Critical Reasoning

Because of rising costs, United Shipping Company raised its rates by ten percent last year. Many of its customers balked at the increase, however, and turned to a rival company whose rates were lower. In response, United Shipping Company began offering a package of services for a single rate that, though high, is still lower than the combined rates of the individual services. Officers of the company claim that this move will recoup the company's lost profits.

Which of the following, if true, provides the best basis for the officers' claim?

A) United Shipping will aggressively advertise the new package of services.
B) United Shipping's rival does not offer some of the services included in the package.
C) Marketing studies have shown that many of United Shipping's former customers would prefer a combined rate for their various shipping services.
D) United Shipping does not already offer all the services separately.
E) No other shipping company offers the same package of services as United Shipping.


SPOILER TO FOLLOW



The answer is C. My beef with this answer is that it is not foolproof (or at least I don't think it is). For example, what if existing customers are already using all of the services that United Shipping is including in its package? Then by offering the package, customers will buy the package paying less for each service than they originally were paying when they purchased each service separately, resulting in lower profits.

I chose D.

Because of rising costs, United Shipping Company raised its rates by ten percent last year. Many of its customers balked at the increase, however, and turned to a rival company whose rates were lower. In response, United Shipping Company began offering a package of services for a single rate that, though high, is still lower than the combined rates of the individual services. Officers of the company claim that this move will recoup the company's lost profits.

Which of the following, if true, provides the best basis for the officers' claim?

A) United Shipping will aggressively advertise the new package of services.
B) United Shipping's rival does not offer some of the services included in the package.
C) Marketing studies have shown that many of United Shipping's former customers would prefer a combined rate for their various shipping services.
D) United Shipping does not already offer all the services separately.
E) No other shipping company offers the same package of services as United Shipping.

Leonard, I will go for C. Here is my approach -
I think u r getting a wrong idea about the option - D. D is saying that United Shipping does not already offer all the services seperately. So these services are coming in a combined package already. If it is true, then the existing customers have already moved from United Shipping to some other organization. That means the then customers were not happy with the package services of the United Shipping. This option actually weakens the officer's claim. So it can not be!
Now come to C - 1. It is a market survey. 2. Former customers like combined rate of some package services. And according to the argument, United Shipping is offering this package service with a less price than the combined cost of individual services offered by different other vendors. So this is the offer which customers will be happy to accept. So IMO C. But u can say that B is also another option which is close to chose. But C is the best option to chose. So C.

Why cannot the answer be B

Here's how I was thinking. :

• The rival does not offer some of the services that United Shipping offers in this combined package. So the customers would now return to the united shipping to leverage those services
  
  Also D seems to be close : If no other company offers the same package of services as United does , then customers would use the services provided by the United shipping
  
  In C Marketing studies have shown that many of United Shipping's former customers would prefer a combined rate for their various shipping services
  
  Prefer does not mean they would actually use those services ..You prefer to buy mercedes, but can u really do it ???
  
  I have seen some CRs knock off using the prefer and actually executing something ..

Please explain

received a pm.

Here's how I was thinking. :
The rival does not offer some of the services that United Shipping offers in this combined package. So the customers would now return to the united shipping to leverage those services

But, go back to the argument. The argument isn't that by providing new services, United Shipping will draw customers away from its competitors. Instead, the argument is that by packaging up multiple services that customers of other companies are already paying for individually, United Shipping can offer up an on-the-whole cheaper value proposition. (This is also why, incidentally, choice C is correct).

Also D seems to be close : If no other company offers the same package of services as United does , then customers would use the services provided by the United shipping

...I think you've misread choice D...

How is E incorrect ..??

IMO: E

kabirmohammed wrote:IMO: E

C is correct

Check out what TestLUV and Ron says !! upthread

@Leonard C

Is it from MGMAT test ? or what's the source ?!

mmslf75 wrote:@Leonard C

Is it from MGMAT test ? or what's the source ?!

oh, i saw this today in MGMAT test CAT 6, but will not bother... about it..as ron says!

Testluv, Ron, it is great to have you here

B is painful to me

B CONTRADICT evidence?, is that right.

for Asummption, Strengthen, weaken question, the answer choice which RESTATE or CONTRADICT is wrong

I got the answer wrong. However, this is what I found out.

The question is asking how United Shipping can win the customers back.

Conclusion: "Offering a package of services for a single rate that is lower than the combined rates of the individual servies" will win the cusomers back.
Evidence: Many customers truned away beause of lower price.

In order to support the arugment, we need to show that United Shipping's former customer LIKE the "combined rates" of the rivals. (so the lower rate will win the customers back).

(A),(B),(D),(E) do not show the links between lower rate and winning the customers back. They might imply that customers return because of "services." Then it is not matter if United Shipping lower its rate or not.

lunarpower wrote:

duongthang wrote:Testluv, Ron, it is great to have you here

B is painful to me

B CONTRADICT evidence?, is that right.

for Asummption, Strengthen, weaken question, the answer choice which RESTATE or CONTRADICT is wrong

nope. (b) is completely irrelevant - it neither weakens nor strengthens the argument.

note that united shipping lost profits because some of its customers "turned to a rival company whose rates were lower".
this means that the passage is ONLY concerned with services that are also offered by the rival firm. even if it's true that united offers some services that the rival firm doesn't offer, this fact wouldn't matter at all - since customers using those services wouldn't have been able to switch to the rival firm in the first place.

I also stuck over B and C, and Finally, I selected B, which is wrong.

Ron and Testluv's explanation gave me a clear idea about B. Thanks

Here, I believe that stimulus is concerned about cost and not about number of services.