The Circle Multiplex has seen tremendous growth in the number of customers since it signed an exclusive contract with a leading distributor. For the last seven months, unlike previous months, almost all the shows have been booked completely. A number of customers have even been turned away for most of the shows. Consequently, the management proposes to increase its profits by raising the ticket prices slightly above the competitions as it believes that invariably the Multiplex will be able to fill its capacity.Which of the following statements is an assumption made by the management of The Circle Multiplex?a)The Circle Multiplex has lower ticket prices than other Multiplexes in the region.b)Factors other than ticket prices such as ambience are very important for the customers in choosing the Multiplex.c)No existing customer of The Circle Multiplex is going to shift for minor economic considerations.d)Not a significant number of customers of The Circle Multiplex are extremely sensitive to ticket prices. .e)Most other Multiplexes around The Circle Multiplex run most of the shows with less than half the capacity filledCorrect answer is option 'D'. Can you explain this answer?

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Which of the following statements is an assumption made by the management of The Circle Multiplex?

a)
The Circle Multiplex has lower ticket prices than other Multiplexes in the region.
b)
Factors other than ticket prices such as ambience are very important for the customers in choosing the Multiplex.
c)
No existing customer of The Circle Multiplex is going to shift for minor economic considerations.
d)
Not a significant number of customers of The Circle Multiplex are extremely sensitive to ticket prices. .
e)
Most other Multiplexes around The Circle Multiplex run most of the shows with less than half the capacity filled

Correct answer is option 'D'. Can you explain this answer?

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The Circle Multiplex has seen tremendous growth in the number of custo...

Which of the following statements is an assumption made by the management of The Circle Multiplex?

Argument Analysis

Pre-Thinking

Conclusion Clarification

The management of CM proposes (concludes) that in order to increase its profits, the ticket prices be raised slightly above the competition’s. Multiplex

Pre-Thinking Approach

To pre-think assumptions, let’s see how we can falsify this conclusion. To do so, we will look at the logical structure, focusing on linkage 1 and the conclusion. We will understand the condition under which the conclusion is falsified. The assumption then will be that the condition does not exist.

Linkage #1 & 2 –

Falsification Condition: The fact that shows have been booked completely in the past doesn’t support that the multiplex will continue to fill the capacity in the future despite a slight increase in the price of the ticket. What if a slight increase in prices leads to a massive decline in number of customers? In such a case, the conclusion will not hold.

Assumption: A significant proportion of CM’s customers are not very sensitive to ticket prices.

With this pre-thinking in mind, let’s evaluate the answer choices.

Answer Choices

The Circle Multiplex has lower ticket prices than other Multiplexes in the region.

Incorrect - Irrelevant

The plan distinctly states raising the price of the tickets to slightly above the competition’s. So it’s irrelevant whether currently its price is the same or lower than that of other’s.

Factors other than ticket prices such as ambience are very important for the customers in choosing the Multiplex.

Incorrect - Not a must be true

To the extent this choice impacts the logic of the argument, it possibly suggests that management’s plan may not be out of sync with the Multiplex customers in general who have other important considerations besides the ticket price. Therefore, it does increase our belief in the conclusion, but it is not a must be true statement as even if the other factors are not very important, they could still be important and the conclusion is still strengthened by the negation of this choice.

No existing customer of The Circle Multiplex is going to shift for minor economic considerations.

Incorrect - Irrelevant

The change in the price has only been referred to in terms of increase in price to a level slightly above that of the competitors. Accordingly, we don’t know whether the change in the ticket price is going to be minor; for instance, if currently the price of CM’s tickets is well below that of the competition’s then the absolute change could be major. Therefore, the author has not factored in this piece of information while drawing the conclusion.

Not a significant number of customers of The Circle Multiplex are extremely sensitive to ticket prices.

Correct

This choice is written along the lines of our pre-thinking per Linkage. If a significant number of customers are extremely sensitive to ticket prices, then most of them are likely to shift when the prices are increased. In such a case, the revenues may decline considerably and accordingly the profits may also decline.

Most other Multiplexes around The Circle Multiplex run most of the shows with less than half the capacity filled.

Incorrect - Irrelevant

This option is about the other multiplexes. The argument is about the proposal aimed at increasing the profits of the CM and hence this piece of information is irrelevant to the argument.

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The Circle Multiplex has seen tremendous growth in the number of customers since it signed an exclusive contract with a leading distributor. For the last seven months, unlike previous months, almost all the shows have been booked completely. A number of customers have even been turned away for most of the shows. Consequently, the management proposes to increase its profits by raising the ticket prices slightly above the competition’s as it believes that invariably the Multiplex will be able to fill its capacity.Which of the following statements is an assumption made by the management of The Circle Multiplex?a)The Circle Multiplex has lower ticket prices than other Multiplexes in the region.b)Factors other than ticket prices such as ambience are very important for the customers in choosing the Multiplex.c)No existing customer of The Circle Multiplex is going to shift for minor economic considerations.d)Not a significant number of customers of The Circle Multiplex are extremely sensitive to ticket prices. .e)Most other Multiplexes around The Circle Multiplex run most of the shows with less than half the capacity filledCorrect answer is option 'D'. Can you explain this answer?

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