Lemonade!, Lemonade!

Expert replies

alex.gellatly: Master | Next Rank: 500 Posts; Posts: 435; Joined: Wed Nov 16, 2011 7:27 amFollowed by: 16 members; Thanked: 48 times

by alex.gellatly » Wed Jun 20, 2012 11:16 pm

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 | Wed Jun 20, 2012 11:16 pm

sandeep_thaparianz: Senior | Next Rank: 100 Posts; Posts: 90; Joined: Wed Mar 21, 2012 1:27 amFollowed by: 2 members; Thanked: 5 times

by sandeep_thaparianz » Thu Jun 21, 2012 1:23 am

Oa is C
Conclusion tells use sale of Daisy's lemonade to shack lemonade = 3:2( since rate are in 2:3 and both had same revenue) and that they have same operating cost( revenue-profit)

On Monday, Daisy's Lemonade Stand sold fewer cups of lemonade than did the Lemon Shack...wrong

The Lemon Shack sells higher quality lemonade than does Daisy's Lemonade Stand....Irrelevant

On Monday, Daisy's Lemonade Stand and the Lemon Shack incurred identical costs to run their businesses..... correct

In general, lemonade consumers prefer the lemonade at Daisy's Lemonade Stand to the Lemonade at the Lemon Shack....irrelevant

The Lemon Shack would not increase its revenues by lowering its prices...wrong

Bill@VeritasPrep: GMAT Instructor; Posts: 1248; Joined: Thu Mar 29, 2012 2:57 pmFollowed by: 192 members; Location: Everywhere; Thanked: 503 times; GMAT Score:780

by Bill@VeritasPrep » Thu Jun 21, 2012 10:01 am

Since we know the sale price for both stands, the fact that revenue was equal means that Daisy must have sold more cups to make up for the lower selling price. We also know that profit was equal for both stands. Since revenue - cost = profit, and we know that revenue and profit are equal, cost must be equal as well.

A--the opposite of what we know to be true.

B--we can't really judge quality from what we know.

C--correct

D--not necessarily; maybe they simply prefer the lower price.

E--we have no way of knowing this.

Join Veritas Prep's 2010 Instructor of the Year, Matt Douglas for GMATT Mondays

Visit the Veritas Prep Blog

Try the FREE Veritas Prep Practice Test

Gaurav 2013-fall: Master | Next Rank: 500 Posts; Posts: 307; Joined: Wed Feb 22, 2012 9:45 pm; Thanked: 12 times; GMAT Score:700

by Gaurav 2013-fall » Mon Jun 25, 2012 7:09 am

IMO C.

more of a quant types!!

Let me tell you something you already know. The world ain't all sunshine and rainbows. It is a very mean and nasty place and it will beat you to your knees and keep you there permanently if you let it. You, me, or nobody is gonna hit as hard as life. But it ain't how hard you hit; it's about how hard you can get hit, and keep moving forward. How much you can take, and keep moving forward. That's how winning is done. Now, if you know what you're worth, then go out and get what you're worth. But you gotta be willing to take the hit, and not pointing fingers saying you ain't where you are because of him, or her, or anybody. Cowards do that and that ain't you. You're better than that! (Rocky VI)

GMAT Course Reviews

563 reviews

1168 reviews

431 reviews

359 reviews

147 reviews

5/5

5 Star (563 Reviews)

"Target Test Prep is the closest to the official version of the GMAT exam, about 99% accuracy in terms of the quality and quantity of information. The course has excellently created singular sets of focused lessons and tests for every possible topic that one could come across in the official GMAT exam."

"The TTP course maximizes the efficiency of the time you spend studying. It will take time and effort but I could almost guarantee that if you complete the course exactly as it is laid out you will get an amazing score. They also have a very responsive team willing to help with any questions you might have."

"TTP has two things that I think no other test prep company offers: A teaching approach that reinforces understanding and an attitude that will give you the mental preparedness needed to succeed on the test. TTP gives you a deep understanding of the concept you need to know while teaching you how to think."

Write a Review