Manufacturers of mechanical pencils make most of the profit

Question

Manufacturers of mechanical pencils make most of the profit on pencil leads rather than on the pencils themselves. The Write Company, which cannot sell its leads as cheaply as other manufacturers can, plans to alter the design of its mechanical pencil so that it will accept only a new designed Write Company lead, which will be sold at the same price as the Write Company's current lead.

Which of the following, if true, most strongly supports the Write Company's projection that its plan will lead to an increase in its sales of pencil leads?

(A) First-time buyers of mechanical pencils tend to buy the least expensive mechanical pencils available.

(B) Annual sales of mechanical pencils are expected to triple over the next five years.

(C) A Write Company executive is studying ways to reduce the cost of manufacturing pencil leads.

(D) A rival manufacturer recently announced similar plans to introduce a mechanical pencil that would accept only the leads produced by that manufacturer.

(E) In extensive test marketing, mechanical-pencil users found the new Write Company pencil markedly superior to other mechanical pencils they had used.

KarishmaB · Accepted Answer

Yes, I do agree with you. The product, though superior is more expensive. So there is no guarantee that its sales will increase. Also, in its own way, even B strengthens the argument. If overall sales increase, there is a good chance that this company's sales will also increase.

But, if you need to make the best of a given question, it would be good to note that E strengthens the argument more than B. B gives you an outside factor that could increase the sales. E is an inherent quality of the product that could increase sales.

artistocrat · Answer

This question can be found in GMATPrep>Practice Content>Review Questions>Q.14

I agree that just because a product is superior doesn't guarantee an increase in sales. You could just as easily argue that if the market for mechanical pencils expands, assuming market share is constant, then there will be an increase in sales as in B.

For these reasons, I believe that the question is poorly written.

akshathbs · Answer

Yes, I do agree with you. The product, though superior is more expensive. So there is no guarantee that its sales will increase. Also, in its own way, even B strengthens the argument. If overall sales increase, there is a good chance that this company's sales will also increase.

But, if you need to make the best of a given question, it would be good to note that E strengthens the argument more than B. B gives you an outside factor that could increase the sales. E is an inherent quality of the product that could increase sales.

nice explanation ..+1 to you..

also in B if sales triple may be the company metioned is not the one to be benifited , may be some other company
will sweep the market because of several reasons for ex lesser cost ,better quality etc..so clearly E wins..

also in B if sales triple may be the company metioned is not the one to be benifited , may be some other company will sweep the market because of several reasons for ex lesser cost ,better quality etc..so clearly E wins..

gettinit · Answer

I believe the argument says the lead is more expensive but not mechanical pencil itself is more expensive. The argument has to do with selling more pencils through which more lead would be sold at a more expensive price. E suggests more pencils will be sold because they are superior (not more expensive), hence leading to an increase in pencil lead sold.

KarishmaB · Answer

I do agree with you. The argument does say that the company's lead is more expensive than the pencil. But it is a matter of interpretation. Using the pencil will be more expensive than using some other pencil because it will take only the expensive lead. e.g. if you go to buy a humidifier, you will check out the cost of its filter too before you buy it since you will need to regularly replace it. If the humidifier is the same cost as others but the filter is more expensive, using that particular humidifier becomes more expensive. Hence, effectively their product, the new mechanical pencil, is going to be more expensive than others (assuming the cost of the pencil itself is similar to others). Since they are superior, they have a better chance of experiencing higher sales, nevertheless.

kinjiGC · Answer

Conclusion : Write Company's projection that its plan will lead to an increase in its sales of pencil leads
Premise : WC's pencil will accept only pencil leads manufactured by WC .

(A) First-time buyers of mechanical pencils tend to buy the least expensive mechanical pencils available ->  Doesn't impact WC's pencil leads

(B) Annual sales of mechanical pencils are expected to triple over the next five years. ->  What about WC's pencil sales?

(C) A Write Company executive is studying ways to reduce the cost of manufacturing pencil leads. ->  OFS

(D) A rival manufacturer recently announced similar plans to introduce a mechanical pencil that would accept only the leads produced by that manufacturer.->  OFS. We are concerned with WC's sales

(E) In extensive test marketing, mechanical-pencil users found the new Write Company pencil markedly superior to other mechanical pencils they had used. ->  Correct

mcelroytutoring · Answer

Attached is a visual that should help. Please note that answer choice B is not correct because it is not *the plan itself* that would lead to the increase in sales, but instead, general market trends.

mihir0710 · Answer

Manufacturers of mechanical pencils make most of the profit on pencil leads rather than on the pencils themselves. The Write Company, which cannot sell its leads as cheaply as other manufacturers can, plans to alter the design of its mechanical pencil so that it will accept only a new designed Write Company lead, which will be sold at the same price as the Write Company's current lead.

Which of the following, if true, most strongly supports the Write Company's projection that its plan will lead to an increase in its sales of pencil leads? 
 
