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National Chain stores

by ssgmatter » Sat May 01, 2010 10:14 pm
Spending on clothes in this country increased by 35% from 1970 to 1990. Over the same period, however, revenue from clothing sales actually made instores, whether retail or wholesale, only increased by 20% and most of that increase took place in national chain departmental stores.

Based on the above statements, which of the following is the most reasonable conclusion about the period from 1970 to 1990

1. There was an increase in spending on clothes that were purchased thru alternate channels, such as thru the mail or over the phone.

2. Spending on clothes decreased in those stores that were not national chain department stores

3. The spending increase was not caused by people buying more clothes, but by an increase in clothing prices, both in retail stores and in wholesale outlets.

4. Most of the increase in spending on clothing was the result of an increase in sales of high price items to a relatively small number of people.

5. Most of the clothing sales that did not take place in stores were made thru the mail order divisions of national department stores.

Please explain with reasons....
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by rockeyb » Sat May 01, 2010 10:35 pm
Premise : Spending on clothes in this country increased by 35% from 1970 to 1990.

Premise :Over the same period, however, revenue from clothing sales actually made in stores, whether retail or wholesale, only increased by 20% and most of that increase took place in national chain departmental stores.

We need to find a conclusion that will agree to the premise above .In short we need to find some thing that will show us why overall spending increased but the overall revenue decreased .

1. There was an increase in spending on clothes that were purchased thru alternate channels, such as thru the mail or over the phone.
[If at all alternate channels were used then why did the revenue decrease instead of increasing, eliminate]
2. Spending on clothes decreased in those stores that were not national chain department stores
[This is it , the premise says that most of the sale took place at national chain departmental stores, so for overall sale to decrease the sale in other stores must have decreased , correct]
3. The spending increase was not caused by people buying more clothes, but by an increase in clothing prices, both in retail stores and in wholesale outlets.
[This is one of the possible scenarios but the opposite of this could also be true as given in option 4.]
4. Most of the increase in spending on clothing was the result of an increase in sales of high price items to a relatively small number of people.
[This could be a possible scenario but we do not know for sure.]
5. Most of the clothing sales that did not take place in stores were made thru the mail order divisions of national department stores.
[If at all there was an increase in sale and other channel was used for the sale dose not explain why the revenue decreased even if the sale increase .]

Please correct me if I am wrong.
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by ssgmatter » Sat May 01, 2010 10:39 pm
OA is A

I am confused between A,B and E......

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by rockeyb » Sat May 01, 2010 10:51 pm
ssgmatter wrote:OA is A

I am confused between A,B and E......

Cheers!
well I dont see much difference in A and E . Both say alternate channels were used to make the sale . But if alternate channels were used then why did the revenue decrease instead of increasing ?
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by ssgmatter » Sat May 01, 2010 11:17 pm
Well that is my question too buddy!

Any thoughts from experts.
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by Testluv » Sat May 01, 2010 11:30 pm
This question raises a paradox: Increase in spending on clothes exceeded the increase in revenues from clothes sold in stores.

Why would this be?

Total revenue should match total spending. So, if the revenue growth from clothes sold in stores fell short of increased spending on clothes, then the incresed revenue must be coming from somewhere else, somewhere other than in-store--outside the store!.

Choice A is a perfect match to this prediction. It tells us that yes, in fact, spending from sources outside the store has increased. Because we were confident in our prediction, and because this answer chioce definitely matches, on test day, we should select this choice, and move on without looking at the other choices (yes, I'm serious: there can be only one correct answer; it is NOT about "best answer", and saved time = higher score.)

_____________

In "resolve the paradox" questions of which this is one, one very common wrong answer type is that which touches one "one side" of the paradox; I call these "1-siders". Let's look at the other choices with this in mind:
2. Spending on clothes decreased in those stores that were not national chain department stores
Well, because we know that in-store revenue has in fact increased (by 20%), then spending in national chain department stores must have increased. But we still don't know why spending growth exceeded revenue growth. So, this choice only touches 1 side of the paradox (1-sider).
3. The spending increase was not caused by people buying more clothes, but by an increase in clothing prices, both in retail stores and in wholesale outlets.
HOW spending grew is irrelevant. This choice falls into the following wrong answer categories: 1-sider, outside the scope, and "who cares!"
4. Most of the increase in spending on clothing was the result of an increase in sales of high price items to a relatively small number of people.
Same as choice C.
5. Most of the clothing sales that did not take place in stores were made thru the mail order divisions of national department stores.
This is NOT the same as choice A. It doesn't match our prediction: it doesn't tell us that spending from sources outside the store has increased. Instead, it merely points to types of outside-of-store sources.
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by ssgmatter » Sat May 01, 2010 11:54 pm
Thankyou TestLuv for the explanation....However I am still not convince with E... I mean it says the same thing as what A says that rest of the spending occurs thru mail order of national chain store...

please help me on this
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by Testluv » Sun May 02, 2010 12:04 am
ssgmatter wrote:Thankyou TestLuv for the explanation....However I am still not convince with E... I mean it says the same thing as what A says that rest of the spending occurs thru mail order of national chain store...

please help me on this
Not quite! Pay close attention to the language of the choice.

