LSAT 8 | Section 4 | Logical Reasoning: Q17

LR Question 17 Explanation

QUESTION TEXT: Certain items-those with hard-to-define quality called…

QUESTION TYPE: Method of Reasoning

CONCLUSION: Exclusive goods should initially risk being priced too high rather than too low.

REASONING: Low prices can actually hurt sales of exclusive goods, since it causes them to be perceived as common and not exclusive. It is impossible to predict the appropriate price for an exclusive good.

ANALYSIS: This sounds like a good argument. Aiming too low has bad consequences. Aiming too high doesn’t have any. We can always lower the price later.

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1. CORRECT. Yes. Setting the price too low will actually hurt sales while bringing in less money. Setting prices too high will also hurt sales but more money is brought in. And when the price is too high the product will still be considered exclusive.
2. There are no advantages to setting prices too low. This can’t be right.
3. We know the reasons: people value goods they perceive as “exclusive.”
4. Actually it explicitly relies on buyers’ estimates of value. They value the goods more highly if they are priced highly.
5. Consumers may well notice the error and think “that is too expensive.” But that’s not such a big deal. It would be far worse if consumers thought “that is not exclusive.”

Recap: The question begins with “Certain items-those with hard-to-define quality called”. It is a Method of Reasoning question. Learn how to master LSAT Method of Reasoning questions on the LSAT Logical Reasoning question types page.