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A large number of customers will pay

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A large number of customers will pay

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Coffee shop owner: A large number of customers will pay at least the fair market value for a cup of coffee, even if there is no formal charge. Some will pay more than this out of appreciation of the trust that is placed in them. And our total number of customers is likely to increase. We could therefore improve our net cash flow by implementing an honor system in which customers pay what they wish for coffee by depositing money in a can.Manager: We're likely to lose money on this plan. Many customers would cheat the system, paying a very small sum or nothing at all.Which of the following, if true, would best support the owner’s plan, in light of the manager’s concern?

(A) The new system if implemented, would increase the number of customers.

(B) By roasting its own coffee, the shop has managed to reduce the difficulties and cost of maintaining an
inventory of freshly roasted coffee.

(C) Many customers stay in the cafe for long stretches of time.

(D) The shop makes a substantial profit from pastries and other food bought by the coffee drinkers.

(E) No other coffee shop in the area has such a system.

D

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AbeNeedsAnswers wrote:
Coffee shop owner: A large number of customers will pay at least the fair market value for a cup of coffee, even if there is no formal charge. Some will pay more than this out of appreciation of the trust that is placed in them. And our total number of customers is likely to increase. We could therefore improve our net cash flow by implementing an honor system in which customers pay what they wish for coffee by depositing money in a can.Manager: We're likely to lose money on this plan. Many customers would cheat the system, paying a very small sum or nothing at all.Which of the following, if true, would best support the owner’s plan, in light of the manager’s concern?

(A) The new system if implemented, would increase the number of customers.

(B) By roasting its own coffee, the shop has managed to reduce the difficulties and cost of maintaining an
inventory of freshly roasted coffee.

(C) Many customers stay in the cafe for long stretches of time.

(D) The shop makes a substantial profit from pastries and other food bought by the coffee drinkers.

(E) No other coffee shop in the area has such a system.

D
Owner's idea: let people pay what they want for coffee
Manager's concern: people may pay very little or nothing at all.

We want to support the owner's plan while taking the manager's concern into account. So how could the plan work if the manager is correct that people will underpay for coffee? Well, what if the coffee is a kind of loss-leader? If the shop loses money on coffee, but makes enough from selling other items to offset that loss, the plan would still succeed. This is the idea presented in D.

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DavidG@VeritasPrep wrote:
AbeNeedsAnswers wrote:
Coffee shop owner: A large number of customers will pay at least the fair market value for a cup of coffee, even if there is no formal charge. Some will pay more than this out of appreciation of the trust that is placed in them. And our total number of customers is likely to increase. We could therefore improve our net cash flow by implementing an honor system in which customers pay what they wish for coffee by depositing money in a can.Manager: We're likely to lose money on this plan. Many customers would cheat the system, paying a very small sum or nothing at all.Which of the following, if true, would best support the owner’s plan, in light of the manager’s concern?

(A) The new system if implemented, would increase the number of customers.

(B) By roasting its own coffee, the shop has managed to reduce the difficulties and cost of maintaining an
inventory of freshly roasted coffee.

(C) Many customers stay in the cafe for long stretches of time.

(D) The shop makes a substantial profit from pastries and other food bought by the coffee drinkers.

(E) No other coffee shop in the area has such a system.

D
Owner's idea: let people pay what they want for coffee
Manager's concern: people may pay very little or nothing at all.

We want to support the owner's plan while taking the manager's concern into account. So how could the plan work if the manager is correct that people will underpay for coffee? Well, what if the coffee is a kind of loss-leader? If the shop loses money on coffee, but makes enough from selling other items to offset that loss, the plan would still succeed. This is the idea presented in D.
If the question is not to ask us consider manger's concern, wouldn't the OA be a weakener to owner's plan alone ?

because owner considers that 'pay as you wish' model is likely to generate more revenue. whereas, OA states other revenues stream, like pasteries and other food, that boost the revenue. by doing so, OA is offering alternate sources of income to that suggested by the owner. so, It would be weakener( if owner's plan alone is considered)

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gocoder wrote:
DavidG@VeritasPrep wrote:
AbeNeedsAnswers wrote:
Coffee shop owner: A large number of customers will pay at least the fair market value for a cup of coffee, even if there is no formal charge. Some will pay more than this out of appreciation of the trust that is placed in them. And our total number of customers is likely to increase. We could therefore improve our net cash flow by implementing an honor system in which customers pay what they wish for coffee by depositing money in a can.Manager: We're likely to lose money on this plan. Many customers would cheat the system, paying a very small sum or nothing at all.Which of the following, if true, would best support the owner’s plan, in light of the manager’s concern?

(A) The new system if implemented, would increase the number of customers.

(B) By roasting its own coffee, the shop has managed to reduce the difficulties and cost of maintaining an
inventory of freshly roasted coffee.

(C) Many customers stay in the cafe for long stretches of time.

(D) The shop makes a substantial profit from pastries and other food bought by the coffee drinkers.

(E) No other coffee shop in the area has such a system.

D
Owner's idea: let people pay what they want for coffee
Manager's concern: people may pay very little or nothing at all.

We want to support the owner's plan while taking the manager's concern into account. So how could the plan work if the manager is correct that people will underpay for coffee? Well, what if the coffee is a kind of loss-leader? If the shop loses money on coffee, but makes enough from selling other items to offset that loss, the plan would still succeed. This is the idea presented in D.
If the question is not to ask us consider manger's concern, wouldn't the OA be a weakener to owner's plan alone ?

because owner considers that 'pay as you wish' model is likely to generate more revenue. whereas, OA states other revenues stream, like pasteries and other food, that boost the revenue. by doing so, OA is offering alternate sources of income to that suggested by the owner. so, It would be weakener( if owner's plan alone is considered)
If we don't consider the manager's concern, the plan is still a good one if more customers are inclined to come into the coffee shop in response to the new policy. If the shop is making large profits on pastries and it's not losing money on coffee as a result of this new plan, wouldn't that scenario be even better for the bottom line? Remember that the argument is about improving net cash flow overall, not about improving net cash flow from coffee sales.

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