MGMAT_T4_VERBAL

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1. 4. Kitchen Corporation sells a variety of stoves and dishwashers. Two years ago, the company introduced a line of refrigerators. The company lost money on sales of the refrigerator line in each of the last two years, and forecasts suggest that the refrigerator line will post stagnant revenues and slightly increasing costs. Therefore, Kitchen Corporation can increase profits by discontinuing the refrigerator line.

Which of the following, if true, most seriously weakens the argument?

A. Kitchen Corporation has designed a new model of its refrigerator that includes an icemaker, a feature that is considered important by many consumers.

B. Refrigerators have a higher average price than dishwashers or stoves.

C. Kitchen Corporation’s refrigerators are competitively priced compared to refrigerators from leading manufacturers.

D. Many customers prefer that all their kitchen appliances come from the same manufacturer.

E. Some machines that are used to manufacture refrigerators can also be used to manufacture stoves.

(2) Deconstruct the Argument

Kitchen Corporation loses money on its recently added refrigerator line, and forecasts suggest this will continue. Therefore, to increase profits Kitchen Corporation should stop making refrigerators.

Here is one possible way to map the argument.

KC = stoves + dw

Added refrig but losing money

© Stop refrig → more profit

(3) State the Goal

The goal on a Weaken question is to cast doubt on the conclusion. What would make it is less likely that discontinuing the refrigerator line will increase profits?

Ans. D

2.11. Adam will spend $4,000 to rent a booth at the town’s annual county fair to promote his new Sandwich Shoppe. In previous years, the average food booth at the fair served 400 customers. Thus, in order to cover his costs, Adam has calculated that he must sell 400 sandwiches for $10 each.

Which of the following statements casts the most doubt on Adam’s chances of breaking even at the county fair?

A. Adam should not limit himself to 400 sandwiches; he should be prepared to sell more.

B. Adam has not factored in the costs of raw materials or labor in calculating the amount of revenue he needs to generate to break even.

C. If booths in previous years averaged 400 customers, that means some booths served more than 400 and some served fewer than 400.

D.Many people prefer other types of food to sandwiches.

E. If Adam shares his booth, and the cost of the rental, with a complementary business, he will not have to sell as many sandwiches to break even.

(C) Though it is true that an average number of customers means some booths served more and some served fewer, this statement does not tell us that Adam will have fewer than 400 or that his plan cannot work. Consider also that each customer might buy more than one sandwich, so Adam could have fewer customers but still sell enough sandwiches to cover his costs.

Ans. B

3. 17. Profits for one of Company X's flagship products have been declining slowly for several years. The CFO investigated and determined that inflation has raised the cost of producing the product but consumers who were surveyed reported that they felt the product’s functionality didn’t justify a higher price. As a result, the CFO recommended that the company stop producing this product because the CEO only wants products whose profit margins are increasing.

The answer to which of the following questions would be most useful in evaluating whether the CFO's decision to divest the company of its flagship product is warranted?

A. Does the company have new and profitable products available with which to replace the flagship product?

B. Will the rest of Company X's management team agree with the CFO's recommendation?

C. Can Company X sell the flagship product to new markets to increase its customer base?

D. Are there additional features that could be added to the product without a resultant increase in the production cost?

E. What percentage of Company X's revenues is represented by sales of the flagship product in question?

Profits for a particular product have been going down and the CFO has determined that this is because, on the one hand, the cost to make the product has increased and, on the other, consumers won't pay more than the current price (recall that Profit = Revenues – Costs). The CEO wants Company X to sell products with increasing profit margins only; as a result, the CFO decides the solution is to stop making this product. What would help to evaluate this decision?

(C) While selling the product to more customers may increase the total revenues, this solution won’t address the profit margin of the product, and hence is out of scope.

(D) The argument indicates that customers “felt the product’s functionality didn’t justify a higher price.” If, on the one hand, new features could be added to the product (without increasing the cost of the product), then the company may be able to charge a higher price for the product, weakening the CFO's assumption that this product cannot achieve increasing margins. If, on the other hand, new features cannot be added to the product (or not without increasing the cost), then the CFO's asumption is strengthened. Either way, this would be a good way to evaluate the decision.

Ans. D

4. 20. Jim: The United States Mint has recently announced that it costs more to manufacture a penny or a nickel than the face value of each coin. In addition, there are very few items that can be purchased for a nickel, and virtually none that can be purchased for a penny. Since both the penny and the nickel no longer provide a necessary function in today’s economy, I propose that the government eliminate them and declare the base unit of U.S. currency to be the dime.

Mary: Don’t be silly. This would mean that all prices would round up to the nearest dime–nobody would want that. Congress would never approve, much less consider, such an unpopular measure.

In her response to Jim, Mary does all of the following EXCEPT

A. makes an assumption about the possible negative consequences of Jim's proposal

B. implies that a particular regulatory path is necessary to implement Jim's proposal

C. provides a reason why Jim’s proposal would be difficult to implement, regardless of its potential benefits

D. assumes that Congress would consider the monetary benefits less important than public opinion of the proposal

E. attempts to undermine a premise upon which Jim bases his proposal

(A) All prices rounding up to the nearest dime would certainly be a negative consequence from a consumer viewpoint, and this contention is not presented anywhere in the passage as a statement of fact; it is simply an assumption made by Mary.

(E) Mary’s response is based on her assertion that Congress would not approve Jim’s proposal because she assumes that it would be extremely unpopular. She does not attack or even mention any of Jim’s premises underlying his proposal.

Ans. E

5. 28. Recent research has indicated that married people are not only happier than unmarried people, but also healthier. This study has been widely reported by the media, with most commentators concluding that being married is good for one’s health and attitude.

The conclusion of the media commentators depends on which of the following assumptions?

A. The longer people are married, the happier and healthier they become.

B. Married couples who had a large, extravagant wedding are happier than those who had a small, simple ceremony.

C. Married people cannot get depressed.

D. Single people with depression or health problems are just as likely to get married as are other single people.

E. Some marriages are more harmonious than others.\

Research indicates that there is a connection between being married and being happy and healthy. Media commentators have concluded that marriage causes happiness and health. However, one could reasonably conclude from the research that the cause and effect are the reverse: being happy and healthy makes a person more likely to get married. CAUSE & EFFECT

Ans. D

6.36. The Action-Packed Gaming Company, based on the success of the previous season’s video game featuring the character Sam Li, of the popular Fist of Awe series of martial arts movies, developed for the current season a similar martial arts game featuring a new character who is also a martial arts master. The new game had improved 3-D graphics, enhanced multiplayer capability, and dozens of new martial arts moves developed by real-life masters. However, marketing surveys showed that teenagers were uninterested in this new game, and the game sold very poorly.

The passage implies that an explanation for the failure of the new game is based on doubt regarding which of the following assumptions?

A. Teenagers make purchasing decisions based on the technological merits of video games, not the name recognition of the games’ main characters.

B. Buyers of video games prefer to purchase games based on popular movies.

C. The Fist of Awe series of movies was extremely popular with teenagers who regularly purchase video games.

D. Technological improvement from one video game to the next does not guarantee a corresponding increase in sales.

E. The successful video game may have benefited from advertising associated with the Fist of Awe movies, a benefit the failed video game did not have.

Understand question stem. The question asks us for the statement that is unlikely to be true – that is, the statement that is an assumption that, if untrue, would support an explanation for the new game’s failure.

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