Verbal questions from any Manhattan Prep GMAT Computer Adaptive Test. Topic subject should be the first few words of your question.
tusharkhatri18
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United Shipping Company

by tusharkhatri18 Fri Nov 14, 2014 6:26 pm

Hi,
The question is as follows:

Because of rising costs, United Shipping Company raised its rates by ten percent last year. Many of its customers balked at the increase, however, and turned to a rival company whose rates were lower. In response, United Shipping Company began offering a package of services for a single rate that, though high, is still lower than the combined rates of the individual services. Officers of the company claim that this move will recoup the company's lost profits.
Which of the following, if true, provides the best basis for the officers' claim?
(a) United Shipping will aggressively advertise the new package of services.
(b) United Shipping's rival does not offer some of the services included in the package.
(c) Marketing studies have shown that many of United Shipping's former customers would prefer a combined rate for their various shipping services.
(d) United Shipping does not already offer all the services separately.
(e) No other shipping company offers the same package of services as United Shipping.

In this question, although I got my option correct as C. But I prethought something else given as:
Studies have shown that majority of the customers regularly used all the services provided in the package
Please whether this can be right, if given?
SANJILG310
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Re: United Shipping Company

by SANJILG310 Sat Nov 23, 2019 10:51 am

United Shipping raised its rates because of rising costs. In response, many of its customers turned to a rival company with lower rates. In turn, United Shipping began to offer a new package of services at a single, higher rate, claiming that this move would recoup the lost profits. We are asked to find a choice that provides the best basis for the claim that profits will be recouped. So we need to find a choice that strongly suggests that United Shipping will actually increase its profits somehow. The company can do so by either increasing revenue or lowering costs.
(A) This does not suggest that United Shipping will increase revenue or lower costs.

(B) This does not suggest that United Shipping will increase revenue or lower costs.

(C) CORRECT. This does suggest that United Shipping will increase profits, since its new package of services will be popular with the same cost-conscious customers who had begun patronizing its competitor. Thus, these customers are likely to return to United Shipping rather than continue to pay for each of the rival's services individually.

(D) This does not suggest that United Shipping will increase revenue or lower costs.

(E) This does not suggest that United Shipping will increase revenue or lower costs.
Sage Pearce-Higgins
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Re: United Shipping Company

by Sage Pearce-Higgins Sun Nov 24, 2019 4:55 am

Thanks for posting. Before I weigh in with an explanation, please let me know what your question about this problem is.