On Monday, Daisyâ€™s Lemonade Stand sold lemonade at 20 cent

Expert replies

rakeshd347: Master | Next Rank: 500 Posts; Posts: 391; Joined: Sat Mar 02, 2013 5:13 amFollowed by: 4 members; Thanked: 50 times

by rakeshd347 » Mon Sep 30, 2013 7:19 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.

OA C
Source: MGMAT

Last edited by rakeshd347 on Tue Oct 01, 2013 2:15 am, edited 1 time in total.

Source: Beat The GMAT — Critical Reasoning | Mon Sep 30, 2013 7:19 pm

vinay1983: Legendary Member; Posts: 643; Joined: Wed Aug 14, 2013 4:27 amFollowed by: 7 members; Thanked: 48 times

by vinay1983 » Mon Sep 30, 2013 7:30 pm

rakeshd347 wrote: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.

OA to follow soon.

Should be E only relevant option according to me

You can, for example never foretell what any one man will do, but you can say with precision what an average number will be up to!

theCodeToGMAT: Legendary Member; Posts: 1556; Joined: Tue Aug 14, 2012 11:18 pmFollowed by: 34 members; Thanked: 448 times; GMAT Score:650

by theCodeToGMAT » Mon Sep 30, 2013 8:09 pm

I will go with "C"
identical revenue means that there costing must be identical

R A H U L

rakeshd347: Master | Next Rank: 500 Posts; Posts: 391; Joined: Sat Mar 02, 2013 5:13 amFollowed by: 4 members; Thanked: 50 times

by rakeshd347 » Mon Sep 30, 2013 8:35 pm

vinay1983 wrote:
rakeshd347 wrote: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.

OA to follow soon.

Should be E only relevant option according to me

Nope its not E.

GMAT/MBA Expert

[email protected]: Elite Legendary Member; Posts: 10392; Joined: Sun Jun 23, 2013 6:38 pmFollowed by: 511 members; Location: Palo Alto, CA; Thanked: 2867 times; GMAT Score:800

by [email protected] » Tue Oct 01, 2013 12:37 am

Hi rakeshd347,

The intent of this CR question doesn't quite match the way that the GMAT would present it, but here's what you need to know to answer it:

This is an inference question. We're told:
1) That Daisy's Lemon Stand sold lemonade at 20cents/cup and The Lemon Shack sold lemonade at 30cents/cup
2) The revenue was the same for both companies (which means that Daisy's Lemonade Stand sold MORE cupts than The Lemon Shack)
3) The profits were the same (profit = revenue - cost). This "factoid" is information that the GMAT would provide (even though this question didn't provide it).

Since the profits were the same AND revenue was the same, the only reasonable inference is that the costs WERE THE SAME.

Final Answer: C

GMAT assassins aren't born, they're made,
Rich

Contact Rich at [email protected]

GMATGuruNY: GMAT Instructor; Posts: 15539; Joined: Tue May 25, 2010 12:04 pmFollowed by: 1906 members; Location: New York, NY; Thanked: 13060 times; GMAT Score:790

by GMATGuruNY » Tue Oct 01, 2013 6:33 am

rakeshd347 wrote: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.

The correct inference is what -- according to the passage -- MUST BE TRUE.
One approach is to NEGATE the answer choices.
When the correct answer choice is negated, the passage will be CONTRADICTED -- implying that the answer choice CANNOT be negated and therefore must be true.

Negating the answer choices, we get:
"¢ On Monday, Daisy's Lemonade Stand sold MORE cups of lemonade than did the Lemon Shack.
"¢ The Lemon Shack sells LOWER quality lemonade than does Daisy's Lemonade Stand.
"¢ On Monday, Daisy's Lemonade Stand and the Lemon Shack incurred DIFFERENT costs to run their businesses.
"¢ In general, lemonade consumers DO NOT PREFER the lemonade at Daisy's Lemonade Stand to the Lemonade at the Lemon
Shack.
"¢ The Lemon Shack WOULD INCREASE its revenues by lowering its prices.

Only the negation in red contradicts the passage:
If the two stands had DIFFERENT costs but IDENTICAL REVENUES (as indicated by the passage), then they would have had DIFFERENT PROFITS -- contradicting the passage's contention that the two stands had IDENTICAL profits.
Since the negation of C contradicts the passage, C is what MUST BE TRUE.

The correct answer is C.

Private tutor exclusively for the GMAT and GRE, with over 20 years of experience.
Followed here and elsewhere by over 1900 test-takers.
I have worked with students based in the US, Australia, Taiwan, China, Tajikistan, Kuwait, Saudi Arabia -- a long list of countries.
My students have been admitted to HBS, CBS, Tuck, Yale, Stern, Fuqua -- a long list of top programs.

As a tutor, I don't simply teach you how I would approach problems.
I unlock the best way for YOU to solve problems.

For more information, please email me (Mitch Hunt) at [email protected].
Student Review #1
Student Review #2
Student Review #3

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