MGMAT Exam Question

Forum Index GMAT Verbal & Essays

New MBA Student Life Forum: Ask your questions to current MBA students from Harvard, Stanford, Wharton, Kellogg and Haas

Post new topic   Reply to topic

Spring599
Just gettin' started!



Joined: 30 Mar 2008
Posts: 8

Thanks given: 0
Thanked 0 times in 0 posts
Topic: MGMAT Exam Question
PostWed Sep 30, 2009 12:32 pm Reply with quote
Can someone please explain how this answer makes sense. Just one of the reasons why I dislike GMAT's verbal section (I think MGMAT offers exceptional guides, so I I am not biased)

Country X imposes heavy tariffs on imported manufactured goods. Company Y has determined that it could increase its profits in the long term by opening a factory in Country X to manufacture the goods that it currently produces in its home country for sale in Country X.

For Company Y's determination to be true, which of the following assumptions must also be true?

A Company Y will be able to obtain all the necessary permits to open a factory in Country X.

B Company Y currently produces no goods outside its home country.

C A sustainable market for Company Y's goods currently exists in Country X.

D Company Y's home country does not impose tariffs on imported goods.

E Labor costs in Country X are lower than those in Company Y's home country.

Correct answer is C.

The question states that the company already manufactures this product in its home country for sale in Country X. The sale of a product would indicate that a market already exists. In my opinion, this answer lacks any logic.
Back to top
View user's profile Send private message
akhilkathuria
Just gettin' started!



Joined: 13 Oct 2008
Posts: 12

Thanks given: 1
Thanked 0 times in 0 posts

Test Date: 27 October 2009
Target GMAT Score: 750+
PostThu Oct 01, 2009 12:57 pm Reply with quote
Answer C is correct,
It doesnt say that company Y exports stuff to country X.
i means question doesnt state that
Back to top
View user's profile Send private message
Spring599
Just gettin' started!



Joined: 30 Mar 2008
Posts: 8

Thanks given: 0
Thanked 0 times in 0 posts
PostThu Oct 01, 2009 6:36 pm Reply with quote
I'm pretty sure it does say that.

opening a factory in Country X to manufacture the goods that it currently produces in its home country for sale in Country X

So, we are supposed to assume that the company produces a product for sale in country X, but doesn't actually sell this product to country X? I do not see the logic in this.
Back to top
View user's profile Send private message
mr big
Just gettin' started!



Joined: 28 Jul 2008
Posts: 2

Thanks given: 0
Thanked 0 times in 0 posts

Test Date: november 8, 2008
Target GMAT Score: 600
PostFri Oct 16, 2009 5:14 am Reply with quote
what level question is this from MGMAT?
Back to top
View user's profile Send private message
kiennguyen
Rising GMAT Star



Joined: 03 Oct 2009
Posts: 73

Thanks given: 5
Thanked 0 times in 0 posts
PostThu Oct 22, 2009 12:25 am Reply with quote
opening an operation in another country is one of strategies which reduce cost of production. however, it should be known whether this strategy will generate benefits in the long term. in this situation, C & E together should be a good answer.
Back to top
View user's profile Send private message
enniguy
Really wants to Beat The GMAT!



Joined: 19 Jul 2008
Posts: 148

Thanks given: 4
Thanked 6 times in 6 posts
PostMon Oct 26, 2009 8:54 pm Reply with quote
Spring599 wrote:
I'm pretty sure it does say that.

opening a factory in Country X to manufacture the goods that it currently produces in its home country for sale in Country X

So, we are supposed to assume that the company produces a product for sale in country X, but doesn't actually sell this product to country X? I do not see the logic in this.
Focus on the term "long Term" in the question. The corresponding requirement in the assumption should be "sustainable".
E.g:- Selling shoes in a village of 10 families might be profitable but is it worth investing a manufacturing plant for those 10 families?
Back to top
View user's profile Send private message
Display posts from previous:   

Post new topic   Reply to topic All times are GMT - 8 Hours
Page 1 of 1