Loading...
The owner of the Holiday Antique Shoppe plans to increase profits by selling gift certificates for \(10\%\) less than their face value. He reasons that customers will eagerly buy the certificates as gifts for friends and family members in the belief that the customers are getting a discount, but that many recipients of the gift certificates will not be interested in antiques, and so will neglect to redeem the certificates.
Which of the following, if true, presents the most serious potential weakness of the plan?
| Text from Passage | Analysis |
| The owner of the Holiday Antique Shoppe plans to increase profits by selling gift certificates for 10 percent less than their face value. |
|
| He reasons that customers will eagerly buy the certificates as gifts for friends and family members in the belief that the customers are getting a discount |
|
| but that many recipients of the gift certificates will not be interested in antiques, and so will neglect to redeem the certificates. |
|
The argument presents a business plan step-by-step: first the strategy (sell discounted certificates), then the owner's reasoning for why people will buy them (perceived discount), and finally why this will increase profits (many won't be redeemed).
The owner believes selling gift certificates at 10% below face value will increase profits.
The plan relies on two key assumptions working together: (1) customers will buy discounted certificates as gifts, and (2) many recipients won't redeem them. If both happen, the shop gets money upfront but doesn't have to provide full value in products, creating profit.
Weaken - We need to find information that would reduce our belief in the owner's conclusion that this plan will increase profits
The owner's plan depends on two key activities: (1) customers buying discounted certificates believing they're getting a deal, and (2) many recipients not redeeming the certificates so the shop keeps that money without giving products
To weaken this plan, we need to find scenarios that would either reduce certificate sales or increase redemption rates beyond what the owner expects. We should look for factors that would disrupt the owner's assumptions about customer behavior or gift certificate usage patterns.
This presents a serious weakness because it suggests customers would use the certificates themselves rather than give them as gifts. The owner's plan depends on low redemption rates from uninterested gift recipients, but if customers keep the certificates to get 10% off their own purchases, redemption rates would be nearly 100%. This would mean the shop gives discounts without the benefit of unredeemed certificates, directly undermining the profit-increasing goal.
While this might affect overall profitability, it doesn't directly weaken the gift certificate plan itself. The owner could still increase profits through unredeemed certificates even if some items have low profit margins. This doesn't address the core mechanism of the plan - that many certificates won't be redeemed.
This suggests customers might be slightly less likely to buy certificates for people they think won't use them. However, this is actually somewhat aligned with the owner's reasoning - he expects customers to buy certificates believing they're getting a discount. The word 'slightly' also minimizes the impact, making this a weak objection to the plan.
This describes what might happen if the plan weren't implemented, but doesn't weaken the plan itself. Whether customers would buy antiques directly as gifts doesn't impact whether the gift certificate plan would increase profits. This is more about alternative scenarios than plan effectiveness.
This provides evidence that supports rather than weakens the plan. If another store's certificates weren't redeemed, this suggests the owner's assumption about low redemption rates might actually be correct. This would strengthen rather than weaken confidence in the plan's success.