Surveys show that every year only 10 percent of cigarette sm

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BTGmoderatorAT: Moderator; Posts: 426; Joined: Tue Aug 22, 2017 8:48 pmFollowed by: 1 member

by BTGmoderatorAT » Tue Mar 13, 2018 7:00 am

Surveys show that every year only 10 percent of cigarette smokers switch brands. Yet the manufacturers have been spending an amount equal to 10 percent of their gross receipts on cigarette promotion in magazines. It follows from these figures that inducing cigarette smokers to switch brands did not pay, and that cigarette companies would have been no worse off economically if they had dropped their advertising.

Of the following, the best criticism of the conclusion that inducing cigarette smokers to switch brands did not pay is that the conclusion is based on

(A) computing advertising costs as a percentage of gross receipts, not of overall costs
(B) past patterns of smoking and may not carry over to the future
(C) the assumption that each smoker is loyal to a single brand of cigarettes at any one time
(D) the assumption that each manufacturer produces only one brand of cigarettes
(E) figures for the cigarette industry as a whole and may not hold for a particular company

OA: E

What's the best approach to determine the answer? Any experts can help please?

Source: Beat The GMAT — Critical Reasoning | Tue Mar 13, 2018 7:00 am

deloitte247: Legendary Member; Posts: 2214; Joined: Fri Mar 02, 2018 2:22 pmFollowed by: 5 members

by deloitte247 » Fri Jul 13, 2018 2:03 am

Option A - INCORRECT.
Since the equivalent of 10 percent of smokers switch brand every year, then it is uneconomical for manufacturers to spend 10% of the gross profit on advertisement, because it may not yield a profitable result on their part. Therefore it is assumed such fund should be used for other expenses.

Option B - INCORRECT.
Inducing cigarette smokers to switch brand did not pay, because it is an addiction and the past pattern of smoking may not be carried to the future if there is a change in personality.

Option C - INCORRECT.
The assumption that each smokers is loyal to a single brand of cigarette at any time is conclusive on the fact that inducing smokers to switch brands does not pay.

Option D - INCORRECT.
The assumption that only each manufacturer produces one brand of cigarette may not be true. Therefore, inducing smokers to switch brands may not be profitable to the manufacturer.

Option E - CORRECT.
Figures of the cigarette industry as a whole and may not for a particular company. However, Advertising appeals may not be effective when inducing smokers to switch brands because the smokers has a decision to make when choosing the most suitable choice of cigarette good for their health.

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