The prices for all kinds of fish sold in Eastville's downtown Old Mark

Question

The prices for all kinds of fish sold in Eastville's downtown Old Market are much lower than the prices charged at uptown seafood stores. Old Market vendors buy fish of similar quality from the same wholesalers and at the same prices as uptown vendors do. Therefore, since Old Market fish vendors' businesses are as profitable as those uptown, the volume of the Old Market vendors' daily fish sales must, on average, be higher.

Which of the following, if true, most strengthens the argument given?

A. People who buy fish at Old Market stores generally have lower incomes than do those who buy fish from uptown seafood stores.

B. Some varieties of fish that are not available at Old Market stores can be found occasionally at uptown seafood stores.

C. Vendors at the old Market save on energy costs by keeping fish on ice instead of in refrigerated cases.

D. Many of the people who live in uptown Eastville prefer to buy fish from the neighborhood stores.

E. Fish vendors at the Old Market do not, on average, have lower overhead costs than uptown vendors do.

Kurtosis · Accepted Answer

Premise: Prices(fish) at Old Market < Prices(fish) at uptown. 
Vendors(Old Market) buy fishes of same quality and at same prices as Vendors(uptown) do.
Profits(Old market vendors) = Profits(uptown vendors)

Conclusion: Quantity of fishes sold at Old Market > Quantity of fishes sold at uptown

Possible Strengthener: Apart from quality and price, old market vendors do not enjoy benefits that help them to keep their prices low and make profits.

A. People who buy fish at Old Market stores generally have lower incomes than do those who buy fish from uptown seafood stores. - Incorrect - No correlation is mentioned between income and buyer sentiments in the argument. Out of context.

B. Some varieties of fish that are not available at Old Market stores can be found occasionally at uptown seafood stores - Incorrect - Mentions that there is a difference in the variety of fishes sold. This is not a strengthener.

C. Vendors at the old Market save on energy costs by keeping fish on ice instead of in refrigerated cases. - Incorrect - Weakener.

D. Many of the people who live in uptown Eastville prefer to buy fish from the neighborhood stores. - Incorrect - Out of context.

E. Fish vendors at the Old Market do not, on average, have lower overhead costs than uptown vendors do. - Correct - This aligns to our strengthener. If fish vendors at old market do not have lower overhead costs than fish vendors at uptown, then old market vendors have to sell more fishes to match the profits of uptown vendors.

Answer: E

tagmag · Answer

Hi Megha

let me try to explain

profit= revenue - expenditure
now as per premise old market prices for all kind of fish are lower, still make equal profit
this can happen in two ways either they make more revenue or they have lower expenditure.
question states that they sell more fish(to make revenue high) so to strengthen this argument expenditure must not be lower, otherwise lower expenditure may be the reason for equal profits and not as stated in question.
that's what option E says

hope it helps

megha_2709 · Answer

Hi,

Thank you for posting such a good question however I cant seem to understand how E is correct , if anyone can please elaborate more.

Thanks
Megha

hsbinfy · Answer

this is really a good question.

Boiled it down to D and E. hard time thinking on these 2.Eventually thougt of marking E but mistakenly marked D.

Now i understand why D is incorrect as it says people buy from neighbour , but that doesn't mean from downtown or if many downtown people are buying from uptown.

E removes a weakening possibility that overhead cost are same which strethengs the argument more.

if u guys have read powerscore then you would understand what i am saying.(THE CORRECT ANSWER CHOICE HERE IS A DEFENDER,which defends the argument from weakening)

hpe it helps.

RatneshS · Answer

Not sure if E is an assumption because E is not strengthening by any means. Conclusion is that high volume of old market is sold. Assumption is that there is no other way apart from volume to get profits.

So if E is positive---conclusion is +
if E is false---conclusion falls

C says that old market saves on energy which is in favour of old market and thus improves profit.

GMAT gurus.. please acknowledge.

Divyadisha · Answer

Uptown vendors- more price, profit equal to DV
downtown vendors- less price, profit equal to UV

Sale of DV> Sale of UV if :-

expenses are same. Because if expenses are same, DV has to sell more fishes to maintain equal profit.

