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Question: The owners of Hole-In-One Donuts, a combination mini golf course and donut shop in the town of Sealett, recently decided to take a controversial political stand online. As a result, a number of people opposed to this political view have promised to boycott Hole-In-One until its owners issue an apology.
The answer to which of the following questions would be the LEAST useful in determining whether the ensuing controversy will be detrimental to Hole-In-One’s profits?
- Whether a significant number of Hole-In-One’s pre-existing customers share the political views held by the boycotters.
- Whether Hole-In-One’s owners considered the potential financial impacts of taking a controversial political stand before sharing their position online.
- Whether Hole-In-One’s political stand will draw in enough new, like-minded customers to counterbalance any business lost to the boycott.
- Whether comparable businesses in Sealett that have taken similar political stands have lost revenue as a result of sharing those positions.
- Whether the controversy over Hole-In-One’s political stand will generate sufficient free publicity to allow Hole-In-One to cut its advertising budget by an amount that would exceed any revenue lost to the boycott.
Answer: B
Explanation
(A) Whether a significant number of Hole-In-One’s pre-existing customers share the political views held by the boycotters. The given statement is incorrect because if the huge number of customers share the boycotters views, then almost everyone will shift to another shop and there will be loss for the first one, but if less number of customers will share the boycotters view then there will be no worries.
(B) Whether Hole-In-One’s owners considered the potential financial impacts of taking a controversial political stand before sharing their position online. The given statement is correct even if it is calculated as a risk but they are not wrong in their estimations. If owners thought that they are going to draw more attention and cut ad costs, but still failed to include all variables, then they can very well be wrong. This choice gives no info as to whether owners’ move was detrimental to profits.
(C) Whether Hole-In-One’s political stand will draw in enough new, like-minded customers to counterbalance any business lost to the boycott. The given statement is incorrect as this is the solution to the statement A. It explains that there are some customers who will support the boycotters which will lead to loss of some profits. But, if new likeminded customers compensate the boycotters, then they will get the solution to the problem.
(D) Whether comparable businesses in Sealett that have taken similar political stands have lost revenue as a result of sharing those positions. The given statement is incorrect because it explains about the inherent behavior of the customer in Sealett. It may be possible that the customers who left a comparable business can be a customer of Hole-in—One’s too. So in this case, if the customers left one business due to a controversial political stand, then they can leave the other one for the same reason.
(E) Whether the controversy over Hole-In-One’s political stand will generate sufficient free publicity to allow Hole-In-One to cut its advertising budget by an amount that would exceed any revenue lost to the boycott. The given statement is incorrect because if there will be increase in the ad money as compared to any revenue lost, then the profit will not decline.
“The owners of Hole-In-One Donuts, a combination mini golf course”- is a question of critical reasoning in a section of GMAT Verbal Reasoning. It examines the logical reasoning of the candidate in the test. The Critical Reasoning question type is used to measure critical business skills. GMAT Critical Reasoning questions assess a distinct set of qualities associated with logic. The students preparing for the GMAT will experience the argument analysis of Critical Reasoning for the first time to substantiate their logic.
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