• NEW! FREE Beat The GMAT Quizzes
Hundreds of Questions Highly Detailed Reporting Expert Explanations
• 7 CATs FREE!
If you earn 100 Forum Points

Engage in the Beat The GMAT forums to earn
100 points for $49 worth of Veritas practice GMATs FREE VERITAS PRACTICE GMAT EXAMS Earn 10 Points Per Post Earn 10 Points Per Thanks Earn 10 Points Per Upvote GMATPrep QP1 : Sol Citrus, a small orchard that produces This topic has 2 expert replies and 0 member replies GMATPrep QP1 : Sol Citrus, a small orchard that produces Sol Citrus, a small orchard that produces only organic citrus fruit, has faced new competition ever since Mega Citrus, a much larger orchard from a neighboring state, began shipping fruit across state lines. In an attempt to increase its market share and take business away from Sol Citrus, Mega Citrus recently began competing directly with Sol Citrus at local farmersâ€™ markets, selling non-organic oranges at a price per pound that is 30% lower than Sol Citrusâ€™s current price. Although most of the patrons of those farmers' markets consider low prices to be a priority when selecting fruit, the owners of Sol Citrus have decided that they will not lower current orange prices in response to Mega Citrus's move. Which of the following, if true, best explains Sol Citrusâ€™s decision not to lower prices? (A) Some consumers consider higher prices to a be a sign of higher quality. (B) In each of the five years before Mega Citrus began shipping fruit across state lines, sales of Sol Citrus oranges at local farmers' markets exceeded combined sales of oranges from all other orchards selling fruit at the markets. (C) If Sol Citrus were to lower its prices by just 20%, most of its regular farmers' market customers would continue buying Sol Citrus oranges instead of Mega Citrus oranges. (D) When purchasing citrus fruit, most customers of the farmers' markets consider the fruitâ€™s classification as "organic" to be more important than the cost of the fruit. (E) Unlike Sol Citrus, Mega Citrus grows genetically modified fruits sprayed with pesticides that are illegal in the state in which Sol Citrus is located. OA: D GMAT/MBA Expert Legendary Member Joined 14 Jan 2015 Posted: 2667 messages Followed by: 122 members Upvotes: 1153 GMAT Score: 770 NandishSS wrote: Sol Citrus, a small orchard that produces only organic citrus fruit, has faced new competition ever since Mega Citrus, a much larger orchard from a neighboring state, began shipping fruit across state lines. In an attempt to increase its market share and take business away from Sol Citrus, Mega Citrus recently began competing directly with Sol Citrus at local farmersâ€™ markets, selling non-organic oranges at a price per pound that is 30% lower than Sol Citrusâ€™s current price. Although most of the patrons of those farmers' markets consider low prices to be a priority when selecting fruit, the owners of Sol Citrus have decided that they will not lower current orange prices in response to Mega Citrus's move. Which of the following, if true, best explains Sol Citrusâ€™s decision not to lower prices? (A) Some consumers consider higher prices to a be a sign of higher quality. (B) In each of the five years before Mega Citrus began shipping fruit across state lines, sales of Sol Citrus oranges at local farmers' markets exceeded combined sales of oranges from all other orchards selling fruit at the markets. (C) If Sol Citrus were to lower its prices by just 20%, most of its regular farmers' market customers would continue buying Sol Citrus oranges instead of Mega Citrus oranges. (D) When purchasing citrus fruit, most customers of the farmers' markets consider the fruitâ€™s classification as "organic" to be more important than the cost of the fruit. (E) Unlike Sol Citrus, Mega Citrus grows genetically modified fruits sprayed with pesticides that are illegal in the state in which Sol Citrus is located. OA: D The scenario: Sol Citrus sells organic/ more expensive fruit Mega Citrus sells non-organic cheaper fruit Why might Sol Citrus continue to dominate the market? Well, the choice is between cost-savings (Mega Citrus) and getting organic produce (Sol Citrus.) If consumers care enough about getting organic produce that they're willing to pay more for their fruit, Sol Citrus' plan not to lower prices makes perfect sense. Put another way, if consumers are determined to buy organic, any product that isn't organic isn't going to serve as competition, no matter the cost savings. The answer is D _________________ Veritas Prep | GMAT Instructor Veritas Prep Reviews Save$100 off any live Veritas Prep GMAT Course

Enroll in a Veritas Prep GMAT class completely for FREE. Wondering if a GMAT course is right for you? Attend the first class session of an actual GMAT course, either in-person or live online, and see for yourself why so many students choose to work with Veritas Prep. Find a class now!

