profits

[n_niaz]

Because of the rising costs of gasoline, a small bus company has decided to decrease the number of weekend trips it runs to a nearby metropolitan area by one third. It will not lose any riders, because the decreased number of trips is adequate for the existing number of weekend riders. The company will save substantially on fuel costs and will have one fewer driver working on weekends. Moreover, the bus company will continue to raise revenue through print advertising inside the bus and on the bus ’ s exterior.

Which of the following if true, provides the strongest evidence that the bus company ’ s profits are likely to decrease if the company implements the plan?

a )Many of the weekend riders would continue riding the bus even if the fare was increased.
b )Most of the advertisers will continue to spend the same amount on advertising per mile and the displaced weekend driver will not earn more by switching to a weekday route at the company.
c )The displaced weekend driver will earn the same salary driving on weekdays and the advertisers will increase their advertising on the weekend.
d )Maintenance costs per bus will remain constant.
e )The increased cost of fuel increases the operating costs of one round trip by twenty per cent.

[viju9162]

Is the answer C ?

[nervesofsteel]

B for me..

If buses are decreased... Total miles will decrease...
thus advertising cost will decrease...

[ranell]

I would go for B as if advertisers continue to maintain the same amount of advertising per mile and the number of miles has decreased, that means that a small bus company will not earn enough revenue on advertising. So even if the removed driver will not earn more, the company's revenue is likely to decrease and, as costs are the same, the gross profit will decrease.

Hence the answer is B

[shibal]

IMO B

[n_niaz]

why not D?

Wont the fact that maintenance cost stay the same reduce the profits now that the bus is on a lesser schedule

[niraj_a]

niaz,

D could have been an answer, if the following was not in the stem - "Moreover, the bus company will continue to raise revenue through print advertising...."

if the bus company continues to raise revenue, then maintenance costs being constant will increase / maintain profits, instead of decreasing profits.

[n_niaz]

OA is B

[khanshainur]

I believe the correct answer should be B