PrepTest 145, Section 4, Question 21
In a recent study, researchers collected current prices(50 more words not shown)
Each of the following, if(10 more words not shown)
- AA price war(17 more words not shown)
- BSuggested wholesale prices(17 more words not shown)
- CWholesale prices for(11 more words not shown)
- DWholesale prices suggested(18 more words not shown)
- EThe prices suggested(20 more words not shown)
Reading the argument
Why are the actual prices so much lower than the guidebook's prices for the same drugs?
One detail catches my attention: these sellers specialize in bulk sales. Maybe buying a very large quantity produces a discount the guidebook doesn't reflect. Another possibility is some outside source of cheaper prices, such as a government subsidy in the market being studied. Those are guesses; we haven't been told either is happening.
I might also wonder whether the book is old, but it is the current annual edition. That rules out simply assuming we're using a book from years ago.
What we’re looking for
This is an EXCEPT question. Four answers should help explain the lower prices. We want the one that leaves the difference between the actual prices and the guidebook's prices unexplained.
Working the answers
- A
A recent price war could drive the actual prices below the levels listed in the guidebook. Wholesalers trying to undercut one another have a reason to charge less than they otherwise would. This helps explain the difference, so we should eliminate it on an EXCEPT question.
- BCorrect
This compares the suggested prices of common drugs with those of less common drugs. Our puzzle compares two prices for the same common drugs: what wholesalers actually charge and what the guidebook suggests. Even if common drugs are cheaper than rare ones, we still need to explain why their actual prices are so far below their own guidebook prices.
- C
Large month-to-month changes could make the current price much lower than the price reflected in an annual guide. Being the current edition doesn't make a yearly publication update itself every month. If the study occurred during a low-price period, the difference would make sense.
- D
The suggested prices are designed to allow every wholesaler a substantial profit. A seller willing to accept a smaller margin could charge less, especially if it expects to sell large quantities. It needn't give up profit altogether. The difference between substantial profit and a smaller acceptable profit gives us a reason the recommendation could exceed the actual price.
- E
This confirms the quantity difference I wondered about. The guidebook prices relatively small purchases by individual doctors, while the study concerns sellers specializing in bulk sales. A bulk discount could therefore make the studied prices much lower even for the same drugs.
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