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Register now and save up to $200 Available with Beat the GMAT members only code • 1 Hour Free BEAT THE GMAT EXCLUSIVE Available with Beat the GMAT members only code ## GMATPrep QP1 : Sol Citrus, a small orchard that produces This topic has 2 expert replies and 0 member replies ### Top Member NandishSS Master | Next Rank: 500 Posts Joined 05 Jun 2015 Posted: 275 messages Followed by: 1 members Thanked: 3 times #### GMATPrep QP1 : Sol Citrus, a small orchard that produces Tue Sep 26, 2017 2:58 am Elapsed Time: 00:00 • Lap #[LAPCOUNT] ([LAPTIME]) Sol Citrus, a small orchard that produces only organic citrus fruit, has faced new competition ever since Mega Citrus, a much larger orchard from a neighboring state, began shipping fruit across state lines. In an attempt to increase its market share and take business away from Sol Citrus, Mega Citrus recently began competing directly with Sol Citrus at local farmers’ markets, selling non-organic oranges at a price per pound that is 30% lower than Sol Citrus’s current price. Although most of the patrons of those farmers' markets consider low prices to be a priority when selecting fruit, the owners of Sol Citrus have decided that they will not lower current orange prices in response to Mega Citrus's move. Which of the following, if true, best explains Sol Citrus’s decision not to lower prices? (A) Some consumers consider higher prices to a be a sign of higher quality. (B) In each of the five years before Mega Citrus began shipping fruit across state lines, sales of Sol Citrus oranges at local farmers' markets exceeded combined sales of oranges from all other orchards selling fruit at the markets. (C) If Sol Citrus were to lower its prices by just 20%, most of its regular farmers' market customers would continue buying Sol Citrus oranges instead of Mega Citrus oranges. (D) When purchasing citrus fruit, most customers of the farmers' markets consider the fruit’s classification as "organic" to be more important than the cost of the fruit. (E) Unlike Sol Citrus, Mega Citrus grows genetically modified fruits sprayed with pesticides that are illegal in the state in which Sol Citrus is located. OA: D Need free GMAT or MBA advice from an expert? Register for Beat The GMAT now and post your question in these forums! ### GMAT/MBA Expert DavidG@VeritasPrep Legendary Member Joined 14 Jan 2015 Posted: 2292 messages Followed by: 115 members Thanked: 1061 times GMAT Score: 770 Tue Sep 26, 2017 9:08 am NandishSS wrote: Sol Citrus, a small orchard that produces only organic citrus fruit, has faced new competition ever since Mega Citrus, a much larger orchard from a neighboring state, began shipping fruit across state lines. In an attempt to increase its market share and take business away from Sol Citrus, Mega Citrus recently began competing directly with Sol Citrus at local farmers’ markets, selling non-organic oranges at a price per pound that is 30% lower than Sol Citrus’s current price. Although most of the patrons of those farmers' markets consider low prices to be a priority when selecting fruit, the owners of Sol Citrus have decided that they will not lower current orange prices in response to Mega Citrus's move. Which of the following, if true, best explains Sol Citrus’s decision not to lower prices? (A) Some consumers consider higher prices to a be a sign of higher quality. (B) In each of the five years before Mega Citrus began shipping fruit across state lines, sales of Sol Citrus oranges at local farmers' markets exceeded combined sales of oranges from all other orchards selling fruit at the markets. (C) If Sol Citrus were to lower its prices by just 20%, most of its regular farmers' market customers would continue buying Sol Citrus oranges instead of Mega Citrus oranges. (D) When purchasing citrus fruit, most customers of the farmers' markets consider the fruit’s classification as "organic" to be more important than the cost of the fruit. (E) Unlike Sol Citrus, Mega Citrus grows genetically modified fruits sprayed with pesticides that are illegal in the state in which Sol Citrus is located. OA: D The scenario: Sol Citrus sells organic/ more expensive fruit Mega Citrus sells non-organic cheaper fruit Why might Sol Citrus continue to dominate the market? Well, the choice is between cost-savings (Mega Citrus) and getting organic produce (Sol Citrus.) If consumers care enough about getting organic produce that they're willing to pay more for their fruit, Sol Citrus' plan not to lower prices makes perfect sense. Put another way, if consumers are determined to buy organic, any product that isn't organic isn't going to serve as competition, no matter the cost savings. The answer is D _________________ Veritas Prep | GMAT Instructor Veritas Prep Reviews Save$100 off any live Veritas Prep GMAT Course

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Tue Sep 26, 2017 11:01 am
NandishSS wrote:
Sol Citrus, a small orchard that produces only organic citrus fruit, has faced new competition ever since Mega Citrus, a much larger orchard from a neighboring state, began shipping fruit across state lines. In an attempt to increase its market share and take business away from Sol Citrus, Mega Citrus recently began competing directly with Sol Citrus at local farmers’ markets, selling non-organic oranges at a price per pound that is 30% lower than Sol Citrus’s current price. Although most of the patrons of those farmers' markets consider low prices to be a priority when selecting fruit, the owners of Sol Citrus have decided that they will not lower current orange prices in response to Mega Citrus's move.

Which of the following, if true, best explains Sol Citrus’s decision not to lower prices?

(A) Some consumers consider higher prices to a be a sign of higher quality.
(B) In each of the five years before Mega Citrus began shipping fruit across state lines, sales of Sol Citrus oranges at local farmers' markets exceeded combined sales of oranges from all other orchards selling fruit at the markets.
(C) If Sol Citrus were to lower its prices by just 20%, most of its regular farmers' market customers would continue buying Sol Citrus oranges instead of Mega Citrus oranges.
(D) When purchasing citrus fruit, most customers of the farmers' markets consider the fruit’s classification as "organic" to be more important than the cost of the fruit.
(E) Unlike Sol Citrus, Mega Citrus grows genetically modified fruits sprayed with pesticides that are illegal in the state in which Sol Citrus is located.
Fact 1:
Mega Citrus recently began competing directly with Sol Citrus at local farmers’ markets, selling non-organic oranges at a price that is 30% lower than Sol Citrus’s current price.
Fact 2:
Sol Citrus, a small orchard that produces only organic citrus fruit, has decided not lower its price in response to Mega Citrus's move..

The correct answer must explain why Sol Citrus has decided not to lower its price.

D: Most customers of the farmers' markets consider the fruit’s classification as "organic" to be more important than the cost of the fruit.
Since Sol Citrus's fruit is organic, while Mega Citrus's fruit is not -- and this distinction is more important to consumers than price -- there is no reason for Sol Citrus to lower its price.

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