Clearbell Telephone provides slow-dialing (SD) service to customers for a low fee, and fast-dialing (FD) service to other customers who pay a somewhat higher fee. FD technology, however, is so efficient that it costs Clearbell substantially less per average call to provide than does SD. Nonetheless, accountants have calculated that Clearbell's profits would drop if it provided FD to all its customers at the current low-fee rate.
Assume that installation costs for FD are insignificant if the customer already has SD service. Which of the following, if true about Clearbell, best explains the results of the accountants' calculation?
A. The extra revenue collected from customers who pay the high fee is higher than the extra cost of providing SD to customers who pay the low fee.
B. The low fee was increased by 6 percent last year, whereas the higher fee was not increased last year.
C. Although 96 percent of customers regard FD service as reliable and more convenient than SD, fewer than 10 percent of them choose to pay the higher fee for FD service.
D. The company's competitors generally provide business customers with FD service at low-fee rates.
E. Profits rose slightly each month for the first three months after FD was first offered to customers, then fell slightly each month for the succeeding three months.
OA A
Source: Official Guide
Target Test Prep's 2024 GMAT Focus Edition prep is discounted for the BTG community!
Redeem5-Day Free Trial
5-day free, full-access trial TTP
Available with Beat the GMAT members only code
MORE DETAILSThis topic has expert replies
-
- Moderator
- Posts: 7187
- Joined: Thu Sep 07, 2017 4:43 pm
- Followed by:23 members
Clearbell Telephone provides slow-dialing (SD) service to
by
BTGmoderatorDC » Tue Dec 24, 2019 5:55 pm
• Page 1 of 1
5/5
5 Star (479 Reviews)
"Target Test Prep is the closest to the official version of the GMAT exam, about 99% accuracy in terms of the quality and quantity of information. The course has excellently created singular sets of focused lessons and tests for every possible topic that one could come across in the official GMAT exam."
"The TTP course maximizes the efficiency of the time you spend studying. It will take time and effort but I could almost guarantee that if you complete the course exactly as it is laid out you will get an amazing score. They also have a very responsive team willing to help with any questions you might have."
"TTP has two things that I think no other test prep company offers: A teaching approach that reinforces understanding and an attitude that will give you the mental preparedness needed to succeed on the test. TTP gives you a deep understanding of the concept you need to know while teaching you how to think."
GMAT Course Reviews
Admissions Consulting Reviews
FREE GMAT PREP RESOURCES
GMAT PREP DEAL TRACKER
- ONLY $85
- SAVE $300
- ONLY $99
- $150 OFF
- 50% OFF
- SAVE $75
- 100% OFF