Only option E talks about the equal or higher costs.

ajay2121988 · Answer

You're right in the way you explained C. But C offers another explanation for the old market(OM) profit. It means that OM derive profits by means other than sales volume. But we have to strengthen the conclusion that cost saving is due to sales volume , not because of any other reason. That's why C is incorrect. 
At the first look, E didn't appeal to me. Later,I arrived at E by POE.

Posted from my mobile device

abhishek03050 · Answer

OLD NEW ------------------------------------------------- Hi, My shot at this... COST/KG 100 100 < GIVEN > SP/KG 150 200 < GIVEN > PROFIT/KG 50 100 < COMPUTED> --------------------------------------------------- TOTAL PROFIT 500 500 < GIVEN PROFITS ARE EQUAL > QTY 500/50 = 10 500/100 = 5 Now, in order to ensure that the Situation remains SAME as above, No other costs need to be involved. E talks abt teh Same hence E ..!! Hope i am not missing out anything here..

broall · Answer

Explanation of  tagmag  is correct. I also get confused because I dont notice  "do not"  in E.

This is standard equation for all business model:

Profit = Revenue - Cost  
 Profit = (Price * Volume) - (Material + Overhead Cost)

Since the price buying from wholesaler, which is material cost, stays the same for both Uptown and DownTown vendors and the profit stays the same for both Uptown and Downtown markets, we could deduce that  Revenu - Overhead Cost  also stays the same.

From E, vendors at Downtown have overhead cost higher than or equal to overhead cost of vendors at Uptown so the revenue at Downtown must be higher to cover these cost.

Since  Revenue = Price * Volume  and revenue at Downtown is higher but Price is lower, Volume at Downtown must be higher => support argument.

sayantanc2k · Answer

Old market vendor:
material cost per unit: M
overhead cost unit: OH1
SP per unit: SP1

Profit per unit P1 = SP1 - (M+OH1)
Total Profit P1 x N1 (N1 is the number of units sold by Old Market)

Uptown vendor:
material cost per unit: M (same as old market vendor)
overhead cost unit: OH2
SP per unit: SP2 (which is >SP1)

Profit per unit P2 = SP2 - (M+OH2)
Total Profit = P2 x N2 (no. of unit ssold by Uptown vendor)

The conclusion has two parts: 1. total profits are same P1 x N1 = P2 x N2, 2. P1<P2 and N1>N2

Any statement that supports one of the above would qualify as a strengthening statement.
Option E: If old market vendors DO NOT have less overhead costs than the upmarket vendors then they have total cost equal to or more than that of upmarket vendors - Since SP1 <SP2, this supports that P1<P2.

Nightfury14 · Answer

The prices for all kinds of fish sold in Eastville's downtown Old Market are much lower than the prices charged at uptown seafood stores. Old Market vendors buy fish of similar quality from the same wholesalers and at the same prices as uptown vendors do. Therefore, since Old Market fish vendors' businesses are as profitable as those uptown, the volume of the Old Market vendors' daily fish sales must, on average, be higher.

Which of the following, if true, most strengthens the argument given?

A. People who buy fish at Old Market stores generally have lower incomes than do those who buy fish from uptown seafood stores.

B. Some varieties of fish that are not available at Old Market stores can be found occasionally at uptown seafood stores.

C. Vendors at the old Market save on energy costs by keeping fish on ice instead of in refrigerated cases.

D. Many of the people who live in uptown Eastville prefer to buy fish from the neighborhood stores.

E. Fish vendors at the Old Market do not, on average, have lower overhead costs than uptown vendors do.

Hi!  sayantanc2k 
Thank you for your inputs to this club and your remarkable short turn around time.

i read the argument, the conclusion unarguably, because of the "therefore", presented itself in - "since Old Market fish vendors' businesses are as profitable as those uptown, the volume of the Old Market vendors' daily fish sales must, on average, be higher".
Conclusion - The volume of sales must be higher for Old Market.
To strengthen - The choice should reflect a reason for higher turnout at the old market.

None of the answers help with this reasoning except for "D. Many of the people who live in uptown Eastville prefer to buy fish from the neighborhood stores."
But the option would have been more appropriate if - "People prefer to buy fish from the neighborhood stores, and Old Market is in the heart of the city (densely populated)."

So, I rephrased the argument.
Old Market vendors buy fish of similar quality from the same wholesalers and at the same prices as uptown vendors do.  Therefore , since Old Market fish vendors' businesses are as profitable as those uptown, the volume of the Old Market vendors' daily fish sales must, on average, be higher.  Therefore , The prices for all kinds of fish sold in Eastville's downtown Old Market are much lower than the prices charged at uptown seafood stores.

