The Maxilux car company’s design for its new luxury model, the Max 100, included a special design for the tires that was intended to complement the model’s image. The winning bid for supplying these tires was submitted by Rubco. Analysts concluded that the bid would only just cover Rubco’s costs on the tires, but Rubco executives claim that winning the bid will actually make a profit for the company.

Which of the following, if true, most strongly justifies the claim made by Rubco’s executives?

(A) In any Maxilux model, the spare tire is exactly the same make and model as the tires that are mounted on the wheels.
(B) Rubco holds exclusive contracts to supply Maxilux with the tires for a number of other models made by Maxilux.
(C) The production facilities for the Max 100 and those for the tires to be supplied by Rubco are located very near each other.
(D) When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type.
(E) When Maxilux awarded the tire contract to Rubco, the only criterion on which Rubco’s bid was clearly ahead of its competitors’ bids was price.

OA: D


Simplifying the argument:

  • Conclusion: winning the bid will actually make a profit for the company.
  • Although: Analysts concluded that the bid would only just cover Rubco’s costs on the tires

Type: Strengthen

Prephrasing: Revenue = cost + profit => there should be other revenues that can draws profits to company

POE:

(A) In any Maxilux model, the spare tire is exactly the same make and model as the tires that are mounted on the wheels.

=> Cannot explain why company has profit => eliminate
(B) Rubco holds exclusive contracts to supply Maxilux with the tires for a number of other models made by Maxilux.

=> Contender. However, it mentions exclusive contracts and we do not know whether exclusive contracts are a part of the bid. Hold it and looking if there is other better choice.
(C) The production facilities for the Max 100 and those for the tires to be supplied by Rubco are located very near each other.

=>The production facilities are located very near each other => Cannot explain why company has profit => eliminate
(D) When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type.

=> So that when people replace the tire, they have to buy from Maxilux => other revenue => profit => Correct
(E) When Maxilux awarded the tire contract to Rubco, the only criterion on which Rubco’s bid was clearly ahead of its competitors’ bids was price.

=> Cannot explain why company has profit => eliminate

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