BTGModeratorVI wrote: ↑Mon Jul 13, 2020 7:55 am
What was a certain company's revenue last year?
(1) Last year gross profit was $4,100
(2) Last year revenue was 50% greater than expenses
Answer:
C
Source: GMATPrep
Target question: What was a certain company's revenue last year?
Key concept: revenue - expenses = profit
Statement 1: Last year gross profit was $4,100
Since we have no information about the expenses, there is no way we can answer the target question.
Statement 1 is NOT SUFFICIENT
If you're not convinced consider these two possible cases that satisfy statement 1:
Case a: expenses = $1000 and profit = $4100. Since
revenue - expenses = profit, we can write:
revenue - $1000 = $4100, which means
revenue = $5100
Case b: expenses = $2000 and profit = $4100. Since
revenue - expenses = profit, we can write:
revenue - $2000 = $4100, which means
revenue = $6100
Since we cannot answer the
target question with certainty, statement 1 is NOT SUFFICIENT
Statement 2: Last year revenue was 50% greater than expenses
There are many scenarios that satisfy statement 2. Here are two:
Case a: expenses = $100 and revenue = $150 (notice that revenue is 50% greater than expenses). In this case, the answer to the target question is
revenue = $150
Case b: expenses = $10 and revenue = $15 (notice that revenue is 50% greater than expenses). In this case, the answer to the target question is
revenue = $15
Since we cannot answer the
target question with certainty, statement 2 is NOT SUFFICIENT
Statements 1 and 2 combined
Statement 2 tells us that revenue was 50% greater than expenses. So, if we let
x = expenses, then
1.5x = revenue
Statement 1 tells us that
profit = $4,100
Since
revenue - expenses = profit, we can write:
1.5x - x = $4100
At this point, we COULD solve this equation for x, which means we COULD answer the target question with certainty (of course, on test day, he would never waste our time solving the equation, since we need only determine whether or not we have sufficient information to answer to Target question)
For "fun" let's solve the equation
1.5x - x = $4100
Simplify the left side to get: 0.5x = $4100
Divide both sides by 0.5 to get: x = $8200
Since
1.5x = revenue, we know that the
revenue = 1.5($8200) = $12,300
Since we can answer the
target question with certainty, the combined statements are SUFFICIENT
Answer: C
Cheers,
Brent