GMAT/MBA Expert

GMAT Instructor
Joined
25 May 2010
Posted:
15344 messages
Followed by:
1864 members
13060
GMAT Score:
790
NandishSS wrote:
Sol Citrus, a small orchard that produces only organic citrus fruit, has faced new competition ever since Mega Citrus, a much larger orchard from a neighboring state, began shipping fruit across state lines. In an attempt to increase its market share and take business away from Sol Citrus, Mega Citrus recently began competing directly with Sol Citrus at local farmersâ€™ markets, selling non-organic oranges at a price per pound that is 30% lower than Sol Citrusâ€™s current price. Although most of the patrons of those farmers' markets consider low prices to be a priority when selecting fruit, the owners of Sol Citrus have decided that they will not lower current orange prices in response to Mega Citrus's move.

Which of the following, if true, best explains Sol Citrusâ€™s decision not to lower prices?

(A) Some consumers consider higher prices to a be a sign of higher quality.
(B) In each of the five years before Mega Citrus began shipping fruit across state lines, sales of Sol Citrus oranges at local farmers' markets exceeded combined sales of oranges from all other orchards selling fruit at the markets.
(C) If Sol Citrus were to lower its prices by just 20%, most of its regular farmers' market customers would continue buying Sol Citrus oranges instead of Mega Citrus oranges.
(D) When purchasing citrus fruit, most customers of the farmers' markets consider the fruitâ€™s classification as "organic" to be more important than the cost of the fruit.
(E) Unlike Sol Citrus, Mega Citrus grows genetically modified fruits sprayed with pesticides that are illegal in the state in which Sol Citrus is located.
Fact 1:
Mega Citrus recently began competing directly with Sol Citrus at local farmersâ€™ markets, selling non-organic oranges at a price that is 30% lower than Sol Citrusâ€™s current price.
Fact 2:
Sol Citrus, a small orchard that produces only organic citrus fruit, has decided not lower its price in response to Mega Citrus's move..

The correct answer must explain why Sol Citrus has decided not to lower its price.

D: Most customers of the farmers' markets consider the fruitâ€™s classification as "organic" to be more important than the cost of the fruit.
Since Sol Citrus's fruit is organic, while Mega Citrus's fruit is not -- and this distinction is more important to consumers than price -- there is no reason for Sol Citrus to lower its price.

_________________
Mitch Hunt
Private Tutor for the GMAT and GRE
GMATGuruNY@gmail.com

If you find one of my posts helpful, please take a moment to click on the "UPVOTE" icon.

Available for tutoring in NYC and long-distance.
Student Review #1
Student Review #2
Student Review #3

Free GMAT Practice Test How can you improve your test score if you don't know your baseline score? Take a free online practice exam. Get started on achieving your dream score today! Sign up now.
• Get 300+ Practice Questions

Available with Beat the GMAT members only code

• Magoosh
Study with Magoosh GMAT prep

Available with Beat the GMAT members only code

• 5 Day FREE Trial
Study Smarter, Not Harder

Available with Beat the GMAT members only code

• Free Practice Test & Review
How would you score if you took the GMAT

Available with Beat the GMAT members only code

• Award-winning private GMAT tutoring
Register now and save up to $200 Available with Beat the GMAT members only code • 1 Hour Free BEAT THE GMAT EXCLUSIVE Available with Beat the GMAT members only code • Free Veritas GMAT Class Experience Lesson 1 Live Free Available with Beat the GMAT members only code • 5-Day Free Trial 5-day free, full-access trial TTP Quant Available with Beat the GMAT members only code • FREE GMAT Exam Know how you'd score today for$0

Available with Beat the GMAT members only code

• Free Trial & Practice Exam
BEAT THE GMAT EXCLUSIVE

Available with Beat the GMAT members only code

Top First Responders*

1 Ian Stewart 57 first replies
2 Brent@GMATPrepNow 31 first replies
3 Jay@ManhattanReview 29 first replies
4 GMATGuruNY 21 first replies
5 ceilidh.erickson 15 first replies
* Only counts replies to topics started in last 30 days
See More Top Beat The GMAT Members

Most Active Experts

1 Scott@TargetTestPrep

Target Test Prep

199 posts
2 Max@Math Revolution

Math Revolution

84 posts
3 Brent@GMATPrepNow

GMAT Prep Now Teacher

69 posts
4 Ian Stewart

GMATiX Teacher

65 posts
5 GMATGuruNY

The Princeton Review Teacher

40 posts
See More Top Beat The GMAT Experts