Q1 - Big-budget movies often

[megm7267]

The first questions in logical reasoning rarely trip me up, but this one had me stumped for a while...perhaps because it appeared towards the end of the first half of the LSAT, I dunno.

Either way, I ended up choosing (A), when the answer is (B). Could someone clarify the reasoning on this one?

Thanks

[trevor.lovell]

The first thing to note is that the question is about revenue, not profit. Revenue is the amount of money coming in, so costs really don't enter into calculating revenue.

Answer choice A basically says big budget movies need to sell more tickets to cover costs, so already it can't be right. Also, in the stimulus the issue of production cost is addressed. It tells you big budget movies earn 2-3 times their costs. So even if we were talking about profit (which we aren't), we have to acknowledge that despite this margin on each big budget movie, the industry is generating more revenue from low budget movies.

Looking to answer choice B, we can imagine that if there are "many" more low budget movies than medium and high budget movies, it is possible the industry would derive more total revenue from low budget movies. It's not enough information to fully resolve the discrepancy (e.g. we don't know how much revenue each of these movies is generating, "many" is pretty open to interpretation, etc.), but it certainly helps. If this answer were true we could see how the industry could make $100M on each of 3 big budget movies, but also made $10M on each of 50 low budget movies, resulting in more revenue from low budget movies than from high budget movies.

Looking at the other answers they don't help much either. In fact, D and maybe E both provide a hint that A is not a likely choice since they both provide reasons why production costs might be high. They rely on similar logic to A, so it's hard to see why one would have more explanatory power than the others.

Hope this helps.

[giladedelman]

I endorse this explanation!

[goriano]

The first thing to note is that the question is about revenue, not profit. Revenue is the amount of money coming in, so costs really don't enter into calculating revenue.

But what if production costs play a factor in determining the makeup (i.e. big budget vs. low budget) of the revenue? Perhaps my idea of revenue is incorrect, but I thought of it as referring to not only the total amount of money coming in, but also relating to the share/makeup/percentage of low budget and big budget films in the movie industry's portfolio for that year. That is, a higher revenue from low-budget movies would imply (though not necessarily) more low-budget movies being made that year.

So I guess I was already thinking (B) in my mind when I was interpreting the meaning of "revenue" in the second sentence, but I didn't see how it addressed anything in the first sentence about big-budget films often grossing two or three times their production cost.

I chose (A) because it seemed to address both sentences. That is, while big-budget movies are more profitable, it takes a lot more effort to do so and might be a more risky venture. Thus, movie producers would rather play it safe and produce more low-budget movies.

I know something is wrong with my reasoning, but I just don't know what it is!

[timmydoeslsat]

I think you are straying too far from the facts that we are given.

1. Big budget films often gross 2X or 3X the cost of production and marketing.

2. Most of the revenue from the film industry is from small budget films.


How can those two statements go together? How can it be that big budget films make a lot of money, yet the small budget films make the majority of the revenue.

As answer choice B says, what if a lot more small budget films are made than big budget films. That explains why even though the big budget films make a lot of money, most of the revenue is coming from the small budget films.

Answer choice A is really only talking about the first statement. I would expect that the big budget films need to sell many more tickets to recoup costs! This fact does not reconcile how small budget films are responsible for the majority of films. Sure, big budget films need to do all of that stuff, but they are making 2X or 3X what the costs were! Why are they not responsible for a majority of the revenue?

B is the only one that explains this.