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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 ## In order to increase revenues, a cell-phone company has deci ##### This topic has 1 expert reply and 0 member replies ## In order to increase revenues, a cell-phone company has deci In order to increase revenues, a cell-phone company has decided to change its fee structure.Instead of charging a flat rate of$20 per month and $0.50 for every minute over 200 minutes, the company will now charge$50 per month for unlimited usage.

Which of the following is a consideration that, if true, suggests that the new plan will not actually increase the company's revenues?

A) A rival-company , which charges no start-up fee , offers an unlimited calling plan for $40 per month. B) Two-thirds of the company's customers use less than 500 minutes per month. C) Studies have shown that customers using unlimited calling plans will increase their monthly usage of minutes by over 50 percent. D) One-fifth of the company's customers use in excess of 1,000 minutes per month. E) In recent months the company has received several complaints of insufficient signal strength and poor customer service. I'm confused between B & D. Can any experts help? ### GMAT/MBA Expert GMAT Instructor Joined 04 Oct 2017 Posted: 551 messages Followed by: 11 members Upvotes: 180 The conclusion: The new plan will increase revenue. The evidence: Instead of charging a flat rate of$20 per month and $0.50 for every minute over 200 minutes, the company will now charge$50 per month for unlimited usage.

We are asked to weaken the conclusion -- to show that the new plan will NOT increase revenue.

You asked about choice B and D. The correct choice is D. If one-fifth of the customers use in excess of 1000 minutes, the company would make more money charging them by the minute. For instance, if these customers used exactly 1000 minutes, the old plan would have charged them $0.50 for 800 of those minutes. That's$400 + the flat rate of $20. That's considerably more than the$50 for unlimited usage, more than enough to make up for little usage by the other four-fifths who use fewer minutes.

Choice B goes in the opposite direction. If more than half of the customers use less than 500 minutes each month, this suggests that it might be more profitable to charge them $50 for unlimited usage. Perhaps they use 200 minutes, in which case they would only be charged$20 on the old plan.

I'm available if you need any follow-up.

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