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28 Jun 2024, 00:59
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mojorising800
Which of the following best completes the passage below?
When the products of several competing suppliers are perceived by consumers to be essentially the same, classical economics predicts that price competition will reduce prices to the same minimal levels and all suppliers’ profits to the same minimal levels. Therefore, if classical economics is true, and given suppliers’ desire to make as much profit as possible, it should be expected that ____________
(A) in a crowded market widely differing prices will be charged for products that are essentially the same as each other
(B) as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to decrease
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from its competitors’ products.
(D) when consumers are unable to distinguish the products in a crowded market, consumers will judge that the higher-priced products are of higher quality
(E) suppliers in crowded markets will have more incentive to reduce prices and thus increase sales than to introduce innovations that would distinguish their product from their competitors’ products
When the products of several competing suppliers are perceived by consumers to be essentially the same, classical economics predicts that price competition will reduce prices to the same minimal levels and all suppliers’ profits to the same minimal levels. Therefore, if classical economics is true, and given suppliers’ desire to make as much profit as possible, it should be expected that ____________
(A) in a crowded market widely differing prices will be charged for products that are essentially the same as each other
(B) as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to decrease
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from its competitors’ products.
(D) when consumers are unable to distinguish the products in a crowded market, consumers will judge that the higher-priced products are of higher quality
(E) suppliers in crowded markets will have more incentive to reduce prices and thus increase sales than to introduce innovations that would distinguish their product from their competitors’ products
Important to keep in mind that while filling in the blank, the entire stimulus should be kept in mind.
Premises:
When the products of several competing suppliers are perceived by consumers to be essentially the same, classical economics predicts that price competition will reduce prices and profits to the same minimal levels.
Suppliers desire to make as much profit as possible
Conclusion: If classical economics is true, it should be expected that __________
If their products are perceived to be the same, they will get minimal profit. But they want more profit. So what can we expect? That they would try to show that their product is not the same - it is better than others.
(A) in a crowded market widely differing prices will be charged for products that are essentially the same as each other.
We are given that as per classical economics, same minimal prices will be charged if products are essentially the same. Hence, if classical economics is true, we certainly would not expect widely differing prices. Incorrect.
(B) as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to decrease
No idea what happens once the market starts becoming less crowded.
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from its competitors’ products.
Exactly. Based on the first sentence, the words that work are that to increase profits, they would try to show that their products are different. Of course, they could take a lot of other measure to increase profit but realise that those measures would not be a part of this argument. Otherwise, what was the point of mentioning the first sentence about what classical economics says and adding "if calssical economics is true" in the conclusion?
(D) when consumers are unable to distinguish the products in a crowded market, consumers will judge that the higher-priced products are of higher quality
In this case, "given suppliers’ desire to make as much profit as possible" makes no sense. Why would it be mentioned just before giving the content of the conclusion. If this were the correct option, something about the consumers would have been given to us.
(E) suppliers in crowded markets will have more incentive to reduce prices and thus increase sales than to introduce innovations that would distinguish their product from their competitors’ products
This is opposite of what we expect. We would expect something on the lines of "suppliers introduce innovations that would distinguish their product from their competitors’ products" to make higher profits. We are given that "sameness" of products leads to minimal profits so we would expect them to distinguish their products in some way to increase profits.
Also there is nothing in the argument that builds up to this statement that suppliers will prefer to drop prices than to introduce innovations.
Answer (C)
SJKC
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Schools: Booth '24 Columbia CBS '24 Haas '24 Harvard '24 Said '23 Ross '24 Sloan '24 Stanford '24 Wharton '24 Yale '24
Posts: 12
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30 Jun 2024, 12:28
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KarishmaB
mojorising800
Which of the following best completes the passage below?
When the products of several competing suppliers are perceived by consumers to be essentially the same, classical economics predicts that price competition will reduce prices to the same minimal levels and all suppliers’ profits to the same minimal levels. Therefore, if classical economics is true, and given suppliers’ desire to make as much profit as possible, it should be expected that ____________
(A) in a crowded market widely differing prices will be charged for products that are essentially the same as each other
(B) as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to decrease
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from its competitors’ products.
(D) when consumers are unable to distinguish the products in a crowded market, consumers will judge that the higher-priced products are of higher quality
(E) suppliers in crowded markets will have more incentive to reduce prices and thus increase sales than to introduce innovations that would distinguish their product from their competitors’ products
When the products of several competing suppliers are perceived by consumers to be essentially the same, classical economics predicts that price competition will reduce prices to the same minimal levels and all suppliers’ profits to the same minimal levels. Therefore, if classical economics is true, and given suppliers’ desire to make as much profit as possible, it should be expected that ____________
(A) in a crowded market widely differing prices will be charged for products that are essentially the same as each other
(B) as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to decrease
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from its competitors’ products.
(D) when consumers are unable to distinguish the products in a crowded market, consumers will judge that the higher-priced products are of higher quality
(E) suppliers in crowded markets will have more incentive to reduce prices and thus increase sales than to introduce innovations that would distinguish their product from their competitors’ products
Important to keep in mind that while filling in the blank, the entire stimulus should be kept in mind.
Premises:
When the products of several competing suppliers are perceived by consumers to be essentially the same, classical economics predicts that price competition will reduce prices and profits to the same minimal levels.
Suppliers desire to make as much profit as possible
Conclusion: If classical economics is true, it should be expected that __________
If their products are perceived to be the same, they will get minimal profit. But they want more profit. So what can we expect? That they would try to show that their product is not the same - it is better than others.
(A) in a crowded market widely differing prices will be charged for products that are essentially the same as each other.
