre-thought 2, Since there is a sale of higher proportion of toys which is expensive so average cost shoot up leading to greater revenue.

c)Last year, the number of consumers shopping for toys increased over the previous year. 
Not related to revenue of this company. If the number of consumers increased they should have bought more toys. This doesn't help us to resolve paradox.

d)Last year, Toys4Them experienced an unprecedented boom in its divisions that do not sell toys.
Resembles Pre-thought 3, Unprecented boom in other divisions, so revenue increased from there.

e)Because of an economic downturn, Toys4Them heavily discounted its toys during the holiday season two years ago.
Resembles Pre-thought 1, Ok last year it was discounted and hence price of toy was less. This year no discount and hence relatively price per toy is higher.

Answer C

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