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calex

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jainrahul1985 Really wants to Beat The GMAT! Default Avatar
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calex Post Sat Aug 28, 2010 7:36 am
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    The Calex Telecommunications Company is planning to introduce cellular telephone service into isolated coastal areas of Caladia, a move which will require considerable investment. However, the only significant economic activity in these areas is small-scale coffee farming, and none of the coffee farmers make enough money to afford the monthly service fees that Calex would have to charge to make a profit. Nevertheless, Calex contends that making the service available to these farmers will be profitable.

    Which of the following, if true, provides the strongest support for Calex's contention?

    (A) Currently, Caladian coffee farmers are forced to sell their coffee to local buyers at whatever price those buyers choose to pay because the farmers are unable to remain in contact with outside buyers who generally offer higher prices.
    (B) In the coastal areas of Caladia where Calex proposes to introduce cellular telephone service, there is currently no fixed-line telephone service because fixed-line companies do not believe that they could recoup their investment.
    (C) A cellular telephone company can break even with a considerably smaller number of subscribers than a fixed-line company can, even in areas such as the Caladian coast, where there is no difficult terrain to drive up the costs of installing fixed lines.
    (D) Calex bases its monthly fees for cellular telephone service in a given region partly on the cost of installing the necessary equipment to provide the service there.
    (E) Calex has for years made a profit on cellular telephone service in Caladia's capital city, which is not far from the coastal region

    Confused b/w A and B . Please suggest OA A

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    ashish2104 Really wants to Beat The GMAT! Default Avatar
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    Post Sat Aug 28, 2010 8:02 am
    the only way for calex to earn profits from farmers is when farmers have enough money to pay to calex.
    Now this is possible only if farmers make enough money to pay calex.
    If calex provides farmers an opportunity to connect with other buyers who can pay higer prices, this shows higer income for farmers which indirectly means higher profits for calex.

    hence A.
    Hope this helps.

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    Whitney Garner GMAT Instructor
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    Post Mon Oct 18, 2010 10:04 am
    Received a PM asking me to respond. Don't see a source. Please cite the source (author) of the problem so I can respond!

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    bubbliiiiiiii GMAT Destroyer!
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    Post Tue Oct 19, 2010 12:21 am
    ashish2104 wrote:
    the only way for calex to earn profits from farmers is when farmers have enough money to pay to calex.
    Now this is possible only if farmers make enough money to pay calex.
    If calex provides farmers an opportunity to connect with other buyers who can pay higer prices, this shows higer income for farmers which indirectly means higher profits for calex.

    hence A.
    Hope this helps.
    Yes .. thats true .. even I got this option as answer.

    But, since the option doesnot say that cellular network is the only option for farmers to connect to non-local coffee dealers .. I am pretty confused. I am OK .. if the option says that there is not fixed line network as given in B.

    Your opinion please.

    Dangerous Dude Rising GMAT Star Default Avatar
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    Post Tue Oct 19, 2010 5:17 am
    A....

    It gives the alternate way through which coffee producers could be profitable through service leading to profit for service provider

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    Geva@MasterGMAT GMAT Instructor
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    Post Tue Oct 19, 2010 5:56 am
    Dangerous Dude wrote:
    A....

    It gives the alternate way through which coffee producers could be profitable through service leading to profit for service provider
    Very true.

    bubbliiiiiiii, the key to CR questions is to spend some time with the argument (after you've broken it down to premises and conclusion, before you rush to the answer choices) and come up with your own broad definition of what the right answer should do, or which direction it should take. The broader the definition, the higher the chance that you will recognize the correct answer, which, though not exactly what you had in mind, still does what you expect it to do. The side benefit of this is taht you can then quickly eliminate irrelevant answer choices such as B.

    The facts of the case are that the deal, as it is right now, is unprofitable - Farmers won't be able to pay the fees. The conclusion is that Calex still thinks that the deal will be profitable.

    What you need to do now is think about the argument before rushing to the statements: If the situation as it is now is unprofitable, then Calex is assuming the existence of some outside factor that will change the situation to the better. This is what the right answer should do, and it doesn't really matter how it does that: an answer choice that states that Caladia's government provides tax benefits to companies servicing this remote region will also be correct, even though it is completely out of scope of the argument, because it does what the right answer should do: provide some new insight that will change the playing field and turn an unprofitable deal into a potentially profitable one. B is then eliminated because it does not change the situation to the better - it provides an assumption to support A, but B itself simply does not match your prediction.

