A cable company sells exactly 3 service packages: Internet only, TV only, and an Internet-TV combination. The monthly charge for...

Understanding the Question

The question asks us to determine which service package generates the greatest monthly revenue.

Let's organize what we know:

• Three packages available: Internet only, TV only, and Internet-TV bundle
• The bundle costs \(25\%\) less than buying both services separately
• Customer distribution: \(60\%\) buy Internet only, \(20\%\) buy TV only, \(20\%\) buy the bundle

To answer "which package generates the most revenue," we need to compare the total revenue from each package (price × number of customers).

Since we already know the customer percentages, sufficiency means having enough information to determine the relationship between the prices of the different packages.

Analyzing Statement 1

What Statement 1 tells us: Internet only costs \(\$25\) per month.

This gives us one piece of the pricing puzzle, but we still don't know:

• How much TV only costs
• Therefore, how much the bundle costs (since it depends on both Internet and TV prices)

Without knowing these prices, we cannot calculate or compare the revenues from each package. For instance:

• If TV costs \(\$10\), then TV revenue = \(20\% \times \$10 = \$2\) per 100 customers
• If TV costs \(\$100\), then TV revenue = \(20\% \times \$100 = \$20\) per 100 customers

The TV revenue could vary dramatically, and we have no way to determine where it falls relative to Internet revenue.

Statement 1 alone is NOT sufficient.

This eliminates choices A and D.

Analyzing Statement 2

Now let's forget Statement 1 completely and analyze Statement 2 independently.

What Statement 2 provides: TV only costs \(20\%\) more than Internet only.

This creates a complete pricing relationship. Here's the key insight:

Internet only has a massive 3-to-1 customer advantage (\(60\%\) vs \(20\%\) for each other package). For another package to generate more revenue, its price would need to more than compensate for having only one-third the customers.

Let's examine the revenue relationships using any base price:

• Internet revenue: \(60\%\) of customers × base price = 60 revenue units
• TV revenue: \(20\%\) of customers × \(1.2\) times base price = 24 revenue units
• Bundle revenue: \(20\%\) of customers × \(75\%\) of (base + \(1.2\)×base) = \(20\% \times 75\% \times 2.2 = 33\) revenue units

Comparing these revenues:

• Internet: 60 revenue units
• TV: 24 revenue units
• Bundle: 33 revenue units

Internet only generates the highest revenue - its \(3\times\) customer advantage is simply too large for the modest price differences to overcome.

[STOP - Sufficient!]

Statement 2 alone is sufficient.

This eliminates choices C and E.

The Answer: B

Statement 2 alone provides the price relationship needed to determine that Internet only generates the greatest revenue, while Statement 1 alone does not.

Answer Choice B: "Statement 2 alone is sufficient, but Statement 1 alone is not sufficient."