Critical Reasoning

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Sales of telephones have increased dramatically over the last year. In order to take advantage of this increase, Mammoth Industries plans to expand production of its own model of telephone, while continuing its already very extensive advertising of this product.

Which of the following, if true, provides most support for the view that Mammoth Industries cannot increase its sales of telephones by adopting the plan outlined above?

(A) Although it sells all of the telephones that it produces, Mammoth Industries' share of all telephone sales has declined over the last year.
(B) Mammoth Industries' average inventory of telephones awaiting shipment to retailers has declined slightly over the last year.
(C) Advertising has made the brand name of Mammoth Industries' telephones widely known, but few consumers know that Mammoth Industries owns this brand.
(D) Mammoth Industries' telephone is one of three brands of telephone that have together accounted for the bulk of the last year's increase in sales.
(E) Despite a slight decline in the retail price, sales of Mammoth Industries' telephones have fallen in the last year.

In original sentence B means that inventory with the manufacturer is not changing much (declined slightly) - > that means not much demand from the retailers (market)....hence increasing production should not help. Hence I think B is correct answer. If it was increased slightly, I would have been more comfortable though, but still I think inventory gives right picture of demand.

Please explain why B is wrong and would it make difference if I change B to

(B) Mammoth Industries' average inventory of telephones awaiting shipment to retailers has increased significantly the last year.

OR

(B) Mammoth Industries' average inventory of telephones awaiting shipment to retailers has declined significantly over the last year.


The official answer is E which appears ok as well. But honestly there are lot of assumptions here.
What if last year something negative happened to their advertising campaign and hence sales was bad, or some other factor which we dont know. Saying that increasing production will NOT increase sales because of E is not clear. Please explain.

crescendo85 wrote:In original sentence B means that inventory with the manufacturer is not changing much (declined slightly) - > that means not much demand from the retailers (market)....hence increasing production should not help. Hence I think B is correct answer. If it was increased slightly, I would have been more comfortable though, but still I think inventory gives right picture of demand.

Please explain why B is wrong and would it make difference if I change B to

(B) Mammoth Industries' average inventory of telephones awaiting shipment to retailers has increased significantly the last year.

OR

(B) Mammoth Industries' average inventory of telephones awaiting shipment to retailers has declined significantly over the last year.

To get the right answers to CR questions, you have to make sure that you are not GOING BEYOND WHAT CAN LOGICALLY BE INFERRED from the answer choices.

In this case, you saw that B says that inventories decreased slightly. The thing to consider is that inventories can change for many reasons, but as retailers buy product from wholesaler inventory, manufacturing can replace the products in inventory. So, for instance, retailers could buy large quantities of product and inventory could remain the same, because for every unit bought, another is manufactured.

So, while in the real world analysts do look at inventory trends, you cannot really logically infer that demand is low because wholesaler inventory declines only slightly, because you don't know what underlies that change, which underlying factors could be high demand with replacement via manufacturing, or low demand with little manufacturing or no demand and no manufacturing and a little damage, or whatever.

The official answer is E which appears ok as well. But honestly there are lot of assumptions here.
What if last year something negative happened to their advertising campaign and hence sales was bad, or some other factor which we dont know. Saying that increasing production will NOT increase sales because of E is not clear. Please explain.

Sometimes in viewing these answer choices you have to see really what the question writer is up to. In this case all of the answer choices but E are irrelevant, and the prompt says that sales of telephones increased last year. So you have been guided to choose E, which indicates that even though industry sales increased and Mammoth's prices decreased, Mammoth's sales went down. Yes, that decrease could have been due to anything, but ok, E is better than any of the other answer choices. The question asks for the one that provides "the most support." None of the other choices provide ANY support. So the best answer is E.

Sales of telephones have increased dramatically over the last year. In order to take advantage of this increase, Mammoth industries plans to expand production of its own model of telephone, while continuing its already very extensive advertising of this product.

Which of the following, if true, provides most support for the view that Mammoth industries cannot increase its sales of telephones by adopting the plan outlined above?

A. Although it sells all of the telephones that it produces, Mammoth industries' share of all telephone sales has declined over the last year.

B. Mammoth industries' average inventory of telephones awaiting shipment to retailers has declined slightly over the last year.

C. Advertising has made the brand name of Mammoth industries' telephones widely known, but few consumers know that Mammoth industries owns this brand.

D. Mammoth industries' telephone is one of three brands of telephone that have together accounted for the bulk of the last year's increase in sales.

E. Despite a slight decline in the retail price, sales of Mammoth industries' telephones have fallen in the last year.

Premise: Sales of telephones have increased dramatically over the last year.
Conclusion: Mammoth industries plans to expand production of its own model of telephone.

Notice the CHANGE IN SCOPE.
The premise is about OVERALL SALES (sales of telephones), while the conclusion is about ONE PARTICULAR COMPANY (Mammoth industries).
To weaken the conclusion, the correct answer choice will BREAK THE LINK between overall sales and Mammoth industries.

E: Despite a slight decline in the retail price, sales of Mammoth industries' telephones have fallen in the last year.
This answer choice indicates a key difference between overall sales and Mammoth industries:
While overall sales have INCREASED DRAMATICALLY , sales of Mammoth's phones HAVE FALLEN, weakening the conclusion that Mammoth industries should expand production of its phones.

The correct answer is E.

Some test-takers might be attracted to A.
A: Although it sells all of the telephones that it produces, Mammoth industries' share of all telephone sales has declined over the last year.
Market share is irrelevant.
Here, Mammoth sells ALL of its phones.
Thus, the conclusion that Mammoth should expand production is STRENGTHENED.
Eliminate A.

Thanks guys. Very useful