    Take home message: Come up with your own prediction of what the right answer should do and measure the answer choices against it, but don't worry too much about how it does it specifically.

    If more than one answer choice goes in the right direction,
    1) reread them carefully to see if they both indeed do what you think they do - confusng phrasing may sometimes mask the fact that one of them, while using the right words, is actually irrelelvant.
    2) think about which one of them requires more assumptions or additional step than the other.

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    Post Wed May 02, 2012 4:01 am
    Geva@MasterGMAT wrote:
    Dangerous Dude wrote:
    A....

    It gives the alternate way through which coffee producers could be profitable through service leading to profit for service provider
    Very true.

    bubbliiiiiiii, the key to CR questions is to spend some time with the argument (after you've broken it down to premises and conclusion, before you rush to the answer choices) and come up with your own broad definition of what the right answer should do, or which direction it should take. The broader the definition, the higher the chance that you will recognize the correct answer, which, though not exactly what you had in mind, still does what you expect it to do. The side benefit of this is taht you can then quickly eliminate irrelevant answer choices such as B.

    The facts of the case are that the deal, as it is right now, is unprofitable - Farmers won't be able to pay the fees. The conclusion is that Calex still thinks that the deal will be profitable.

    What you need to do now is think about the argument before rushing to the statements: If the situation as it is now is unprofitable, then Calex is assuming the existence of some outside factor that will change the situation to the better. This is what the right answer should do, and it doesn't really matter how it does that: an answer choice that states that Caladia's government provides tax benefits to companies servicing this remote region will also be correct, even though it is completely out of scope of the argument, because it does what the right answer should do: provide some new insight that will change the playing field and turn an unprofitable deal into a potentially profitable one. B is then eliminated because it does not change the situation to the better - it provides an assumption to support A, but B itself simply does not match your prediction.

    Take home message: Come up with your own prediction of what the right answer should do and measure the answer choices against it, but don't worry too much about how it does it specifically.

    If more than one answer choice goes in the right direction,
    1) reread them carefully to see if they both indeed do what you think they do - confusng phrasing may sometimes mask the fact that one of them, while using the right words, is actually irrelelvant.
    2) think about which one of them requires more assumptions or additional step than the other.
    Thanks for the detailed explanation. However, I think about A differently. When reading A, I marked it as a weakening answer because if the farmers are ripped off by local buyers, how can they have money to afford the service fee.

    I know that if we continue to read more, we will see that the phone will enable the farmers to make more profit, but at the moment, they cannot afford the service fee, so how can they subscribe to any cellphone plan to make the profit to pay for the plan? Sounds like one needs to happens before another and in this case, I lean toward the fact that the farmers currently don't have enough money. This fact takes the priority.

    What is your opinion?

    Gaurav 2013-fall Really wants to Beat The GMAT! Default Avatar
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    Post Wed May 09, 2012 11:31 pm
    good question .

    ihatemaths Really wants to Beat The GMAT! Default Avatar
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    Post Fri May 11, 2012 9:02 pm
    Though A is very broad , it is the only option that strengthens , saying calex can recoup or earn profits only when farmers get more money from coffee sales than they get now.

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    Post Sat May 12, 2012 12:46 am
    +1 A

    With a cell phone, the farmers could negotiate better prices for their products. So, they would pay the cell phone service in order to make profits.

    ankita1709 Really wants to Beat The GMAT! Default Avatar
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    Post Sat May 12, 2012 1:09 am
    catennacio wrote:
    Geva@MasterGMAT wrote:
    Dangerous Dude wrote:
    A....

    It gives the alternate way through which coffee producers could be profitable through service leading to profit for service provider
    Very true.

    bubbliiiiiiii, the key to CR questions is to spend some time with the argument (after you've broken it down to premises and conclusion, before you rush to the answer choices) and come up with your own broad definition of what the right answer should do, or which direction it should take. The broader the definition, the higher the chance that you will recognize the correct answer, which, though not exactly what you had in mind, still does what you expect it to do. The side benefit of this is taht you can then quickly eliminate irrelevant answer choices such as B.

    The facts of the case are that the deal, as it is right now, is unprofitable - Farmers won't be able to pay the fees. The conclusion is that Calex still thinks that the deal will be profitable.

