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United Shipping

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by reply2spg » Tue Jul 20, 2010 9:22 pm
C is correct here.
Leonard C wrote: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.
Sudhanshu
(have lot of things to learn from all of you)