A product that represents a clear technological advance over competing products can generally command a high price. Because technological advances...
GMAT Critical Reasoning : (CR) Questions
Source: Official Guide
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A product that represents a clear technological advance over competing products can generally command a high price. Because technological advances tend to be quickly surpassed and companies want to make large profits while they still can, many companies charge the maximum possible price for such a product. But large profits on the new product will give competitors a strong incentive to quickly match the new product's capabilities. Consequently, the strategy to maximize overall profit from a new product is to charge less than the greatest possible price.
In the argument above, the two portions in boldface play which of the following roles?
Solution
Understanding the Passage
| Text from Passage | Analysis |
| "A product that represents a clear technological advance over competing products can generally command a high price." |
|
| (Boldface 1) "technological advances tend to be quickly surpassed" |
|
| "and companies want to make large profits while they still can" |
|
| (Boldface 2) "many companies charge the maximum possible price for such a product" |
|
| "But large profits on the new product will give competitors a strong incentive to quickly match the new product's capabilities." |
|
| "Consequently, the strategy to maximize overall profit from a new product is to charge less than the greatest possible price." |
|
Overall Structure
The author is presenting a business strategy argument that challenges conventional wisdom. The flow moves from: established principle → common practice based on that principle → problem with that practice → better alternative strategy.
Main Conclusion: The strategy to maximize overall profit from a new product is to charge less than the greatest possible price.
Boldface Segments
- Boldface 1: technological advances tend to be quickly surpassed
- Boldface 2: many companies charge the maximum possible price for such a product
Boldface Understanding
Boldface 1:
- Function: Provides a key reason explaining why companies feel pressure to price aggressively
- Direction: Supports the author's conclusion (explains why maximum pricing is problematic)
Boldface 2:
- Function: Describes the common business practice that the author ultimately argues against
- Direction: Opposes the author's conclusion (represents the flawed strategy the author wants to change)
Structural Classification
Boldface 1:
- Structural Role: Supporting evidence/reason that explains the motivation behind a problematic strategy
- Predicted Answer Patterns: "provides explanation for," "gives reason why," "supports the premise that"
Boldface 2:
- Structural Role: Description of current practice that the argument seeks to refute
- Predicted Answer Patterns: "describes a strategy that the argument opposes," "states a practice that the argument argues against"
Answer Choices Explained
A
The first is a consideration raised to argue that a certain strategy is counterproductive; the second presents that strategy.
'The first is a consideration raised to argue that a certain strategy is counterproductive' - ✗ WRONG - The first boldface doesn't argue against maximum pricing; it actually explains why companies feel compelled to use that strategy. It provides reasoning for the behavior rather than criticizing it.
B
The first is a consideration raised to support the strategy that the argument recommends; the second presents that strategy.
'The first is a consideration raised to support the strategy that the argument recommends' - ✗ WRONG - The first boldface supports maximum pricing (which creates urgency), but the argument ultimately recommends charging LESS than maximum price. So this consideration supports the wrong strategy.
C
The first is a consideration raised to help explain the popularity of a certain strategy; the second presents that strategy.
'The first is a consideration raised to help explain the popularity of a certain strategy' - ✓ CORRECT - The first boldface explains why maximum pricing is popular: because tech advances get surpassed quickly, companies feel pressure to maximize profits while they can. 'the second presents that strategy' - ✓ CORRECT - The second boldface presents the maximum pricing strategy that the first boldface helped explain.
D
The first is an assumption, rejected by the argument, that has been used to justify a course of action; the second presents that course of action.
'The first is an assumption, rejected by the argument, that has been used to justify a course of action' - ✗ WRONG - The first boldface isn't an assumption that the argument rejects. The author accepts that tech advances do get surpassed quickly - this is presented as factual reality, not a rejected assumption.
E
The first is a consideration that has been used to justify adopting a certain strategy; the second presents the intended outcome of that strategy.
'The first is a consideration that has been used to justify adopting a certain strategy' - ✓ CORRECT - The first boldface does justify maximum pricing by explaining the time pressure companies face. 'the second presents the intended outcome of that strategy' - ✗ WRONG - The second boldface presents the strategy itself (maximum pricing), not the intended outcome. The intended outcome would be 'large profits while they still can.'
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