My doubt: The reasoning pattern followed while answering one question does not hold good while answering another question (that appeared in mgmat practice test)

1)
Sneakers
Brand X designs and buils custom sneakers, one sneaker at a time. It redently announced plans to sell "The Gold Standard", a sneaker that will cost five times more to manufacture than any other sneaker that has been ever been created.
Which of the following, if true, most supports the prediction that The Gold Standard shoe line will be profitable?
(A) Because of its reputation as an original and exclusive sneaker, the Gold Standard will be favored by Urban hipsters to pay exceptionally high prices in order to stand out

(B) Of the the last four sneakers that Brand X released, three have been sold at a rate that was higher than projected.

(C) A rival brand recently declared bankruptcy and ceased manufacturing shoes.

(D) The market for The Gold Standard will not be more limited than the market for other Brand X shoes

(E) The Gold Standard is made using canvas that is more than five times the cost of the canvas used in most sneakers.

Answer A
and D is irreleavnt: We have been told nothing that connects
market to profitability

Now consider this question which appeared in my mgmat practice test 3

2)
Country X imposes heavy tariffs on imported manufactured goods. Company Y has determined that it could increase its profits in the long term by opening a factory in Country X to manufacture the goods that it currently produces in its home country for sale in Country X.

For Company Y's determination to be true, which of the following assumptions must also be true?

(A) Company Y will be able to obtain all the necessary permits to open a factory in Country X.
(B) Company Y currently produces no goods outside its home country.
(C) A sustainable market for Company Y's goods currently exists in Country X.
(D) Company Y's home country does not impose tariffs on imported goods.
(E) Labor costs in Country X are lower than those in Company Y's home country.

Explanation
The text tells us only that Country X imposes heavy tariffs on imported goods and that Company Y believes it can increase long-term profits by opening a factory in Country X so it can avoid having to import its goods into Country X. We are asked to select an answer choice that is an assumption required for Company Y's belief to be valid.

(C) CORRECT. In order for Company Y to conclude that it can increase long-term profits by opening a factory in Country X, it must believe that a sustainable market exists for its products in that country. Otherwise, the new factory would not generate revenue and the company could not recoup the cost of the new factory.

(E) We need not assume that labor costs are lower in Country X. It could be that labor costs in Country X are higher than those in Company Y's home country but the increased cost of labor is still less than the tariffs. This would result in a net savings for Company Y in Country X.

My question: I chose (E) since in the 1st question's explanation, it is mentioned that We have been told nothing that connects
market to profitability'. Following this reasoning, I eliminated answer choice (E) in 2nd question.
And I feel labour charges are equally related with profitability.

Kindly help in resolving my doubt. How can (C) be the answer if earlier you reasoned theres no correlation between matket and profitability

Hello :)

The resolution to your problem is as follows:

Never EVER bring in extraneous information in for a CR question. The information as given in the passage is the only information you need to know about the topic/argument. Also know that CR questions are very literal. They mean what they say. You should never go too far from what is stated in the argument. And you certainly can't add your own knowledge/information to the argument, which is what you have done in this case. Treat each question ONLY on the basis of the GIVEN argument.

Hope that helps.

thanks it helps ... :)

The real issue with your question is that these questions are DIFFERENT TYPES; they're asking different things so you cannot use the same logic.

The first question (Sneakers) is a Strengthen the Conclusion question. We need to answer: does this answer choice help demonstrate that the Gold Standard will be profitable? Basically, the correct answer will show the shoe line's profitability. (A) does that because the high prices increases the revenues, leading to higher profits. (D) does not help demonstrate that the comparison of markets will lead to greater profits of this shoe line.

The second question is a Find the Assumption question. Here, we need to link the premises stated in the argument with the assumption: the correct answer bridges this gap. We are told that Country X imposes heavy tariffs, so it's obviously very expensive to import goods into Country X. Company Y thinks that it might be more cost-effective to build that factory right in Country X so it doesn't have to pay the tariffs. In order for Company Y to invest so much resources to start a new factory in Country X, they must believe (assume) enough people will buy this product to make it worthwhile for them. If no one buys it, why build a factory? This is the assumption that bridges the gap to conclude that profits will be increased by building the factory in Country X.

So the KEY here is to be careful about what type of question you're answering. What may be true for one type may not be true for another type.

Hope that helps.

_________________
Ben Ku
Instructor
ManhattanGMAT