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Farm profit

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Farm profit

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: — Data Sufficiency |
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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!

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