Consider the 2 paragraphs from a passage. I am not typing the entire passage , since it is very difficult to do so.(Also the question does not require the other paragraphs).
In colloquial sense, "procurement" is the act of acquiring items, goods, or services.When used in business setting,the term takes on another facet and suggests that the outcome of the acquisition process should be mutually beneficial for both parties.
Suppose company X would like to produce machinery from company Y. Company Y would benefit from the transaction through increased revenues . But how would company X realize an advantage ?
Question :
Which of the following is NOT a scenario under which Company Y might not profit from the transaction outlined in the second paragraph?
I am providing only 3 options since others are obvious and can be eliminated .
A) The bidding was so competitive that Company Y was forced to sell the machinery at a price below cost.
b)The machinery is of such a low quality that it will likely break down quickly leading to increased repair costs.
c)An increase in the demand for all metals drives up the price of aluminium, a key component in the machinery.
The explanation given for the options uses the following relation.
Profit=revenue-expenditure.
The answer given is choice b).
Now comes my doubt. Option (A) can be eliminated because revenue is decreased and it could result in
a loss . Option (C) can be eliminated because it increases expenditure(could result in loss).
But what about option (b)? This also increases repair costs , (which are additional expenses) . So a loss could occur here too. So why is this the answer ? ( as given in the book that I referred.)
In colloquial sense, "procurement" is the act of acquiring items, goods, or services.When used in business setting,the term takes on another facet and suggests that the outcome of the acquisition process should be mutually beneficial for both parties.
Suppose company X would like to produce machinery from company Y. Company Y would benefit from the transaction through increased revenues . But how would company X realize an advantage ?
Question :
Which of the following is NOT a scenario under which Company Y might not profit from the transaction outlined in the second paragraph?
I am providing only 3 options since others are obvious and can be eliminated .
A) The bidding was so competitive that Company Y was forced to sell the machinery at a price below cost.
b)The machinery is of such a low quality that it will likely break down quickly leading to increased repair costs.
c)An increase in the demand for all metals drives up the price of aluminium, a key component in the machinery.
The explanation given for the options uses the following relation.
Profit=revenue-expenditure.
The answer given is choice b).
Now comes my doubt. Option (A) can be eliminated because revenue is decreased and it could result in
a loss . Option (C) can be eliminated because it increases expenditure(could result in loss).
But what about option (b)? This also increases repair costs , (which are additional expenses) . So a loss could occur here too. So why is this the answer ? ( as given in the book that I referred.)
