Most large retail stores hold sales in the month of January.

Question

Most large retail stores hold sales in the month of January. The original idea of price reduction campaigns in January became popular when it was realized that sales of products would generally slow down following the Christmas rush, were it not for some incentive. The lack of demand could be solved by the simple solution of reducing prices. There is now an increasing tendency among major department stores in large urban centers to have their “January sales” begin before Christmas, some time before the end of the calendar year. The idea behind this trend is to endeavor to sell the maximum amount of stock at a profit, even if that may not be at the maximum profit.

Which of the following conclusions cannot be drawn from the above?

(A) The incidence of “early” January sales results in the lower holdings of stocks with the corollary of lower stock holding costs.

(B) Demand is a function of price; as you lower price, demand increases.

(C) Major stores seem to think it makes sense to have the January sales campaigns pre-Christmas.

(D) It is becoming less popular to start the January sales in the New Year.

(E) The major department stores do not worry as much about profit maximization as they do about sales maximization.

Feb2024 · Answer

Bunuel KarishmaB GMATNinja CrackverbalGMAT Hello Experts! Please help me here What does Option A even mean? And why are Option D and Option E incorrect? Thanks in Advance

Saksham_144 · Answer

Options D and E are not possible as they are already stated in the argument
For E, It's written in the last line that despite having lower profits they are selling it, so they don't care about profits.
For D, Check this line There is now an increasing tendency.
For A, it is irrelevant, this line suggests that when "early" January sales occur, businesses sell off a significant portion of their stock inventory at the beginning of the year—this reduction in inventory results in businesses holding fewer stocks. As a result of holding less inventory, the costs associated with storing and managing stock (stock holding costs) are reduced. In summary, early January sales lead to lower inventory levels, leading to lower costs for holding that inventory.

dhwanit2412 · Answer

Yes, Option A seems very vague and confusing. With respect to conclusion the answer should not be A. Someone pls explain.

GMATNinja · Answer

Yup, I totally agree that (A) is confusing. Initially, I interpreted the word "stock" to mean "equity," which would not make a whole lot of sense. So I did what we should all do when we encounter a confusing answer choice -- I kept moving.

The remaining options all seem like pretty straightforward conclusions from the prompt. Well, if everything else is out, and (A) is confusing, I guess we'll have to pick (A)! On second read, this question appears to be using "stock" to mean "inventory." We don't really know anything about how quickly inventory is replenished after the early sale begins, and we know nothing about how this might translate to inventory costs. So (A) is the one conclusion we couldn't necessarily draw, and it appears to be the best of the bunch. But the better takeaway is about the strategy for when you encounter confusing answer choices. If you don't understand one option, but the other four are clearly wrong, your job is to pick the one you don't understand. If you don't understand one option, but one of the other four options is clearly correct, your job is to pick THAT option. In other words, it's not an ideal scenario, but you don't have to understand every answer choice completely to get the question right. Keep moving and evaluate the answer choices you do understand, and then see what you're left with. I hope that helps!

LamboWalker · Answer

B and C are easy to eliminate.

D is out because although the reduction in popularity might not be too drastic, it is still a reduction nonetheless.

E is eliminated because the argument states that stores want to sell maximum count of products , not necessarily at the maximum profit. Also, between A and E, A cannot be inferred from the argument.

Therefore, A it is

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Bunuel · Answer

Barron's GMAT Official Explanation:

(A)

A number of points are made in the paragraph, and a number of conclusions can be drawn. One is (B), the simple law of economics—that demand varies with price. Also, since it is stated that there is now an increasing tendency to have the January sales in December, it must be becoming less popular to start the sales in January itself. Therefore, the conclusions in (C) and (D) can be drawn, and so choices (C) and (D) are not appropriate. Further, the hypothesis in (C) and also in (E) can be inferred from what is stated in the paragraph about the stores’ policies on end-of-year sales. Answer choice (A) introduces a new idea that may be correct and valid, but which cannot be inferred or concluded from what is stated in the paragraph; (A), therefore is the correct answer.

VerbalBot · Answer

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Most large retail stores hold sales in the month of January.

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Most large retail stores hold sales in the month of January.

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