At a local health club, almost 80% of the revenue from gym entrance

Question

At a local health club, almost 80% of the revenue from gym entrance fees comes from annual membership dues. At the café within the health club, it is surprising that less than 40% of the revenue of the café comes from health club members.

Which of the following, if true, best explains the surprising finding regarding the café’s revenues?

A. Only people who pay to use the health club are allowed access to the café.

B. Members with 3 and 6 month memberships use the café much more than annual members do.

C. The café is most appealing to people who have never been to the club before.

D. The café only offers a small variety of food items when compared to nearby restaurants.

E. Members get a 10% discount on food at the café.

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bebu24 · Answer

Fact provided in the question: 
Less than 40% of the cafe's revenue comes from health club members.

Question stem? 
Explain the reason behind the surprising Fact/Finding?

Pre-thinking:  May be health club members, didn't like the cafe food/service.

Lets evaluate the options: 
 A.  This goes against the fact provided in the question. If true, 100% of the cafe's revenue would come from health club members.
 B.  This does not tells us any thing about why the revenue is less than 40 %.
 C.  (Correct)The option says that cafe is most appealing to those who have never been to the club before, which indicates that may be after visiting the cafe once, the club members did not find the cafe much appealing, leading to reduced revenue from club members.
 D.  This does not tells us any thing about why the revenue is less than 40 %. May be the cafe sells only health food, which is preferred by the health club members.
 E.  This should lead to increase in revenue not decrease. Doesn't explain the decrease.

sayan640 · Answer

Both options B and C are close.
Can you please share your insights ?  KarishmaB   MartyMurray

KarishmaB · Answer

(B) is irrelevant.

We are given: At the café within the health club, it is surprising that less than 40% of the revenue of the café comes  from health club members .

We are not given "annual health club members." 40% of the revenue is from all members. So revenue obtained from 3 to 6 month members is also included in the 40%.  
 So all members account for only 40% of cafe revenue but annual members alone account for 80% of revenue from entrance fees.

Only (C) is correct.

Bunuel · Answer

VERITAS PREP OFFICIAL SOLUTION:

This “Explain the Paradox” question presents the following paradox: 80% of gym revenue comes from annual membership dues, yet less than 40% of revenue for the café in the gym comes from health club members. In (A), this piece of information actually increases the paradox. One possible explanation for how such a low percentage of revenue at the café could come from members is that many people come for lunch or dinner at the café that are not there to use the health club. If you must be a paying user to use the café, then this explanation is not possible and the paradox is even greater.

For (B), many people will fixate on the fact that the first data point is only about annual memberships – “80% of the revenue comes from annual membership dues” – whereas the second part references all members - “40% of the revenue of the café comes from health club members”. However, if short term members with 3 and 6 month memberships use the café more than annual members do, this does not resolve the paradox. The paradox is how non-members, who account for such a low portion of gym entrance fees at the club, could account for such a high percentage of revenue at the café.

Answer choice (C) gives an explanation for how this discrepancy could be true - if the day pass users who have never been there and who account for only 20% of fees are the ones who find the café appealing, they would account for more of the revenue. This would explain perfectly why the revenue figures at the café do not match the revenue figures for entrance to the gym.

In (D), the variety of food offered at the café would not explain this puzzling data and in (E) if the food is cheaper for members, it actually increases the paradox.  The correct answer is (C).

At a local health club, almost 80% of the revenue from gym entrance

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At a local health club, almost 80% of the revenue from gym entrance

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