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19 Apr 2013, 09:09
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Difficulty:
25%
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Question Stats:
77% (01:43) correct
23%
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wrong
based on 376
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In contrast to many speculators, demand for SUV (sports utility vehicles) has not increased in recent years. Yet, even though prices and production amounts have generally been stable during the last three years, SUV manufacturers last year increased their profits by more than 10 percent over the previous year's level.
Any of the following statements, if true about last year, helps to explain the rise in profits EXCEPT:
(A)Many countries, like Thailand, that have a preference for SUVs increased their production of SUVs in hopes of taking market share away from sedans and coupes.
(B)SUV manufacturers have saved money on wages by switching from paying assembly workers an hourly wage to paying them per vehicle assembled.
(C)The price of oil, the major energy source used by SUV manufacturers in machining their vehicle components, dropped by over 25 percent.
(D)Many small SUV manufacturers joined together to form an association of SUV manufacturers and began to buy vehicle components at low group rates.
(E)Temperatures in manufacturing facilities were lower than they had been during the previous year, allowing the manufacturers to save money on expensive heat and electricity-powered ventilation systems.
Any of the following statements, if true about last year, helps to explain the rise in profits EXCEPT:
(A)Many countries, like Thailand, that have a preference for SUVs increased their production of SUVs in hopes of taking market share away from sedans and coupes.
(B)SUV manufacturers have saved money on wages by switching from paying assembly workers an hourly wage to paying them per vehicle assembled.
(C)The price of oil, the major energy source used by SUV manufacturers in machining their vehicle components, dropped by over 25 percent.
(D)Many small SUV manufacturers joined together to form an association of SUV manufacturers and began to buy vehicle components at low group rates.
(E)Temperatures in manufacturing facilities were lower than they had been during the previous year, allowing the manufacturers to save money on expensive heat and electricity-powered ventilation systems.
19 Apr 2013, 09:15
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Demand = stable
Price = stable
Production = stable
Profits = UP, clearly profits are a function of (REVENUES - COSTS) every component of the revenues (see above) is stable ==> cost must have been lower this year.
All the options give us possible scenarios in which this happened.
(ie: (B)SUV manufacturers have saved money on wages by switching from paying assembly workers an hourly wage to paying them per vehicle assembled.
(C)The price of oil, the major energy source used by SUV manufacturers in machining their vehicle components, dropped by over 25 percent.)
Only A doesn't, so A
Price = stable
Production = stable
Profits = UP, clearly profits are a function of (REVENUES - COSTS) every component of the revenues (see above) is stable ==> cost must have been lower this year.
All the options give us possible scenarios in which this happened.
(ie: (B)SUV manufacturers have saved money on wages by switching from paying assembly workers an hourly wage to paying them per vehicle assembled.
(C)The price of oil, the major energy source used by SUV manufacturers in machining their vehicle components, dropped by over 25 percent.)
Only A doesn't, so A
