Fish currently costs about the same at seafood stores throughout Eastville and its surrounding suburbs. Seafood stores buy fish from the same wholesalers and at the same prices, and other business expenses have also been about the same. But new tax breaks will substantially lower the cost of doing business within the city. Therefore, in the future, profit margins will be higher at seafood stores within the city than at suburban seafood stores.
For the purposes of evaluating the argument, it would be most useful to know whether
(A) More fish wholesalers are located within the city than in the surrounding suburbs
(B) Any people who currently own seafood stores in the suburbs surrounding Eastville will relocate their businesses nearer to the city
(C) The wholesale price of fish is likely to fall in the future
(D) Fish has always cost about the same at seafood stores throughout Eastville and its surrounding suburbs
(E) Seafood stores within the city will in the future set prices that are lower than those at suburban seafood stores
OA:E
I understand how E is important.
But how do we rule out B answer choice ?
In fact I find E as an extension to B.
B says that Any people who currently own seafood stores in the suburbs surrounding Eastville will relocate their businesses nearer to the city.
Thus, if that happens, the greater number of shops would lead to lessening of the prices and that would in turn lead to reduced profits as expected.
If that does not happen, then there will be increase in profit as expected.
Hence, I feel that B is also affecting the conclusion in both ways as E does.
How to make the choice between B and E then ?
Any help please.
Tough CR..Any Help ?
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- Brent@GMATPrepNow
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The conclusion here is all about the comparison of profit margins for businesses in the city and for businesses in the suburbs.
At the moment, all businesses have about the same costs and they charge about the same prices for their fish. So, at the moment, the profit margins are about the same for businesses in the city and for businesses in the suburbs.
Once the tax breaks come, the businesses in the city will have lower expenses than businesses in the suburbs. So, the businesses in the city are certain to have a higher profit margin as long as they continue charging the same prices as the suburban businesses charge.
(E) This information is crucial to help us evaluate the conclusion. If the city stores don't change their prices, then their profit margins are sure to increase. If the city stores lower their prices then their profit margins might not increase at all.
(B) Whether suburban businesses relocate to the city has no effect on profit margins. The only things that affect profit margins are expenses and the price charged. You have added some extra assumptions into your choice of answers (the greater number of shops would lead to lessening of the prices and that would in turn lead to reduced profits as expected). Are you sure this will happen?
Also, be careful of the wording in answer choice B. It says, "any." That could mean 1 store relocates. Does that help us evaluate the conclusion? Not really.
Cheers,
Brent
At the moment, all businesses have about the same costs and they charge about the same prices for their fish. So, at the moment, the profit margins are about the same for businesses in the city and for businesses in the suburbs.
Once the tax breaks come, the businesses in the city will have lower expenses than businesses in the suburbs. So, the businesses in the city are certain to have a higher profit margin as long as they continue charging the same prices as the suburban businesses charge.
(E) This information is crucial to help us evaluate the conclusion. If the city stores don't change their prices, then their profit margins are sure to increase. If the city stores lower their prices then their profit margins might not increase at all.
(B) Whether suburban businesses relocate to the city has no effect on profit margins. The only things that affect profit margins are expenses and the price charged. You have added some extra assumptions into your choice of answers (the greater number of shops would lead to lessening of the prices and that would in turn lead to reduced profits as expected). Are you sure this will happen?
Also, be careful of the wording in answer choice B. It says, "any." That could mean 1 store relocates. Does that help us evaluate the conclusion? Not really.
Cheers,
Brent
- Kasia@EconomistGMAT
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Premises:
1. Fish costs the same in Eastville and in surrounding suburbs
2. All seafood stores buy fish from the same wholesalers and incur very similar costs
3. Taxes in the city will be much lower in the future
Conclusion:
In the future profit margins on fish/ seafood will be higher in the city than in the suburbs
In order to evaluate the conclusion we need to know whether seafood stores in the city and in the suburbs will continue charging the SAME prices.
If yes - then clearly seafood stores located in the city will make more money and have higher profit margins because they will incur lower costs due to decreased taxes.
As to answer b it is not important whether the suburban seafood store owners relocate to the city. The conclusion that the higher number of shops and more competition would lead to lowering prices goes too far from the original argument. Therefore, it is out of scope.
1. Fish costs the same in Eastville and in surrounding suburbs
2. All seafood stores buy fish from the same wholesalers and incur very similar costs
3. Taxes in the city will be much lower in the future
Conclusion:
In the future profit margins on fish/ seafood will be higher in the city than in the suburbs
In order to evaluate the conclusion we need to know whether seafood stores in the city and in the suburbs will continue charging the SAME prices.
If yes - then clearly seafood stores located in the city will make more money and have higher profit margins because they will incur lower costs due to decreased taxes.
As to answer b it is not important whether the suburban seafood store owners relocate to the city. The conclusion that the higher number of shops and more competition would lead to lowering prices goes too far from the original argument. Therefore, it is out of scope.
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- vk_vinayak
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B is wrong for many reasons as pointed out by experts.
here is one more reason: Notice the word nearer to the city. It doesn't mean the same as into the city.
Even if the shops in the suburbs move nearer to the city, may be by a meter or kilo meter, they'd still be in suburbs.
here is one more reason: Notice the word nearer to the city. It doesn't mean the same as into the city.
Even if the shops in the suburbs move nearer to the city, may be by a meter or kilo meter, they'd still be in suburbs.
- VK
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Thanks all. Yes, the assumption made by me in B goes too far and also the wording in B, any/nearer, make it a weak answer choice as compared to E.
Thanks.
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