Jack Bygrave is an executive at a major South African diamond company that produces 2% of the world's total annual diamond production. The CFO is anxious to maximize revenues and increase sales. Bygrave, however, believes that increased sales would only drive down the world price of diamonds and lower revenues. Which of the following represents the logical flaw in Bygrave's reasoning?
A) Jack connects the price of unrefined diamonds and the price of jewelry-quality diamonds.
B) He assumes that production goals are similar to financial goals.
C) He assumes that the supply produced by his company can significantly alter the aggregate supply for the market.
D) He assumes that seasonal and long term supply are proportional.
E) He correlates long-term and short-term demand.
I feel that B is also a possible answer as CFO is talking about incresing sales and revenue (which doesnt mean increase in production).Pls correct me if am wrong.Have given the OA below.
Thanks
karthik
The OA is [spoiler](C) Since the company only makes 2% of the world's total diamond production, its output can hardly affect world diamond supply and prices. Jack erroneously assumes that what happens at his company will affect the world diamond market.[/spoiler]
A) Jack connects the price of unrefined diamonds and the price of jewelry-quality diamonds.
B) He assumes that production goals are similar to financial goals.
C) He assumes that the supply produced by his company can significantly alter the aggregate supply for the market.
D) He assumes that seasonal and long term supply are proportional.
E) He correlates long-term and short-term demand.
I feel that B is also a possible answer as CFO is talking about incresing sales and revenue (which doesnt mean increase in production).Pls correct me if am wrong.Have given the OA below.
Thanks
karthik
The OA is [spoiler](C) Since the company only makes 2% of the world's total diamond production, its output can hardly affect world diamond supply and prices. Jack erroneously assumes that what happens at his company will affect the world diamond market.[/spoiler]
