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On Monday, Daisy’s Lemonade Stand sold lemonade ( CAT-3)

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vcb_007
 Post subject: On Monday, Daisy’s Lemonade Stand sold lemonade ( CAT-3)
 Post Posted: Sun Sep 13, 2009 10:13 am 
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Students


Posts: 7
On Monday, Daisy’s Lemonade Stand sold lemonade at 20 cents per cup. The Lemon Shack sold lemonade at 30 cents per cup. At the end of the day, Daisy’s Lemonade Stand and the Lemon Shack reported identical revenues and identical profits.

The statements above best support which of the following assertions?

A.On Monday, Daisy’s Lemonade Stand sold fewer cups of lemonade than did the Lemon Shack.
B.The Lemon Shack sells higher quality lemonade than does Daisy’s Lemonade Stand.
C.On Monday, Daisy’s Lemonade Stand and the Lemon Shack incurred identical costs to run their businesses.
D.In general, lemonade consumers prefer the lemonade at Daisy’s Lemonade Stand to the Lemonade at the Lemon Shack.
E.The Lemon Shack would not increase its revenues by lowering its prices.

Please show me how to arrive at the correct inference.
C
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RonPurewal
 Post subject: Re: On Monday, Daisy’s Lemonade Stand sold lemonade ( CAT-3)
 Post Posted: Sun Oct 11, 2009 5:35 am 
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ManhattanGMAT Staff


Posts: 7146
vcb_007 wrote:
Please show me how to arrive at the correct inference.
C


remember, you MUST pick a statement that HAS TO BE TRUE based on the statements in the passage.
remember that profit = revenue minus cost (this is actually the ONLY thing you have to know about business AT ALL on this test). therefore, if revenue and profit are both invariant (as specified in the passage), then so must be cost.
that is all that's needed to prove (c).

--

also, remember that you DO NOT HAVE TO USE ALL, OR EVEN MOST, OF THE INFORMATION PRESENTED. the passage is consistent with this principle (note that you don't use the percentages).
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pushkalk
 Post subject: Re: On Monday, Daisy’s Lemonade Stand sold lemonade ( CAT-3)
 Post Posted: Thu Jun 23, 2011 11:06 am 
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Students


Posts: 25
Hi Ron,
My reasoning was that if Daisy sells at a lower cost and arrives at the same revenue and profit then she must have sold a higher no of cups.

Thus I scanned the answer choices for something which supported this reasoning and I found D.

If people prefer Daisy's lemonade =>that she sold more number of cups. This is consistent with the argument.



Kindly point out the error in my reasoning if possible.

Thanks
bblast
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george.kourdin
 Post subject: Re: On Monday, Daisy’s Lemonade Stand sold lemonade ( CAT-3)
 Post Posted: Wed Jun 29, 2011 9:40 am 
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Course Students


Posts: 98
pushkalk,

too much of an inteference and may not necessarily be true based on the info presented in the passage. as ron said, it MUST be true.

r = p - costs. we know that they made the same revenue and profits, thus, costs must be the same. if either stand has higher/lower costs, revenue would differ. that is a fact.

you are going after the profits portion of this equation and making too many inferences/assumptions. do you know for a fact that consumers prefer one lemonade over the other? what if they dont and they were blackmailed into buying it?
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jnelson0612
 Post subject: Re: On Monday, Daisy’s Lemonade Stand sold lemonade ( CAT-3)
 Post Posted: Sat Jul 16, 2011 11:45 pm 
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ManhattanGMAT Staff


Posts: 1857
George is right. We don't know that people prefer one lemonade to another. The chosen lemonade may be cheaper, or more convenient to obtain, or the business may sell other desirable items so the customers decide to just get their lemonde at that business, etc.

_________________
Jamie Nelson
ManhattanGMAT Instructor
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