We are given that as per classical economics, same minimal prices will be charged if products are essentially the same. Hence, if classical economics is true, we certainly would not expect widely differing prices. Incorrect.
(B) as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to decrease
No idea what happens once the market starts becoming less crowded.
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from its competitors’ products.
Exactly. Based on the first sentence, the words that work are that to increase profits, they would try to show that their products are different. Of course, they could take a lot of other measure to increase profit but realise that those measures would not be a part of this argument. Otherwise, what was the point of mentioning the first sentence about what classical economics says and adding "if calssical economics is true" in the conclusion?
(D) when consumers are unable to distinguish the products in a crowded market, consumers will judge that the higher-priced products are of higher quality
In this case, "given suppliers’ desire to make as much profit as possible" makes no sense. Why would it be mentioned just before giving the content of the conclusion. If this were the correct option, something about the consumers would have been given to us.
(E) suppliers in crowded markets will have more incentive to reduce prices and thus increase sales than to introduce innovations that would distinguish their product from their competitors’ products
This is opposite of what we expect. We would expect something on the lines of "suppliers introduce innovations that would distinguish their product from their competitors’ products" to make higher profits. We are given that "sameness" of products leads to minimal profits so we would expect them to distinguish their products in some way to increase profits.
Also there is nothing in the argument that builds up to this statement that suppliers will prefer to drop prices than to introduce innovations.
Answer (C)
Thank you for the feedback.
Just a Q - The argument neither mentioned that if suppliers do not make the consumers to perceive the product to be same (aka products to be different), their profits will go up.
How could we tackle with this reasoning, given that the answer should 100% support the statement that 'suppliers make higher profits'?
Thank you!
30 Jun 2024, 21:18
Kudos
Bookmarks
SJKC
KarishmaB
mojorising800
Which of the following best completes the passage below?
When the products of several competing suppliers are perceived by consumers to be essentially the same, classical economics predicts that price competition will reduce prices to the same minimal levels and all suppliers’ profits to the same minimal levels. Therefore, if classical economics is true, and given suppliers’ desire to make as much profit as possible, it should be expected that ____________
(A) in a crowded market widely differing prices will be charged for products that are essentially the same as each other
(B) as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to decrease
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from its competitors’ products.
(D) when consumers are unable to distinguish the products in a crowded market, consumers will judge that the higher-priced products are of higher quality
(E) suppliers in crowded markets will have more incentive to reduce prices and thus increase sales than to introduce innovations that would distinguish their product from their competitors’ products
When the products of several competing suppliers are perceived by consumers to be essentially the same, classical economics predicts that price competition will reduce prices to the same minimal levels and all suppliers’ profits to the same minimal levels. Therefore, if classical economics is true, and given suppliers’ desire to make as much profit as possible, it should be expected that ____________
(A) in a crowded market widely differing prices will be charged for products that are essentially the same as each other
(B) as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to decrease
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from its competitors’ products.
(D) when consumers are unable to distinguish the products in a crowded market, consumers will judge that the higher-priced products are of higher quality
(E) suppliers in crowded markets will have more incentive to reduce prices and thus increase sales than to introduce innovations that would distinguish their product from their competitors’ products
Important to keep in mind that while filling in the blank, the entire stimulus should be kept in mind.
Premises:
When the products of several competing suppliers are perceived by consumers to be essentially the same, classical economics predicts that price competition will reduce prices and profits to the same minimal levels.
Suppliers desire to make as much profit as possible
Conclusion: If classical economics is true, it should be expected that __________
If their products are perceived to be the same, they will get minimal profit. But they want more profit. So what can we expect? That they would try to show that their product is not the same - it is better than others.
(A) in a crowded market widely differing prices will be charged for products that are essentially the same as each other.
We are given that as per classical economics, same minimal prices will be charged if products are essentially the same. Hence, if classical economics is true, we certainly would not expect widely differing prices. Incorrect.
(B) as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to decrease
No idea what happens once the market starts becoming less crowded.
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from its competitors’ products.
Exactly. Based on the first sentence, the words that work are that to increase profits, they would try to show that their products are different. Of course, they could take a lot of other measure to increase profit but realise that those measures would not be a part of this argument. Otherwise, what was the point of mentioning the first sentence about what classical economics says and adding "if calssical economics is true" in the conclusion?
(D) when consumers are unable to distinguish the products in a crowded market, consumers will judge that the higher-priced products are of higher quality
In this case, "given suppliers’ desire to make as much profit as possible" makes no sense. Why would it be mentioned just before giving the content of the conclusion. If this were the correct option, something about the consumers would have been given to us.
(E) suppliers in crowded markets will have more incentive to reduce prices and thus increase sales than to introduce innovations that would distinguish their product from their competitors’ products
This is opposite of what we expect. We would expect something on the lines of "suppliers introduce innovations that would distinguish their product from their competitors’ products" to make higher profits. We are given that "sameness" of products leads to minimal profits so we would expect them to distinguish their products in some way to increase profits.
Also there is nothing in the argument that builds up to this statement that suppliers will prefer to drop prices than to introduce innovations.
Answer (C)
Thank you for the feedback.
Just a Q - The argument neither mentioned that if suppliers do not make the consumers to perceive the product to be same (aka products to be different), their profits will go up.
How could we tackle with this reasoning, given that the answer should 100% support the statement that 'suppliers make higher profits'?
Thank you!
But in any case, we don't need to look for something that must be 100% true. Theh question doesn't ask for it. It asks for what best completes the passage. What you think the author will say next. It is not necessary that he must re-word exactly what he said before. We need to see what works best based on what he said before and what is given in the options.
