During a single hour of a pledge drive for a public radio station, any

Question

During a single hour of a pledge drive for a public radio station, anyone making a pledge of a stated amount was given a free gift. Pledges were encouraged by the announcement that the retail cost of the gift was equal to the amount of the pledge. Yet, at the end of the hour, the total money raised from pledges accounted for a larger dollar amount than the amount organizers had paid for all the free gifts.

Which of the following, if true, is the best explanation for the fact that funds raised from pledges during the hour accounted for more money than the cost of the free gifts?

Which of the following, if true, is the best explanation for the fact that funds raised from pledges during the hour accounted for more money than the cost of the free gifts?

A) The cost of postage was included in the total cost assigned to the gifts, making them seem more expensive to potential donors.

B) Organizers underestimated the amount of money that would be raised during the hour and were surprised by the actual total of pledges.

C) Organizers overestimated the number of donors who would respond to the offer and were forced to offer gifts at half price when there were fewer pledges than expected.

D) Free gifts were donated by a sponsor, eliminating the need to subtract the cost of them from the total money raised through pledges.

E) More money was raised during this hour than during the previous three hours, driving down the average out-of-pocket cost of the free gifts.

TommyWallach · Accepted Answer

Hey All,

I got a request to weigh in on this one, but to be honest, I'm unsure where the confusion is. People keep saying that the answer goes against a written premise. It doesn't in the slightest:

During a single hour of a pledge drive for a public radio station, anyone making a pledge of a stated amount was given a free gift. Pledges were encouraged by the announcement that the retail cost of the gift was equal to the amount of the pledge. Yet, at the end of the hour, the total money raised from pledges accounted for a larger dollar amount than the amount organizers had paid for all the free gifts.

Which of the following, if true, is the best explanation for the fact that funds raised from pledges during the hour accounted for more money than the cost of the free gifts?

This is an "Explain the Discrepancy" question, so all we need to do is write it in our own words.

Discrepancy: Station gives away gift that retails for the same amount as associated pledge, yet station makes profit. How?

Explanation: Pretty obvious that the gifts were donated. This is how the majority of charity auctions are run.

A)The cost of postage was included in the total cost assigned to the gifts, making them seem more expensive to potential donors.
PROBLEM: This doesn't address the issue. Even if cost of postage is included, the station's outlay = pledges if they had to buy the gifts.

B)Organizers underestimated the amount of money that would be raised during the hour and were surprised by the actual total of pledges.
PROBLEM: Again, if they had to buy the gifts, outlay still = pledges.

C)Organizers overestimated the number of donors who would respond to the offer and were forced to offer gifts at half price when there were fewer pledges than expected.
PROBLEM: This wouldn't help at all. In fact, it looks like it would hurt the discrepancy.

D)Free gifts were donated by a sponsor, eliminating the need to subtract the cost of them from the total money raised through pledges.
ANSWER: People keep saying this goes against the premise. But the premise never says the gifts were bought. It says "total money raised from pledges accounted for a larger dollar amount than  the amount organizers had paid  for all the free gifts." That does not imply that they bought them at all. It just says they made more money than they paid. Even if the amount they paid was $0, this would remain a true premise. I see no contradiction. : )

E)More money was raised during this hour than during the previous three hours, driving down the average out-of-pocket cost of the free gifts.
PROBLEM: Same problem as B.

Hope that helps!

-t

ashnag · Answer

it's D. If oraganizer does not need to pay the cost of the gifts , whatever fund is raised the radio station gets to keep it. so whatever they raise , the station will always be at profit.

OA please.

RaviChandra · Answer

OA is D

During a single hour of a pledge drive for a public radio station, anyone making a pledge of a stated amount was given a free gift. Pledges were encouraged by the announcement that the retail cost of the gift was equal to the amount of the pledge. Yet, at the end of the hour, the total money raised from pledges accounted for a larger dollar amount than the amount organizers had paid for all the free gifts.

