Critical Reasoning

Several airlines have recently intensified their fierce competition for business by offering tickets that, if purchased 2 days in advance, cost as much as 40 percent less than the heretofore lowest-priced "super-saver" tickets, which require a 30-day advance purchase. The airlines' long-term gains from tickets bought under this new plan will be enormous because, unlike earlier discount tickets, these are not refundable.

The author assumes which of the following about discounted airline tickets in predicting long-term gains in airline revenue?

(A) More discounted, advance purchase tickets are purchased than are actually used.
(B) Tickets requiring 30-day advance purchase are not profitable for airlines.
(C) Few business travelers have taken advantage of 30-day advance purchase tickets.
(D) Airlines will have to discontinue offering 30-day advance purchase tickets when they begin offering 2-day advance purchase tickets.
(E) The majority of the 2-day advance purchase tickets offered by a given airline will be sold to passengers who have not previously flown on that airline.

Q/A-b why not a

Negate A , we get most of the discounted tickets are used.
if the price of the tickets still profitable after discounting, then the conclusion still holds true.
Thus, A is not assumption.

Ankitaverma wrote:Several airlines have recently intensified their fierce competition for business by offering tickets that, if purchased 2 days in advance, cost as much as 40 percent less than the heretofore lowest-priced "super-saver" tickets, which require a 30-day advance purchase. The airlines' long-term gains from tickets bought under this new plan will be enormous because, unlike earlier discount tickets, these are not refundable.

Earlier ---- 30 Days ticket were refundable though prices were low , profit margin were low.

Now ------ 2 Days ticket non refundable , prices 40% less than 30 Days ticket...

Hence , Profit from sale of these non Refundable tickets will be more in the long run.


After reading the first assumption which comes to mind is that -

Cancellation of tickets is a regular phenomenon and now it will yield more profit to the Airlines company , since the Co's won't be repaying money after cancellation..

The author assumes which of the following about discounted airline tickets in predicting long-term gains in airline revenue?[/b]

(A) More discounted, advance purchase tickets are purchased than are actually used.

Not at all , people won't like buying advance tickets if they won't make a journey because a rational buyer knows that money won't be refunded if they don't make a journey..

(B) Tickets requiring 30-day advance purchase are not profitable for airlines.

The passage mentions -

" Several airlines have recently intensified their fierce competition for business .... "

So we can claim that 30 days tickets are NOT SO PROFITABLE for the Business , hence they have moved over to 2 days advanced ticket which is MORE PROFITABLE for them.

The option doesn't look very good but it is close to the correct answer - Keep it aside for further consideration.

(C) Few business travellers have taken advantage of 30-day advance purchase tickets.

To me it's basically an inference , not an assumption( in support of the conclusion).

(D) Airlines will have to discontinue offering 30-day advance purchase tickets when they begin offering 2-day advance purchase tickets.

May be , we don't have sufficient data to claim the same...

The companies can carry out the said 30 days advance ticket as well along with the 2 days advance tickets , to leverage it's position further..

(E) The majority of the 2-day advance purchase tickets offered by a given airline will be sold to passengers who have not previously flown on that airline.

Out of scope...


Though personally I don't like option (B ) but considering the other answer choices all I can say is-

It's better than the rest , hence IMO (B) holds good..[/u]

Nice explanation for Choice A!

Ankitaverma wrote:Several airlines have recently intensified their fierce competition for business by offering tickets that, if purchased 2 days in advance, cost as much as 40 percent less than the heretofore lowest-priced "super-saver" tickets, which require a 30-day advance purchase. The airlines' long-term gains from tickets bought under this new plan will be enormous because, unlike earlier discount tickets, these are not refundable.

The author assumes which of the following about discounted airline tickets in predicting long-term gains in airline revenue?

(A) More discounted, advance purchase tickets are purchased than are actually used.
(B) Tickets requiring 30-day advance purchase are not profitable for airlines.
(C) Few business travelers have taken advantage of 30-day advance purchase tickets.
(D) Airlines will have to discontinue offering 30-day advance purchase tickets when they begin offering 2-day advance purchase tickets.
(E) The majority of the 2-day advance purchase tickets offered by a given airline will be sold to passengers who have not previously flown on that airline.

Q/A-b why not a

Hi!

What's the source of this question? The author definitely isn't assuming (b), so if that's the accredited answer, it's just a bad question.

The author is, on the other hand, assuming (a) - so your first instinct is correct!

Breaking down the stimulus:

Old plan had cheap prices and refundable tickets.
New plan has even cheaper prices and non-refundable tickets.

Conclusion: new plan will be enormously profitable.

Well, it can't be extra profitable because of prices - those are even cheaper than before. So, the author must be assuming that it's the non-refundability that will lead to giant profits.

(a) says that more of these tickets are purchased than used; in other words, people buy them then don't use them. That has to be true in order for non-refundability to be relevant.

We can use the Denial Test to show that (a) is an assumption.

Denial of (a): all discount advanced purchase tickets get used.

Well, if they all get used, then how are refunds even relevant? The denial of (a) destroys the author's conclusion, therefore the author must be assuming that (a) is true.

(B) is wrong because the author never asserts (or implies) that the 30-day tickets weren't profitable, just that the 2-day will be very profitable. Even if the opposite of (b) were true (i.e. 30 day tickets are profitable), we can't say that the 2-day tickets won't be.

After reading Stuart's great explanation on this one, I decided to look for the source and the Official Answer.

I found a couple of postings of this question that refer to it as coming from the old GMAT paper tests and the official answer is indeed choice A.

So this is a legitimate question and with choice A it is not a bad one.