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Manhattan: CR Inference

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Manhattan: CR Inference

by joealam1 » Wed Nov 30, 2016 12:29 am
Due to high jet fuel costs, airline carriers are looking for new ways to increase revenues and thereby counteract declining profits. Airline A has proposed increasing the number of passengers that can fit on its airplanes by creating several standing room only "seats" in which passengers would be propped against a padded backboard and held in place with a harness. This proposal, since it relates to passenger safety, cannot be implemented without prior approval by the Federal Aviation Administration.

The above statements, if true, indicate that Airline A has made which of the following conclusions?

A)The addition of standing room only "seats" will generate more revenue than the cost of ensuring that these seats meet safety standards.
B)The Federal Aviation Administration will approve Airline A's specific proposal.
C)The revenue generated by the addition of standing room only "seats" is greater than the current cost of jet fuel.
D)There are no safer ways in which Airline A can increase revenues.
E)Passenger safety is less important than increasing revenue.

[spoiler]OA:A[/spoiler]
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by ceilidh.erickson » Sat Dec 10, 2016 11:48 am
Whenever you're asked to draw a conclusion (or as in this case, what conclusions have already been drawn), ask yourself what MUST BE TRUE based on the information given.

Based on the information given, if Airline A is proposing "standing seats," then the airline must have concluded that this will increase revenue (we're not asked whether we ourselves agree with this conclusion).

As you're going through the answer choices, ask yourself, "does this HAVE to be true for the airline's proposal to hold?"

A) The addition of standing room only "seats" will generate more revenue than the cost of ensuring that these seats meet safety standards.
If the airline has proposed these seats, they must have concluded that the seats will generate revenue, even against any additional costs. This would have to be true.

B) The Federal Aviation Administration will approve Airline A's specific proposal.
Generally speaking, we can never know with certainty what WILL or will not happen in the future. So, any definitive future-oriented statement is almost certain to be wrong on an inference question.

C) The revenue generated by the addition of standing room only "seats" is greater than the current cost of jet fuel.
We don't need to compare individual costs, because there are many: labor, marketing, food, etc etc. We merely know that these new seats must be expected to increase revenue OVERALL, but not as compared to other individual costs.

D) There are no safer ways in which Airline A can increase revenues.
Safety is not relevant to the question of revenue and cost (it's certainly relevant to the airline, but not to the specific scope of this argument). Furthermore, if we say "Plan A will work," it does not necessarily have to follow that "no other plan would work better."

E) Passenger safety is less important than increasing revenue.
We can pretty much never draw definitive conclusions about people's thoughts or intentions, but only about their actions (in life as well as on the GMAT!). The purview of the argument is simply revenue and profit, but we have no idea what other considerations also factor in.

The only answer that MUST be true is A.
Ceilidh Erickson
EdM in Mind, Brain, and Education
Harvard Graduate School of Education
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by ceilidh.erickson » Sat Dec 10, 2016 11:53 am
For more examples of how to eliminate wrong answers on INFERENCE CR questions by asking "what MUST be true?", see:
https://www.beatthegmat.com/bone-depleti ... tml#569967
https://www.beatthegmat.com/electric-uti ... tml#695918
https://www.beatthegmat.com/why-is-e-wro ... tml#718643
https://www.beatthegmat.com/box-office-r ... tml#770971
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EdM in Mind, Brain, and Education
Harvard Graduate School of Education
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by joealam1 » Mon Dec 12, 2016 8:54 am
Hi Ceilidh,

I do understand why A is the right answer.

But i m not 100% sure why C is wrong.

The objective is to increase revenue to thereby counteract the decline in profits.

So in case the fuel cost was still higher than the revenue generated by the those new seats, then a turnaround in profits is way unlikely to happen.

So C should be true as well.

I m not sure if there is something that i missed from the prompt.
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by ceilidh.erickson » Wed Dec 14, 2016 3:50 pm
joealam1 wrote:Hi Ceilidh,

I do understand why A is the right answer.

But i m not 100% sure why C is wrong.

The objective is to increase revenue to thereby counteract the decline in profits.

So in case the fuel cost was still higher than the revenue generated by the those new seats, then a turnaround in profits is way unlikely to happen.

So C should be true as well.

I m not sure if there is something that i missed from the prompt.
I think you're still not taking into account other variables. Imagine this hypothetical scenario for an individual flight, which would align with the information we're given. (I'm making these numbers up completely, so people with aviation experience, please forgive!):

Revenue:
200 seats at $200 apiece: $40,000
Costs:
jet fuel: $20,000
labor: $10,000
food & drinks: $1,000
other costs: $4,000
total: $35,000
Profit: $5,000

Imagine that we can take out 50 of those regular seats and replace them with 100 "standing seats" at $120 piece. Now, revenue = (150)(200) + (100)(120) = $42,000. (Pretending simplistically that this did not change our costs), the profit is now $7,000.

The revenue generated by the *addition* of those new seats is only $2,000, though. This is certainly not greater than the cost of jet fuel, which was $20,000. The TOTAL revenue must be greater than any individual cost, but the ADDITIONAL revenue does not have to be. I think perhaps a better way to phrase this answer choice would have been "the additional revenue generated by adding these new seats..." Even still, we cannot interpret the answer choice to mean total revenue.

Does that answer your question?
Ceilidh Erickson
EdM in Mind, Brain, and Education
Harvard Graduate School of Education
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