Which of the following, if true, is the best explanation for the fact that funds raised from pledges during the hour accounted for more money than the cost of the free gifts?

if we observe the last sentence it clearly says that the gifts are bought... 
even thought option D is very convincing i eliminated D thinking they are bought and can not be gifted.....

Can some one explain this!!!!

nverma · Answer

Let me try..!!

Organizers had gifts:    "Free gifts"  can be  bought by organizers  or sponsors can provide  "free gift"  to organizers.

AND NOW..

Organizers have to give these gifts to the pledge makers...!! And the any pledge makers will get the  "free gift"  equivalent to the pledge made.

SO, Let say there 10 pledge makers and each made a pledge $ 10.. so total worth of gifts to be given by organizers shud worth $100.

But  let say organizers bought only 8 gifts themselves  and  2 were offered  by the sponsors..>>>> So, effectively Organizers paid less...|>> funds raised from pledges during the hour accounted for more money than the cost of the  "free gifts"  PAID by the organizers..

Hope it helps..

ingoditrust · Answer

Answer should be D, as it clearly gives details about cost of gifts = 0 and thereby proving that

cost to get gifts < amount of money from pledges.

vigneshpandi · Answer

I know this may be a dumb question... The passage claerly says "the total money raised from pledges accounted for a larger dollar amount   than the amount organizers had paid for all the free gifts  ."
So it says that they had paid something for the gifts....So how can we assume an answer which is related to donations? please explain?

TommyWallach · Answer

Hey Vignes,

Not sure about your question. We're not assuming anything. We're trying to find something that explains the discrepancy, which is that somehow, the association gave away gifts worth the exact amount of the relevant pledges, but ended up making money. The only thing that could explain this is that the charity itself DID NOT pay retail price for the gifts (even though they were WORTH the exact value of the pledge).

-t

iPen · Answer

Option B is misleading and is a potential trap if you think too much about it. Organizers can be surprised by how much money came in, but it doesn't say anything about running out of gifts. If organizers ran out of gifts, then the pledges were met with no gift at all. Of course, pledgers may withdraw if there is no gift... and the announcement only said that pledges were encouraged by the news that pledges would be met with a free gift that has a retail value equal to the pledge amount. It doesn't say that it was guaranteed. But that line of reasoning isn't sufficient to answer the question. It boils down to what you definitively know or don't know - you don't know that they ran out of free gifts.

Option D could mean that organizers paid $0. Another scenario would be that they paid 80% of the gifts, whereas sponsors donated the last 20%. So, $ pledge > $ paid for gifts by organizers. Answer D.

Option D could mean that organizers paid $0. Another scenario would be that they paid 80% of the gifts, whereas sponsors donated the last 20%. So, $ pledge > $ paid for gifts by organizers. Answer D.

kanigmat011 · Answer

can somebody explain option E
I was unable to understand the wording

iPen · Answer

E) More money was raised during this hour than during the previous three hours, driving down the average out-of-pocket cost of the free gifts.

We take E as true, which means average cost must drop.

Average cost: Total C/Q
Imagine each "gift" is what the pledgers are buying.
Each item is $1; every donor pledges only $1
Each item is matched with a gift of equal value, which essentially means that the pledge drive stops as soon the gifts are gone (and not that there is an infinite quantity of gifts on hand, though the organizers can simply go out and buy more gifts after receiving the pledges, thereby prolonging the pledge drive for as long as possible with an "unlimited" quantity).

Let's say you start off by buying $10 in gifts:
Hour 1: $1 raised 
Average cost after 1 hour: $10/1 = $10.00 per item
Hour 2: $5 raised
Average cost after 2 hours: $10/6 = $1.67 per item

It doesn't give us any information that we don't already know. That is, we already know that at the end of the day, average cost will be $1 in the example above , since all pledges are matched with an equivalent retail value. The total quantity could be 6 with an average cost that's $1.67 with $6 raised, which would still lead to an average cost of $1 at the end of the pledge drive. Or, it could be $100 in initial cost with $100 raised in pledges with an average cost of $1 after just the first hour. The total cost is equivalent to the total pledge amount in all cases.