    What you need to do now is think about the argument before rushing to the statements: If the situation as it is now is unprofitable, then Calex is assuming the existence of some outside factor that will change the situation to the better. This is what the right answer should do, and it doesn't really matter how it does that: an answer choice that states that Caladia's government provides tax benefits to companies servicing this remote region will also be correct, even though it is completely out of scope of the argument, because it does what the right answer should do: provide some new insight that will change the playing field and turn an unprofitable deal into a potentially profitable one. B is then eliminated because it does not change the situation to the better - it provides an assumption to support A, but B itself simply does not match your prediction.

    Take home message: Come up with your own prediction of what the right answer should do and measure the answer choices against it, but don't worry too much about how it does it specifically.

    If more than one answer choice goes in the right direction,
    1) reread them carefully to see if they both indeed do what you think they do - confusng phrasing may sometimes mask the fact that one of them, while using the right words, is actually irrelelvant.
    2) think about which one of them requires more assumptions or additional step than the other.
    Thanks for the detailed explanation. However, I think about A differently. When reading A, I marked it as a weakening answer because if the farmers are ripped off by local buyers, how can they have money to afford the service fee.

    I know that if we continue to read more, we will see that the phone will enable the farmers to make more profit, but at the moment, they cannot afford the service fee, so how can they subscribe to any cellphone plan to make the profit to pay for the plan? Sounds like one needs to happens before another and in this case, I lean toward the fact that the farmers currently don't have enough money. This fact takes the priority.

    What is your opinion?
    Very true. I thought the same way. A option suggests more of the futuristic view.It might or might not get true and it seems quite unlikely that a coffee producer who can't even afford the monthly fee will get a cellular phone connection in the first place.

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    Post Sat May 12, 2012 2:25 am
    The Calex Telecommunications Company is planning to introduce cellular telephone service into isolated coastal areas of Caladia, a move which will require considerable investment. However, the only significant economic activity in these areas is small-scale coffee farming, and none of the coffee farmers make enough money to afford the monthly service fees that Calex would have to charge to make a profit. Nevertheless, Calex contends that making the service available to these farmers will be profitable.

    Conclusion:
    making the service available ---> Calex will be profitable.

    Pre-thinking:
    In the current scenario, people cannot afford the service. "making the service available" should bring about some change(OA:A) in the current scenario, which will help the people and continue to use the services. This will increase the profitability of the company under discussion. when practicing CR, reason and find out different ways to strengthen or weaken the argument.For example in this question another correct AO could be one that speaks about future customers (i.e 80% of the population are now college graduate who are expected to start new companies or earn large sums of money..Then they could afford the service.)

    (A) Currently, Caladian coffee farmers are forced to sell their coffee to local buyers at whatever price those buyers choose to pay because the farmers are unable to remain in contact with outside buyers who generally offer higher prices.
    (B) In the coastal areas of Caladia where Calex proposes to introduce cellular telephone service, there is currently no fixed-line telephone service because fixed-line companies do not believe that they could recoup their investment. Not relevant to conclusion. Speaks about some other entity(fixed line) not relevant to discussion.
    (C) A cellular telephone company can break even with a considerably smaller number of subscribers than a fixed-line company can, even in areas such as the Caladian coast, where there is no difficult terrain to drive up the costs of installing fixed lines. Speaks about Cellular vs Fixed line. NOT RELEVANT
    (D) Calex bases its monthly fees for cellular telephone service in a given region partly on the cost of installing the necessary equipment to provide the service there. It is clearly given in the premise that they cannot afford.
    (E) Calex has for years made a profit on cellular telephone service in Caladia's capital city, which is not far from the coastal region. Not Relevant to conclusion. This one contrasts city vs coastal region

    In CR, pre-thinking helps to save time and to be confident of the answer option. POE should be used as a secondary skill/strategy in CR. Problem with most test takers is they use POE as the primary skill on CR and waste a lot of time in answer options. The section is called Critical "Reasoning" and most test takers do not use their reasoning or logical thinking on CR section instead they follow a set of rules for Correct answers and incorrect answers. Check out Ron's video on how to prepare for CR section. He strongly advises against following a set of rules for CR section.
    Do check out my earlier post http://www.beatthegmat.com/the-answer-to-this-question-surprised-me-please-help-t110793.html#467125

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