First time computer buyers
First-time computer buyers buying PXC home computers typically buy models that cost much less and have a smaller profit margin per computer than do PXC computers bought by people replacing their computers with more powerful models. Last year PXC’s profits from computer sales were substantially higher than the previous year, although about the same number of PXC computers were sold and the prices and profit margins for each computer model that PXC sells remained unchanged.
If the statements above are true, which of the following is most strongly supported by them?
(A) PXC’s competitors raised the prices on their computers last year, making PXC computers more attractive to first-time computer buyers.
(B) The number of people buying PXC computers who also bought PXC computer-related products, such as printers, was larger last year than the previous year.
(C) Among computer buyers who bought a PXC computer to replace their existing computer, the proportion who were replacing a computer made by a competitor of PXC was greater last year than the previous year.
(D) The proportion of PXC computers bought by first-time computer buyers was smaller last year than the previous year.
(E) PXC’s production costs for its computers were lower last year than they had been the previous year.
Hi Riya,
Options C compares PXC computers to competitors’ computers. We don’t have any data about the pricing or sales of competitors. The comparison has to be between PXC’s first-time buyers and PXC’s replacement buyers
Option D is the correct answer because
Let’s take year 2018
Data given:
Profit margin on first time sales < profit margin on replacement sales
Profit margin, price, number of computers sold 2017 = Profit margin, price, number of computers sold 2016
Profits of PXC 2017 > Profit of PXC 2016
If all the above are true, only option D can be inferred.
According to D, the proportion of PXC computers bought by first time buyers 2017 < The proportion of PXC computers bought by first time buyers 2016.
