The Tulips electronics manufacturer came out with a revamped

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The Tulips electronics manufacturer came out with a revamped version of a radio they had once produced. The older model had excellent sound quality. The new version had a more attractive design and was fitted with a display screen. The management department was extremely pleased with the record-high sales figures produced by the new radio although the finance department claimed that the profit earned by the old radio in the same amount of time was higher by two-thirds.

Which of the following inferences is best supported by the statement made above?

A) The screen fitted to the new radios increased its production cost, resulting in a lower profit.
B) Although the new model was cheaper to produce, its marketing proved to be very expensive.
C) The revenues earned by the old model were two-thirds higher than those earned by the new model.
D) Although it had excellent sound quality, the older model cost Tulips less.
E) Even though the sales figures of the new radio were extremely high, those enjoyed by the older model had been even higher.

OA D

Source: Economist Gmat
Source: — Critical Reasoning |

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by deloitte247 » Thu Aug 08, 2019 8:50 am

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Here, we need to find the option that best supports this statement.
Explanation: The new model radio comes with an attractive design and display screen, which makes its cost of production more than the older model. However, the profit generated by the older model is two-third more than the profit generated by the new model in the same amount of time, despite the high sales recorded for the new model radio in the same period.

OPTION A - INCORRECT
This inference is not totally true because the company recorded a massive sales from the new radios within a specified period. Other factors, such as the cost of the product or sales could be responsible for the lower profit. It's absolutely not because of the screen fitted to the new radio.

OPTION B - INCORRECT
The addition of extra features, such as design and screen will only lead to increases in the cost of production. Also, the high sales record further proved that the products are not extremely expensive but rather affordable.

OPTION C - INCORRECT
The two-third revenue increase-gap of the older model over the new model was specified for the same amount of time which the old model and new model were released respectively. It doesn't state if it is true for long-term income generation.

OPTION D - CORRECT
Yes, this expression is quite true because the older model comes with lesser features as compared to the new model, and this, in turns, makes its cost of production less for Tulips electronics.

OPTION E - INCORRECT
The statement didn't emphasize or give a satisfactory report from the purchasers of these products. So, this is not true.