PT67-S4-Q17

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jitsubruin
Posts: 23
Joined: Sun May 08, 2011 1:56 pm

PT67-S4-Q17

Postby jitsubruin » Thu Sep 05, 2013 1:32 pm

I am having trouble understanding why B is properly inferred. I have already read Manhattan's forum and none of the responses address my reasoning for throwing out B. B says: "Retail stores that distribute coupons generally compensate..." While the stimulus says: "...retail stores that distribute and accept store coupons as a way of discounting the prices on certain products..."

Isn't it possible that retail stores that just distribute coupons differ from retail stores that both distribute and accept coupons as a way of discounting prices? I guess it doesn't make much sense for a retail store to just distribute coupons and not accept them. Maybe I am being too strict with the language or missing something.

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Silvermanlsat
Posts: 12
Joined: Thu Sep 05, 2013 8:06 pm

Re: PT67-S4-Q17

Postby Silvermanlsat » Thu Sep 05, 2013 8:42 pm

The answer to this question is entirely based on the fact that the stimulus provides that retail stores that distribute and accept coupons charge more for their products on average than retail stores that do not distribute and accept coupons charge for those same products.

Let's assume we have retail store A, and that retail store does distribute and accept products. Assume they sell only 5 products.

Product 1: $5;
Product 2: $5
Product 3: $6
Product 4: $6
Product 5: $7

Now assume retail store B sells the same products but does not accept distribute and accept coupons. Assume its prices are:

Product 1 :$6
Product 2: $6
Product 3: $7
Product 4: $7
Product 5: $8

If the above were true, it would be impossible for retail store A, on average, to charge more for its products because computing the average merely entails adding up all the individual prices, and dividing by the number of items. To be specific, the average price of products in retail store A in the example above would be 5+5+6+6+7/5=$5.80, while the average price of products in retail store B would be 6+6+7+7+8/5=$6.80.

As per the above, if all the prices in retail store B are greater than all the prices in retail store A, it will not be true that the average price of products in retail store A is higher. So, if the average price of products in retail store A is to be higher (and we are told that the store that distributes coupons has a higher average product price) then it must be true that stores that distribute coupons charge higher prices than stores that do not distribute coupons for (at least) some of its products (choice B).




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