LSAT 69, Logical Reasoning II, Q18

QUESTION TEXT: Computer store manager: Last year we made…

QUESTION TYPE: Flawed Reasoning

CONCLUSION: We should sell only low end models.

REASONING: We make a higher profit margin on low end models. So we’ll make more profits by selling low end models.

ANALYSIS: Note that any sentence with ‘should’ is usually the conclusion.

This argument confuses profits and profit margins. Profit margins are percentages: you make, for example, 8% of the sale price.

Profits are dollar amounts: you make, for example, $500 whenever you sell a certain computer.

High end computers might be more profitable, even if they have a lower margin. I’d rather make 5% of a $2000 sale than 10% of a $400 sale. That’s $100 instead of $40.

___________

1. CORRECT. See the explanation above. I’d rather get more money from a high end sale, even if the profit percentage  is lower.
2. This doesn’t quite work. If you sell the same amount of computers of each type, you’re still making a higher margin on the low end models.
3. So? The point is that lower end models have a higher profit margin. You might prefer that the customer buys the low end model.
4. The manager doesn’t say profits are the only objective. But his proposal seems like it will increase profits without harming other objectives. That’s a win.
5. Well duh. Sales are always going to fluctuate. But there’s no reason to believe low end sales will be consistently worse than high end sales in the future.

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