BREAKING: Target Test Prep releases Brand New 2026 On Demand GMAT prep course

Redeem

MGMAT - Cable companies

Expert replies
by acecoolan » Mon Dec 08, 2008 8:58 pm
Most cable television companies currently require customers to subscribe to packages of channels, but consumer groups have recently proposed legislation that would force the companies to offer a la carte pricing. Subscribers would pay less, argue the consumer groups, because they could purchase only the desired channels. However, the cable industry argues that under the current package pricing, popular channels subsidize less-popular ones, providing more options for viewers. For this reason, the industry claims that it is always cheaper for the consumer to purchase many bundled channels than to buy them individually.

Which of the following would be most important for the government to determine before deciding whether to require cable television companies to offer a la carte pricing in order to reduce consumer costs?
a) Whether the total number of channels offered to consumers would decrease, along with programming diversity, as a result of the a la carte pricing structure
b) Whether advertising revenue for the cable television companies would decrease as a result of the a la carte pricing structure
c) Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually
d) Whether cable and satellite companies currently have the ability to buy channels individually from programmers and content providers
e) Whether a la carte subscribers would be required to have new television set-top boxes

OA after some discussion
Join the discussion
Source: — Critical Reasoning |

by ronniecoleman » Tue Dec 09, 2008 1:23 am
IMO C
Admission champion, Hauz khaz
011-27565856
Join the discussion

by raunekk » Tue Dec 09, 2008 2:45 am
i didnt find any of the option convincing enough...
Join the discussion

by poonam1279 » Tue Dec 09, 2008 2:55 am
c) Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually

If the popular channels subsidize less-popular ones. So subscribers get more channels in package than individually.
If in the same price subscribers get less channels would be the question.
Join the discussion

by raunekk » Tue Dec 09, 2008 3:50 am
Most cable television companies currently require customers to subscribe to packages of channels, but consumer groups have recently proposed legislation that would force the companies to offer a la carte pricing. Subscribers would pay less, argue the consumer groups, because they could purchase only the desired channels. However, the cable industry argues that under the current package pricing, popular channels subsidize less-popular ones, providing more options for viewers. For this reason, the industry claims that it is always cheaper for the consumer to purchase many bundled channels than to buy them individually.

argument:the main topic of the argument is "cost" or the price a customer will pay.

though the counter argument here is: Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually


The number of channels in not the issue but the desired channels and price paid by customer is.

thus c) Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually .... cannot be the right choice..!!


"cost" and not "number of channels" is the main theme of the argument...
Join the discussion

by Spring2009 » Tue Dec 09, 2008 4:27 am
raunekk wrote: "cost" and not "number of channels" is the main theme of the argument...
I totally agree, with this in mind, I picked E.
Join the discussion

by mudit_verma » Thu Dec 11, 2008 1:07 am
IMO D

According to cable companies claim that buying bundle of channels is more economical than buying them individually because popular channels subsidize less-popular ones.

We need to decide whether its more economical to buy channels individually, I norrowed down to two option: C or D

C- Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually

This choice is not most covincing as even though the vast majority reduce the number of channels that doesn't confirms that price they will pay for these channels will be reduced.

So better option is D, Govt must find whether it is possible for cable companies to buy channels individually. Although, this choice is not convincing either, but i think its better among the given choices.
Join the discussion

by acecoolan » Thu Dec 11, 2008 2:16 pm
The OA for this is 'C'.

Ronnie - could you explain ur chain of reasoning? You seem to be too good at CR :)
Join the discussion

by ronniecoleman » Sat Dec 13, 2008 11:20 am
well!!

the reasoning behind this is as follows

Govt want to reduce the uneccessary burden of extra cost of channels that people don't want to see.

But So if there are 100 channels and on a average user sees 10-20 then buying them separately would not cost much as compared to buying 100 channels together in bulk.

But what if the viewers watch most of the 100 channels or somewhat near it, then it would be separate buying of around 100 channels and not a single onetime package...

Option C --- clarifies that point..
Admission champion, Hauz khaz
011-27565856
Join the discussion

by nervesofsteel » Sat Dec 13, 2008 11:22 am
C should be it...

Eg channel 1 cost $100
and channel 1 + 100 extra channels cost $200

then by choosing channel 1 only ( significant reduction ) the cost of the subscription has reduced by half ...

Thus cost is affected by number of channels...
Join the discussion

by ashley.com » Fri May 13, 2016 2:24 am
Option C should be the correct answer
Join the discussion