PrepTest 139, Section 4, Question 18
Computer store manager: Last year we made an(80 more words not shown)
The reasoning in the manager's(12 more words not shown)
- AThe argument fails(23 more words not shown)
- BThe argument fails(21 more words not shown)
- CThe argument ignores(23 more words not shown)
- DThe argument presumes,(16 more words not shown)
- EThe argument fails(16 more words not shown)
Reading the argument
Thirteen percent of a large price can be more money than twenty-five percent of a small one.
Try some made-up prices that fit the passage. On a $3,000 computer, a 13 percent profit is $390. On a $500 computer, a 25 percent profit is $125. The cheaper computer has the better percentage, but the expensive one brings in more than three times as many profit dollars.
What we’re looking for
That difference matters even if the manager is right about selling the same total number of computers. Replacing a sale that earns $390 with one that earns $125 would reduce profit. We don't know that these are the store's actual prices; the example shows why comparing percentages doesn't settle the decision. For the flaw question, look for the possibility that the lower percentage applies to a large enough price to produce more money per sale.
Working the answers
- ACorrect
The money earned per high-end computer might be substantially greater despite the lower percentage. The manager focuses on profit rates and overlooks what those rates yield in dollars. Without that comparison, selling only low-end computers hasn't been shown to maximize profit.
- B
Equal numbers sold last year wouldn't tell us how much profit each kind contributed. If each high-end sale earned $390 and each low-end sale earned $125, equal unit sales would still produce very different profits. This answer doesn't address the missing dollar comparison.
- C
A customer might switch to the more expensive model, but does that sale earn the store more profit? We still need the information A supplies. The possibility of persuading someone to buy a high-end model doesn't by itself establish that keeping those models improves the store's profits.
- D
The manager is making a recommendation for maximizing profit. That doesn't require believing profit is the only worthwhile goal of running a store. The flaw is that the recommended policy may fail even on the manager's stated objective. We can examine that claim without deciding whether other goals also matter.
- E
The forecast compares future low-end-only sales with future sales of both kinds combined. It doesn't simply assume that low-end sales will remain at last year's level. Sales could change over time while that comparison still held. More importantly, even granting the predicted equal number of sales leaves the percentage-versus-dollars problem unresolved.
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