Critical Reasoning

Last year, construction in the city of Vonter, including the rewiring of telephone and cable lines, caused the cost of providing cable television service to homes within the city to increase by 12 percent as compared to the previous year. In response, all cable companies in the city increased the price of their monthly service to customer. Broadcast Television Cable Company has found, however, that the proportion of cable bills paid on time decreased sharply the six months after raising the price of monthly service but returned to the previous year's level by the end of the year.

Which of the following, if true, most helps to explain the change between the first half and the second half of the year in the proportion of cable bills not paid on time to Broadcast Television Cable Company?

(A) The total number of homes subscribing to cable service within Vonter increased between the first and second half of the year.
(B) Between the first and second half of the year, Broadcast Television Cable Company, unlike other cable service providers in Vonter, increased the number of channels that it offers to customers.
(C) Because Broadcast Television Cable Company provides only a premium cable package, a large portion of its subscribers who could no longer afford this package switched to another provider by the second half of the year.
(D) In order to attract more subscribers, all cable service providers in Vonter offered promotional sign-up packages that began in the second half of the year.
(E) The rewiring of telephone and cable lines in Vonter caused other businesses, such as telephone companies that
had provided service to landlines, to suffer, and thus many workers in Vonter were laid off immediately after the construction was completed


[spoiler]OA C:
Discrepancy is why there was a fall in bills paid in the 1st 6 months and why it returned to the previous year's level by the end of the year.
In C, if people have switched,then how it was back to normal?[/spoiler]

Well the discrepancy is actually not on overall bills paid, but on bills paid on time. For the first six months, because subscribers could not afford the premium package, a lot of customers did not pay on time thus increasing the proportion of late payers/ defaulters. Here late payers and defaulters are classed in the same category of not paying bills on time. In the next six months this group of people moved to another provider and hence people who can afford the pay more or less remained. Hope this helps.

Ans C: Reason: Let us assume that there were 100 customers with Broadcast cable and there were 20 people who were not paying the bills on time. So 20% were not paying on time.

After the price was increased, 16 more people were struggling to pay the price so now 20 + 16 people were not paying the bill on time. So 36% people were not paying on time. If 20 people decide to change subscribers who were not able to keep up with increased prices or did not like the hike, then total customer base = 80. Let the new late payers be 16 and on time payers be 64 then the percentage is back to 20%

I hope this mathematical solution makes more sense now.

abhi84v wrote:Well the discrepancy is actually not on overall bills paid, but on bills paid on time. For the first six months, because subscribers could not afford the premium package, a lot of customers did not pay on time thus increasing the proportion of late payers/ defaulters. Here late payers and defaulters are classed in the same category of not paying bills on time. In the next six months this group of people moved to another provider and hence people who can afford the pay more or less remained. Hope this helps.

Hey thanks....got it..I missed the point completely

dinesh19aug wrote:Ans C: Reason: Let us assume that there were 100 customers with Broadcast cable and there were 20 people who were not paying the bills on time. So 20% were not paying on time.

After the price was increased, 16 more people were struggling to pay the price so now 20 + 16 people were not paying the bill on time. So 36% people were not paying on time. If 20 people decide to change subscribers who were not able to keep up with increased prices or did not like the hike, then total customer base = 80. Let the new late payers be 16 and on time payers be 64 then the percentage is back to 20%

I hope this mathematical solution makes more sense now.

Got it man...
thank you