Farm profit

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Dean Jones: Master | Next Rank: 500 Posts; Posts: 239; Joined: Thu Oct 28, 2010 8:40 amFollowed by: 2 members; Location: India; Thanked: 5 times; GMAT Score:690

by Dean Jones » Sat Jul 16, 2011 9:46 pm

Hi Friends,

I am having difficulty in understanding the following problem. Please help.

In order to make a profit at the market price, a firm must sell 80% of its production. Did the firm make a profit in 2009?

(1) The firm made a profit in 2008.

(2) The ratio of the percent increase in the firm's sales in 2009 to the percent increase in the firm's production in 2009 is 0.85.

OA is E

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Source: Beat The GMAT — Data Sufficiency | Sat Jul 16, 2011 9:46 pm

Frankenstein: Legendary Member; Posts: 1448; Joined: Tue May 17, 2011 9:55 amFollowed by: 53 members; Location: India; Thanked: 375 times

by Frankenstein » Sat Jul 16, 2011 10:03 pm

Hi,
From(1):
We do not know the sales/production ratio
From(2):
Case-1: 2008-> Sales - 80, Production - 100
2009 -> Sales - 148(85%increase), Production -200(100%increase)
Now Sales/Production is 148/200 = 74% <80% (No profit)
case-2: 2008-> Sales - 100, Production - 100
2009 -> Sales - 185(85%increase), Production -200(100%increase)
Now Sales/Production is 185/200 = 92.5% > 80% (Profit)
Not sufficient

Both(1) and (2): Same

Hence, E

Cheers!

Things are not what they appear to be... nor are they otherwise

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