So the company has linked the sales of its leads with the sales of its pencils (Mechanical Pencils - MP) by changing the design of its pencil to accept only its own leads.
So to support projection that the sales of the leads will increase, we need to somehow prove that the sales of the pencils will increase ... 
 
(A) First-time buyers of mechanical pencils tend to buy the least expensive mechanical pencils available. 
 Incorrect because we are not told anywhere in the argument that the WC's MP are least expensive ... 
 
(B) Annual sales of mechanical pencils are expected to triple over the next five years. 
 I was about to mark this option but then realize that the option does NOT specifies which company's MP's sales will triple... It may be the case that WC's sales does NOt cchange at all but all other company's sales triple

(C) A Write Company executive is studying ways to reduce the cost of manufacturing pencil leads. 
 Great ...let him study ...come back when he finds a solution (if at all he does !!!)

(D) A rival manufacturer recently announced similar plans to introduce a mechanical pencil that would accept only the leads produced by that manufacturer. 
 So what happened to the rival manufacturer ..did he succeed ?? Not mentioned anywhere...

(E) In extensive test marketing, mechanical-pencil users found the new Write Company pencil markedly superior to other mechanical pencils they had used.
 Important word :  MP's users  found that the WC's MP are superior..means they like the product and are more likely to buy WC's MP than others...
So, definitely supports the company's projection.

ashmit99 · Answer

ChiranjeevSingh

I was confused between B and E. Although I chose E, I had no strong reason to reject B. Do you think B and E have the same direction but different magnitude? Can you please explain why would you choose E over B?

Thanks in advance!

Thanks in advance!

ChiranjeevSingh · Answer

B has no impact. How does it support that "the company's plan" will lead to an increase in its sales?

We need to support that X will lead to Y. B just indicates that Y will happen.

kittle · Answer

The OFFICIAL reasoning for the correct answer choice (E):

What point supports the plan’s success? It is clear that increased lead sales are directly tied to the sales and ongoing use of the new pencil that can use only that type of lead. If the new pencils sell well and then get used frequently, the buyers will need to purchase leads regularly. If thorough test marketing has shown that potential buyers find the new pencil greatly superior to use, then the pencil buyers will have to purchase the only available leads that fit their pencils, no matter whether the leads are more expensive, and the projection that sales of these pencil leads will increase is strengthened.

Hope this helps.

avem2000 · Answer

Why is A not a valid answer. If first time buyers are more likely to buy WC's pencil they will have to buy WC lead. Irrespective of long term affects this is bound to increase sales in the early stage.

guddo · Answer

Manufacturers of mechanical pencils make most of the profit on pencil leads rather than on the pencils themselves. The Write Company, which cannot sell its leads as cheaply as other manufacturers can, plans to alter the design of its mechanical pencil so that it will accept only a new designed Write Company lead, which will be sold at the same price as the Write Company's current lead.
 
 Which of the following, if true, most strongly supports the Write Company's projection that its plan will lead to an increase in its sales of pencil leads?

Write’s problem is that its leads are pricier than competitors’, so people avoid them. The plan is to “lock in” customers by making a pencil that only takes Write leads, at the same (still not cheap) price. This will increase lead sales only if many people will actually buy and use this new pencil. The best support is evidence that the new pencil will be chosen by users.

(A) First-time buyers of mechanical pencils tend to buy the least expensive mechanical pencils available.

This weakens the plan. If Write’s pencil is not the cheapest, first-time buyers may avoid it, reducing the number of locked-in users and thus reducing lead sales.

(B) Annual sales of mechanical pencils are expected to triple over the next five years.

This is a general market growth claim. It does not show Write will capture those buyers, so it only weakly supports increased Write lead sales.

(C) A Write Company executive is studying ways to reduce the cost of manufacturing pencil leads.

Studying does not mean costs will drop, and the plan explicitly keeps the lead price the same anyway. So it does not support the projection.

(D) A rival manufacturer recently announced similar plans to introduce a mechanical pencil that would accept only the leads produced by that manufacturer.

This does not support Write. If anything, it suggests competitors may also lock in customers, which could make it harder for Write to increase its lead sales.

(E) In extensive test marketing, mechanical-pencil users found the new Write Company pencil markedly superior to other mechanical pencils they had used.

This directly supports the projection: if users strongly prefer the new pencil, more people will buy it, and once they own it they must buy Write leads. That is the clearest reason lead sales would increase.

Answer: (E)

guddo · Answer

(A) says first time buyers tend to buy the least expensive pencils. That does not imply they are more likely to buy Write’s pencil. Write’s key fact is it  cannot sell its leads as cheaply as other manufacturers . That usually goes with Write being the higher cost option overall, not the cheapest.

So (A) either does nothing (it gives no reason to think Write is the least expensive), or it hurts Write: if Write’s pencil is not the cheapest, first time buyers will choose competitors, so fewer people get locked into  Write only  leads.

Manufacturers of mechanical pencils make most of the profit

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Manufacturers of mechanical pencils make most of the profit

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