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There is relativley little room for growth in the overall carpet market, which is tied to the size of the population. Most who purchase carpet do so only once or twice, first in their twenties ot thirties, and then perhaps again in their fifties or sixties. Thus as the population ages, companies producing carpet will be able to gain market share in the carpet market only through purchasing competitors, and not through more agressive marketing.
Which of the following, if true, casts the most doubt on the conclusion above?
(A) Most of the major carpet producers market other floor coverings as well. (B) Most established carpet producers market several different brand names and varieties, and there is no remaining niche in the market for new brands to fill. (C) Two of the three mergers in the industry's last ten years led to a decline in profits and revenues for the the newly merged companies. (D) Price reductions, achieved by cost-cutting in production, by some of the dominant firms in the carpet market are causing other producers to leave the market altogether. (E) The carpet market is unlike most markets in that consumers are becoming increasingly resistant to new patterns and styles.
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C and D are the ones to choose from....But C can be avoided since we need to make an extreme statement when doing a weakening question...So I'll choose D....
(A) Most of the major carpet producers market other floor coverings as well. -Out of scope
(B) Most established carpet producers market several different brand names and varieties, and there is no remaining niche in the market for new brands to fill. -Opposite answers
(C) Two of the three mergers in the industry’s last ten years led to a decline in profits and revenues for the newly merged companies. -This is attractive choice but profits and revenues are not market share. Hence incorrect
(D) Price reductions, achieved by cost-cutting in production, by some of the dominant firms in the carpet market are causing other producers to leave the market altogether. -This choice shows that to gain market share you don't have to merge but cut cost in production, there by eliminating competition. Hence the correct Choice
(E) The carpet market is unlike most markets in that consumers are becoming increasingly resistant to new patterns and styles. -Out of scope
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