This simplified the answer choices and (E) pops out easily.

Most of the explanations above are mathematical but in my opinion do not affect the conclusion "volume of sales must be higher".

My question - 1. The question is legit as it is from Question pack 2. GMAC mixes up the conclusion sometimes, can this question be an example of the same. The "therefore" is not the main conclusion.

Thanks in Advance.

sayantanc2k · Answer

Thank you.

Premise (P1): Old Market vendors buy fish of similar quality from the same wholesalers and at the same prices as uptown vendors do. 
Premise (P2): Old Market fish vendors' businesses are as profitable as those uptown.
Conclusion (C): The volume of the Old Market vendors' daily fish sales must, on average, be higher.

The confusion arises because the P2 comes AFTER the word "therefore".

Nonetheless a premise-conclusion core can itself be considered a conclusion: An alternative way of looking at the structure is:
Premise: P1
Conclusion: P2-C

kavach · Answer

this is really a good question.

Boiled it down to D and E. hard time thinking on this 2.Eventually thought of marking E but mistakenly marked D.

Now I understand why D is incorrect as it says people buy from a neighbor, but that doesn't mean from downtown or if many downtown people are buying from uptown.

E removes a weakening possibility that overhead cost is the same which strengthens the argument more.

if u guys have read powerscore then you would understand what I am saying. (THE CORRECT ANSWER CHOICE HERE IS A DEFENDER, which defends the argument from weakening)

hope it helps.

Raman109 · Answer

Understanding the argument -
The prices for all kinds of fish sold in Eastville's downtown Old Market are much lower than the prices charged at uptown seafood stores. Fact. SP of fish in uptown>SP of fish in downtown.
Old Market vendors buy fish of similar quality from the same wholesalers and at the same prices as uptown vendors do. So if the material cost is the same. the profits would be high for Uptown (just hold on to it for now as we don't know much).
Therefore, since Old Market fish vendors' businesses are as profitable as those uptown (oh, so the profitability is the same), the volume of the Old Market vendors' daily fish sales must, on average, be higher.

P (downtown) = (SP-CP)*no. of units sold downtown
P (uptown) = (SP-CP)*no. of units sold uptown.

As P (downtown) = P (uptown), and as the author concludes that no. of units sold downtown>no. Of units sold uptown, the logical deduction is that the (SP-CP for downtown has to be lower than (the SP-CP) for uptown to balance out for profitability to be the same. For that to happen (we know that SP in uptown>SP in downtown), the other or overhead (as the material cost is identical for both) has to be the same or more than CP for uptown to reduce the (SP-CP) for downtown, which is what option E states.

If you would like to look at it from an assumption standpoint, the author assumes that (SP-CP) for the downtown is lower than for the uptown for the conclusion (the number of units sold for downtown is much larger than that for the uptown) to hold. And Option E is that assumption. If you negate the option E, the conclusion will shatter.

Option Elimination -

A. People who buy fish at Old Market stores generally have lower incomes than do those who buy fish from uptown seafood stores. - incomes of people buying is out of scope.

B. Some varieties of fish that are not available at Old Market stores can be found occasionally at uptown seafood stores. - out of scope.

C. Vendors at the old Market save on energy costs by keeping fish on ice instead of in refrigerated cases. - At best, it's a weakener. If the cost is lower for downtown and profitability is the same, then the number of units for downtown can't be more than for the uptown.

D. Many of the people who live in uptown Eastville prefer to buy fish from the neighborhood stores. - Out of scope.

E. Fish vendors at the Old Market do not, on average, have lower overhead costs than uptown vendors do. - ok

shaliny · Answer

I have solved this question as cause and effect argument.
Here, Cause- higher selling of old market fish ( conclusion)
& Effect - Old market business as profitable as Uptown ( premise)

In these type of arguments author assumes that there is no other cause for the same effect and option E doing the same thing that it is eliminated the other possible cause ( overhead cost) of old market to be profitable same as Uptown.

If some mistakes here please correct me.
Thanks

The prices for all kinds of fish sold in Eastville's downtown Old Mark

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The prices for all kinds of fish sold in Eastville's downtown Old Mark

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