Gmat Question Pack 1

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Gmat Question Pack 1

by richachampion » Thu May 11, 2017 11:13 pm
Printwell's Ink Jet Division manufactures ink-jet printers and the ink cartridges they use. Sales of its ink-jet printers have increased. Monthly revenues from those sales, however, have not increased, because competition has forced Printwell to cut the prices of its printers. Unfortunately, Printwell has been unable to bring down the cost of manufacturing a printer. Thus, despite the increase in printer sales, the Ink Jet Division must be contributing less to the company's profits than it used to.

Which of the following, if true, most seriously weakens the argument?

(A) Ink-jet printers in regular use frequently need new ink cartridges, and Printwell's printers only accept Printwell's ink cartridges.

(B) Unlike some competing companies, Printwell sells all of its printers through retailers, and these retailers' costs account for a sizable proportion of the printers' ultimate retail price.

(C) Some printer manufacturers have been forced to reduce the sale price of their ink-jet printers even more than Printwell has.

(D) In the past year, no competing manufacturer of ink-jet printers has had as great an increase as Printwell in unit sales of printers.

(E) In the past year, sales of Printwell's ink-jet printers have increased more than sales of any other type of printer made by Printwell
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by richachampion » Thu May 11, 2017 11:13 pm
OA is A, but why is E wrong?
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by GMATGuruNY » Fri May 12, 2017 4:44 am
richachampion wrote:Printwell's Ink Jet Division manufactures ink-jet printers and the ink cartridges they use. Sales of its ink-jet printers have increased. Monthly revenues from those sales, however, have not increased, because competition has forced Printwell to cut the prices of its printers. Unfortunately, Printwell has been unable to bring down the cost of manufacturing a printer. Thus, despite the increase in printer sales, the Ink Jet Division must be contributing less to the company's profits than it used to.

Which of the following, if true, most seriously weakens the argument?

(A) Ink-jet printers in regular use frequently need new ink cartridges, and Printwell's printers only accept Printwell's ink cartridges.

(B) Unlike some competing companies, Printwell sells all of its printers through retailers, and these retailers' costs account for a sizable proportion of the printers' ultimate retail price.

(C) Some printer manufacturers have been forced to reduce the sale price of their ink-jet printers even more than Printwell has.

(D) In the past year, no competing manufacturer of ink-jet printers has had as great an increase as Printwell in unit sales of printers.

(E) In the past year, sales of Printwell's ink-jet printers have increased more than sales of any other type of printer made by Printwell
Premise:
Printwell has been forced to cut the prices of its ink-jet printers and has been unable to reduce its manufacturing costs.
Conclusion:
The ink-jet division must be contributing less to Printwell's profits.

To weaken the conclusion, the correct answer must explain how the ink-jet division can still be contributing to Printwell's profits.

A: Ink-jet printers in regular use frequently need new ink cartridges, and Printwell's printers only accept Printwell's ink cartridges.
Here, the ink-jet division can still be contributing to Printwell's profits -- despite the decrease in revenue from printer sales -- by selling more CARTRIDGES.

The correct answer is A.

E: In the past year, sales of Printwell's ink-jet printers have increased more than sales of any other type of printer made by Printwell.
Consider the following case:

Last year:
Printers sold = 100, manufacturing cost per printer = $10, total cost to manufacture last year's printers = 100*10 = $1000.
This year:
Printers sold = 1000, manufacturing cost per printer = $10, total cost to manufacture this year's printers = 1000*10 = $10,000.

As the case above illustrates, total costs have INCREASED.
It is given that revenues from sales of ink-jet printers have NOT increased.
Since revenues are THE SAME and costs are UP, PROFITS from the sale of ink-jet printers must be LESS.
Thus, the number of printers sold is irrelevant.
The correct answer choice must offer an ALTERNATE source of profits for the ink-jet division.
Eliminate E.
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