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- Sat Mar 18, 2017 9:30 am
#33525
Complete Question Explanation
Flaw in the Reasoning—#%. The correct answer choice is (A)
The key to answering this question correctly is to simplify the language in the stimulus and focus on the numerical evidence presented in support of the conclusion. The author observes that the profit margin on low-end computer models is higher than it is on high-end models. This leads to the conclusion that selling only low-end models will maximize profits, even if the total number of computers sold remains the same.
The conclusion is flawed, because a numbers conclusion (“maximize profits”) cannot be drawn solely from percentage information. This is a typical error in the use of numerical evidence. Even if profit margins on the high-end models are relatively low (13% vs. 25%), the amount earned on each high-end model could still be relatively high. It all depends on how much each computer model costs. For instance, if the store priced its computers at $2,000 for the high-end models and $500 for the low-end, then a 13% profit on the high-end models would return a profit of $260 per computer. The corresponding figure would be only $125 for the low-end models. Since the total number of computers sold is unlikely to change, the decision to sell only low-end models may not maximize the computer store’s profits. As you attack the answer choices, look for an answer that addresses this error.
Answer choice (A): This is the correct answer choice. If the money earned on each high-end computer is significantly higher than the money earned on each low-end model, then the decision to sell only low-end models is unlikely to maximize the store’s profits. This line of reasoning assumes that the total number of computers sold remains unchanged, which is reasonable considering the author’s prediction that “we would probably sell as many low-end models […] as we would sell both kinds combined.”
Answer choice (B): The ratio of high-end to low-end models sold last year has no bearing on the question of whether selling only low-end computer models would maximize profits.
Answer choice (C): This answer choice describes a common consumer behavior: a customer comes into the store expecting to purchase a low-end model, but “switches” to a high-end model. Is this something the manager should have considered? Not really. The decision to suspend selling high-end models would obviously prevent such customers from “switching,” but it is entirely unclear how discontinuing such behavior would affect the store’s bottom line. If the store earns more money on the low-end models, profits could increase; inversely, if they earn more money on the high-end models, profits might go down. Since we have no way of determining the amount of money earned on each computer, this answer choice raises an interesting, but ultimately irrelevant, issue.
Answer choice (D): It is reasonable to expect that businesses strive to maximize profits, but there is no evidence suggesting that this is the store manager’s only objective.
Answer choice (E): The manager is fully aware that future sales of low-end computers may not be the same as past sales (“we would probably sell as many low-end models […] as we would sell both kinds combined”). This answer choice misstates a key premise in the argument and is therefore incorrect.
Flaw in the Reasoning—#%. The correct answer choice is (A)
The key to answering this question correctly is to simplify the language in the stimulus and focus on the numerical evidence presented in support of the conclusion. The author observes that the profit margin on low-end computer models is higher than it is on high-end models. This leads to the conclusion that selling only low-end models will maximize profits, even if the total number of computers sold remains the same.
The conclusion is flawed, because a numbers conclusion (“maximize profits”) cannot be drawn solely from percentage information. This is a typical error in the use of numerical evidence. Even if profit margins on the high-end models are relatively low (13% vs. 25%), the amount earned on each high-end model could still be relatively high. It all depends on how much each computer model costs. For instance, if the store priced its computers at $2,000 for the high-end models and $500 for the low-end, then a 13% profit on the high-end models would return a profit of $260 per computer. The corresponding figure would be only $125 for the low-end models. Since the total number of computers sold is unlikely to change, the decision to sell only low-end models may not maximize the computer store’s profits. As you attack the answer choices, look for an answer that addresses this error.
Answer choice (A): This is the correct answer choice. If the money earned on each high-end computer is significantly higher than the money earned on each low-end model, then the decision to sell only low-end models is unlikely to maximize the store’s profits. This line of reasoning assumes that the total number of computers sold remains unchanged, which is reasonable considering the author’s prediction that “we would probably sell as many low-end models […] as we would sell both kinds combined.”
Answer choice (B): The ratio of high-end to low-end models sold last year has no bearing on the question of whether selling only low-end computer models would maximize profits.
Answer choice (C): This answer choice describes a common consumer behavior: a customer comes into the store expecting to purchase a low-end model, but “switches” to a high-end model. Is this something the manager should have considered? Not really. The decision to suspend selling high-end models would obviously prevent such customers from “switching,” but it is entirely unclear how discontinuing such behavior would affect the store’s bottom line. If the store earns more money on the low-end models, profits could increase; inversely, if they earn more money on the high-end models, profits might go down. Since we have no way of determining the amount of money earned on each computer, this answer choice raises an interesting, but ultimately irrelevant, issue.
Answer choice (D): It is reasonable to expect that businesses strive to maximize profits, but there is no evidence suggesting that this is the store manager’s only objective.
Answer choice (E): The manager is fully aware that future sales of low-end computers may not be the same as past sales (“we would probably sell as many low-end models […] as we would sell both kinds combined”). This answer choice misstates a key premise in the argument and is therefore incorrect.