Let's take a look at it again:
Most of the clothing sales that did not take place in stores were made thru the mail order divisions of national department stores.
Does it matter whether most of the clothing sales that did not take place in stores (that is, outside of store clothing sales) took place through mail order divisions of national department stores or mail order divisions of regional departement stores or on the street, etc.?

No, the sources or types of outside-of-store sales don't matter. That outside-of-store sales mostly come from outside-of-store sources of a certain type (mail order division of national dept. stores) doesn't matter any more than if outside-of-store sales mostly come from merchants peddling shirts in the street. We need the choice to say that revenues from these outside-of-store sources increased, regardless of the types of outside-of-store sources....and this choice does NOT tell us that revenues at these alternative sources increased!

Let me know, if you still have doubts, and I will try to explain again.
Last edited by Testluv on Sun May 02, 2010 12:09 am, edited 1 time in total.
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by ssgmatter » Sun May 02, 2010 12:09 am
So this means that E talks about the in store revenues where mail order is one of the sources of National chain store......but we need strictly outside store spend and that is why A is correct.....

Please correct my understanding...

Many thanks!
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by Testluv » Sun May 02, 2010 12:10 am
While you were posting, I edited my post somewhat to make it more clear. Let me know if you still have doubts.
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by ssgmatter » Sun May 02, 2010 12:20 am
Thankyou Testluv for the explanations

I got this one now....Options A and E are really very close in a sense that we need to read between the lines as to what the optinos are trying to convey.....

I understand that option A talks about the increase in spend but this messsage is not conveyed by option E....So A is the right option here...

Please confirm my understanding....
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by rockeyb » Sun May 02, 2010 12:27 am
Testluv wrote:
Most of the clothing sales that did not take place in stores were made thru the mail order divisions of national department stores.
Does it matter whether most of the clothing sales that did not take place in stores (that is, outside of store clothing sales) took place through mail order divisions of national department stores or mail order divisions of regional departement stores or on the street, etc.?

No, the sources or types of outside-of-store sales don't matter. That outside-of-store sales mostly come from outside-of-store sources of a certain type (mail order division of national dept. stores) doesn't matter any more than if outside-of-store sales mostly come from merchants peddling shirts in the street. We need the choice to say that revenues from these outside-of-store sources increased, regardless of the types of outside-of-store sources....and this choice does NOT tell us that revenues at these alternative sources increased!

Let me know, if you still have doubts, and I will try to explain again.
Testluv , thank you for your reply .

I get your point that whatever the outside source of the sale dose not matter .

But what I dont understand is why is it necessary for an answer option to say that the revenue from XYZ source INCREASED.

We know there is a mismatch between the sale in store and amount of money spent in purchasing the goods . So just by indicating that some XYZ source was also involved in selling the goods is reason enough to believe the data given by the store is not true reflection of its original sale .

Why do we need to to know if sale from other source Increased or decreased or remained steady ?
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by Testluv » Sun May 02, 2010 12:27 am
ssgmatter wrote:Thankyou Testluv for the explanations

I got this one now....Options A and E are really very close in a sense that we need to read between the lines as to what the optinos are trying to convey.....

I understand that option A talks about the increase in spend but this messsage is not conveyed by option E....So A is the right option here...

Please confirm my understanding....
Exactly!
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by ssgmatter » Sun May 02, 2010 12:29 am
Thankyou Testluv!....:)
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by Testluv » Sun May 02, 2010 1:09 am
Testluv , thank you for your reply .

I get your point that whatever the outside source of the sale dose not matter .

But what I dont understand is why is it necessary for an answer option to say that the revenue from XYZ source INCREASED.
Total spending should match the total revenue coming from all the different kinds of places that sell clothes. But we learn that spending exceeded the revenue from in-store sales. That is, the revenue growth coming from in-store sales is insufficient to explain the big spending growth. Thus, in order to match the revenue growth, dollar for dollar, with the spending growth, revenues from out-of-store sales must have increased.
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