If you think about it, it doesn't make sense to hold a pledge drive by spending the same amount of money on gifts as the amount you will receive from pledges - there are other costs to consider, too, such as shipping, utilities, etc... but that's an aside.

Arpitkumar · Answer

HI , pls help out with the answer here . thanks

Bunuel · Answer

There are several explanations given above, for example: https://gmatclub.com/forum/during-a-sin ... ml#p712789 Official Solution: During a single hour of a pledge drive for a public radio station, anyone making a pledge of a stated amount was given a free gift. Pledges were encouraged by the announcement that the retail cost of the gift was equal to the amount of the pledge. Yet, at the end of the hour, the total money raised from pledges accounted for a larger dollar amount than the amount organizers had paid for all the free gifts. Which of the following, if true, is the best explanation for the fact that funds raised from pledges during the hour accounted for more money than the cost of the free gifts? A. The cost of postage was included in the total cost assigned to the gifts, making them seem more expensive to potential donors. B. Organizers underestimated the amount of money that would be raised during the hour and were surprised by the actual total of pledges. C. Organizers overestimated the number of donors who would respond to the offer and were forced to offer gifts at half price when there were fewer pledges than expected. D. Half of the free gifts were sponsored by the companies from which they were purchased. E. More money was raised during this hour than during the previous three hours, driving down the average out-of-pocket cost of the free gifts. Situation: Organizers of a public radio fund drive find that they have received more money in pledges than they must pay for free gifts they send to donors. Reasoning: Which is the best explanation for the excess in money? Because the retail cost of the gift and the amount each donor’s pledge are assumed to be equal, it is expected that organizers will not see a net gain in funds during this hour. It is important to note, however, that the amounts of money being compared are the pledge amount and the retail cost of the free gifts. If organizers do not spend the enitre money on the free gifts they send to donors, a certain amount of the pledges received during the hour represent a net gain. Choice A : Whether the gifts seem more expensive has no impact on the net amount raised during the hour. Choice B : The organizers’ surprise may influence their perceptions of the amount of money raised, but would not influence an actual count. Choice C : Free gifts are not being sold in the passage, and therefore can not be offered at half price. Choice D : Correct - If only half of the cost of the gifts need to be subtracted from the dollar amount raised during the hour, half of the pledges count as net gain and represent a larger dollar amount than the total retail price of all gifts. Choice E : The amount of money raised during previous hours has no bearing on the situation described in the passage. Answer: D

RITESH24 · Answer

MY ANSWER AT FIRST WAS 'D' BUT THEN In THE ARGUMENT IT IS WRITTEN STATION HAS PAID SOMETHING .... in that case d goes against the veracity of the premise.

nayas96 · Answer

TommyWallach  The argument also mentions the lines that "Pledges were encouraged by the announcement that  the retail cost of the gift  was equal to the amount of the pledge". Does not this actually show to some degree that the there was a particular amount paid for every gift that was bought, since the author is aware of the retail cost of that particular gift?.

Also, the author in the last line mentions that "the total money raised from pledges accounted for a larger dollar amount than the amount organizers had paid for all the free gifts", as per option (A) "The cost of postage was included in the total cost assigned to the gifts, making them seem more expensive to potential donors" and the line "Pledges were encouraged by the announcement that  the retail cost of the gift  was equal to the amount of the pledge", would not it mean that the total cost the paid towards the gifts would be based on the retail price and given that the total cost that included the postage cost, which would increase the price of the total cost and hence there would be a differnce in the money raised in the pledges as per the retail price and the total cost assigned to the gift, which would be on the higher end.

TommyWallach   Sajjad1994   egmat   GMATNinja  Please Kindly help clarify regarding the above doubts.

Taru0990 · Answer

Can someone explain why cant it be option A . if it looks expensive that means we have revised price mark on gift and hence making profit .

Taru0990 · Answer

I have same question. Can someone explain .

During a single hour of a pledge drive for a public radio station, any

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During a single hour of a pledge drive for a public radio station, any

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