Surveys reveal that the vast majority of hotel guests in the United States resent the high prices of the items in the mini-bars in their hotel rooms.These guests would prefer to have an empty refrigerator in their rooms in order to have space to put their own food and beverages, although a large percentage of these guests would still make at least one purchase from their in-room mini-bar. After analyzing the results of the study, the management of Hotel T decided that it would be more profitable to eliminate the mini-bar and install empty refrigerators in each room.
Which of the following, if true, would support Hotel T's plan to increase profitability by eliminating in room mini-bars in favor of empty refrigerators?
1. There is currently some space available in Hotel T's in-room mini-bars for guests to put their own items.
2. Hotel T is located in the United States.
3. Some guests of Hotel T do not make any purchases from their in-room mini-bars.
4. The money that Hotel T makes from the mini-bar purchases of its guests is less than the money that Hotel T loses from discarding mini-bar items that have not sold by their expiration dates.
5. It will cost Hotel T less money to maintain empty refrigerators in its guest rooms than to maintain stocked mini-bars in those rooms.
Please explain your answer with reason
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gauravgundal
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SmarpanGamt
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IMO E :gauravgundal wrote:Surveys reveal that the vast majority of hotel guests in the United States resent the high prices of the items in the mini-bars in their hotel rooms.These guests would prefer to have an empty refrigerator in their rooms in order to have space to put their own food and beverages, although a large percentage of these guests would still make at least one purchase from their in-room mini-bar. After analyzing the results of the study, the management of Hotel T decided that it would be more profitable to eliminate the mini-bar and install empty refrigerators in each room.
Which of the following, if true, would support Hotel T's plan to increase profitability by eliminating in room mini-bars in favor of empty refrigerators?
1. There is currently some space available in Hotel T's in-room mini-bars for guests to put their own items.
2. Hotel T is located in the United States.
3. Some guests of Hotel T do not make any purchases from their in-room mini-bars.
4. The money that Hotel T makes from the mini-bar purchases of its guests is less than the money that Hotel T loses from discarding mini-bar items that have not sold by their expiration dates. ( Since the stimulus conclued that transation cost of mini bar items + empty mini bar will be more profitable , this option only suggest for the first one )
5. It will cost Hotel T less money to maintain empty refrigerators in its guest rooms than to maintain stocked mini-bars in those rooms. ( Maintain empty - maintain stocked - suggest both )
Please explain your answer with reason
Please suggest if explaination is confusing.
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student22
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It's D. D says that they lose more money selling expired mini-bar stuff than they make selling mini-bar stuff. Basically, it's saying that the mini-bar is a net loss for them. This strengthens their proposal to eliminate the mini-bar.
POE leads to either E or D
now E is out because E compares minibar with refrigerator from maintainence cost and ignores the profit due to sale of minbar items
D is better because D says minibar business is loss making...if one removes loss from any business then profit is always there
for e,g, It like saying remove -3 from 10 = 13
now E is out because E compares minibar with refrigerator from maintainence cost and ignores the profit due to sale of minbar items
D is better because D says minibar business is loss making...if one removes loss from any business then profit is always there
for e,g, It like saying remove -3 from 10 = 13
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student22
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The problem with E is that it only talks about costs. It doesn't talk about how much money they're making. E says that the cost of having no mini-bar is cheaper than having a mini-bar. But what if they were making a high profit. In that case the hight costs would be justified and it would make sense to keep the bar.
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lunarpower
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this is pretty much a perfect explanation. basically, the point is that the hotel can't SELL anything from an empty refrigerator, but they could SELL things from the minibar -- a consideration that is just ignored here.student22 wrote:The problem with E is that it only talks about costs. It doesn't talk about how much money they're making. E says that the cost of having no mini-bar is cheaper than having a mini-bar. But what if they were making a high profit. In that case the hight costs would be justified and it would make sense to keep the bar.
an analogy:
choice (e) is like saying that MGMAT should stop offering live classes and just do nothing but post on forums, since "it will cost MGMAT less money to maintain forums online than to rent and staff a live office". --> this doesn't hold water, since it ignores all the revenue we'll get from enrolling students in our classes!
choice (d), on the other hand, would be like saying that we spend more money on the live office -- rent, staffing, etc. -- than we make in student tuition. if that were true, that would be a pretty solid argument against continuing to offer live classes.
Ron has been teaching various standardized tests for 20 years.
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this_time_i_will
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what if people who are frequent visitors of US based Hotel T are those who do not come under that "vast majority"?jube wrote:Ok, why can it not be B? Shouldn't that be the first consideration?
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be sure that you read all of the facts contained in the passage. in particular, don't overlook the following:jube wrote:Ok, why can it not be B? Shouldn't that be the first consideration?
These guests would prefer to have an empty refrigerator in their rooms in order to have space to put their own food and beverages, although a large percentage of these guests would still make at least one purchase from their in-room mini-bar.
in other words, the passage actually declares that "a large percentage" of these american guests WILL ACTUALLY PURCHASE THINGS from the minibar, even though they resent the presence of the minibar vis-a-vis an empty refrigerator.
the consequence of this fact, then, is exactly the opposite of what you would want if you pick choice (b). namely, since a large percentage of these americans are actually purchasing things from the minibar, the elimination of the minibar could very well hurt profits if the hotel is located in the united states.
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