Daisy’s Lemonade

Expert replies

madhur_ahuja: Master | Next Rank: 500 Posts; Posts: 435; Joined: Sat May 02, 2009 3:55 am; Thanked: 17 times

by madhur_ahuja » Tue Aug 11, 2009 5:08 am

On Monday, Daisy’s Lemonade Stand sold lemonade at 20 cents per cup. The Lemon Shack sold lemonade at 30 cents per cup. At the end of the day, Daisy’s Lemonade Stand and the Lemon Shack reported identical revenues and identical profits.

The statements above best support which of the following assertions?
On Monday, Daisy’s Lemonade Stand sold fewer cups of lemonade than did the Lemon Shack.
The Lemon Shack sells higher quality lemonade than does Daisy’s Lemonade Stand.
On Monday, Daisy’s Lemonade Stand and the Lemon Shack incurred identical costs to run their businesses.
In general, lemonade consumers prefer the lemonade at Daisy’s Lemonade Stand to the Lemonade at the Lemon Shack.
The Lemon Shack would not increase its revenues by lowering its prices.

Source: Beat The GMAT — Critical Reasoning | Tue Aug 11, 2009 5:08 am

ankit1383: Master | Next Rank: 500 Posts; Posts: 159; Joined: Sun Jul 27, 2008 8:41 pm; Thanked: 3 times

Re: Daisy’s Lemonade

by ankit1383 » Tue Aug 11, 2009 5:20 am

IMO C
Since they have identical profits and identical revenue.. cost is identical

Revenue-Profit=Cost

HTH

vikram_k51: Master | Next Rank: 500 Posts; Posts: 208; Joined: Sat Jan 31, 2009 11:32 am; Location: Mumbai; Thanked: 2 times

by vikram_k51 » Tue Aug 11, 2009 11:09 am

On Monday, Daisy’s Lemonade Stand sold lemonade at 20 cents per cup. The Lemon Shack sold lemonade at 30 cents per cup. At the end of the day, Daisy’s Lemonade Stand and the Lemon Shack reported identical revenues and identical profits.

The statements above best support which of the following assertions?
On Monday, Daisy’s Lemonade Stand sold fewer cups of lemonade than did the Lemon Shack.
The Lemon Shack sells higher quality lemonade than does Daisy’s Lemonade Stand.
On Monday, Daisy’s Lemonade Stand and the Lemon Shack incurred identical costs to run their businesses.
In general, lemonade consumers prefer the lemonade at Daisy’s Lemonade Stand to the Lemonade at the Lemon Shack.
The Lemon Shack would not increase its revenues by lowering its prices.

arjunnattar: Junior | Next Rank: 30 Posts; Posts: 16; Joined: Thu Oct 12, 2006 12:00 am; Location: India

by arjunnattar » Tue Aug 11, 2009 12:43 pm

I thought it was D since Daisy showed same amount of revenue and Profit and it is possible only if more Lemonade is consumed in Daisy's than the Shack's.

Warm regs,
Arjun

real2008: Legendary Member; Posts: 527; Joined: Thu May 01, 2008 12:06 am; Thanked: 7 times

by real2008 » Tue Aug 11, 2009 1:01 pm

vikram_k51 wrote:On Monday, Daisy’s Lemonade Stand sold lemonade at 20 cents per cup. The Lemon Shack sold lemonade at 30 cents per cup. At the end of the day, Daisy’s Lemonade Stand and the Lemon Shack reported identical revenues and identical profits.

The statements above best support which of the following assertions?
On Monday, Daisy’s Lemonade Stand sold fewer cups of lemonade than did the Lemon Shack.
The Lemon Shack sells higher quality lemonade than does Daisy’s Lemonade Stand.
On Monday, Daisy’s Lemonade Stand and the Lemon Shack incurred identical costs to run their businesses.
In general, lemonade consumers prefer the lemonade at Daisy’s Lemonade Stand to the Lemonade at the Lemon Shack.
The Lemon Shack would not increase its revenues by lowering its prices.

ur choosing ob B addresses 'identical revenues' but how does it justify for 'identical profit' unless u r sure of 'identical cost'

crackgmat007: Legendary Member; Posts: 882; Joined: Fri Feb 20, 2009 2:57 pmFollowed by: 1 member; Thanked: 15 times; GMAT Score:690

by crackgmat007 » Tue Aug 11, 2009 1:09 pm

IMO - C since stimulus states that both have identical revenues and profits.

pandeyvineet24: Legendary Member; Posts: 527; Joined: Mon Jun 02, 2008 9:14 am; Location: Atlanta; Thanked: 17 times

by pandeyvineet24 » Tue Aug 11, 2009 1:22 pm

IMO C
I think both B is out of scope it describes the quality of lemonade,argument never talks about the quality of lemonade
In i think it goes far too beyond, argument lacks enough data to make that assertion (may be there are only 3 customers for Daisy and 2 for lemonade)

Madhur, Please post OA ?

arorag: Master | Next Rank: 500 Posts; Posts: 343; Joined: Mon Jan 21, 2008 3:28 pm; Thanked: 4 times

by arorag » Tue Aug 11, 2009 5:49 pm

it has to be
profit= rev.-cost
and it profit and rev are same then cost has to be same

madhur_ahuja: Master | Next Rank: 500 Posts; Posts: 435; Joined: Sat May 02, 2009 3:55 am; Thanked: 17 times

by madhur_ahuja » Tue Aug 11, 2009 8:05 pm

OA is C , Thanks all

eaakbari: Master | Next Rank: 500 Posts; Posts: 435; Joined: Mon Mar 15, 2010 6:15 amFollowed by: 1 member; Thanked: 32 times

by eaakbari » Fri Dec 28, 2012 3:28 pm

madhur_ahuja wrote:On Monday, Daisyï¿½s Lemonade Stand sold lemonade at 20 cents per cup. The Lemon Shack sold lemonade at 30 cents per cup. At the end of the day, Daisyï¿½s Lemonade Stand and the Lemon Shack reported identical revenues and identical profits.

The statements above best support which of the following assertions?
On Monday, Daisyï¿½s Lemonade Stand sold fewer cups of lemonade than did the Lemon Shack.
The Lemon Shack sells higher quality lemonade than does Daisyï¿½s Lemonade Stand.
On Monday, Daisyï¿½s Lemonade Stand and the Lemon Shack incurred identical costs to run their businesses.
In general, lemonade consumers prefer the lemonade at Daisyï¿½s Lemonade Stand to the Lemonade at the Lemon Shack.
The Lemon Shack would not increase its revenues by lowering its prices.

Experts,

Isn't this question ill-framed and vague.

Clearly D is a good answer choice

It's fair to assume that since customers prefer Daisy over Shack, Daisy would sell more cups.
And since Daisy sells at 20cents & Shack at 30cents, we need to show that daisy sold more to make the revenue equal.

Choice C can also be substantiated but is weaker as the costs being the same, and selling the same number of cups, Shack > Daisy.

M thirsty now.

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