GMAT Section 3 Verbal Ability practice questions, page 25 of 30, with answer review and explanations.
Question 121
Holdens Ltd. two subsidiaries performed with remarkable consistency over the past five years: in each of those years, Lexton has accounted for roughly 30 percent of dollar sales and 60 percent of profits, and Still more for the balance. Which of the following can properly be inferred regarding the past five years from the statement above?
Total dollar sales for each of the subsidiaries have remained roughly constant.
Lexton has faced stiffer competition in its markets than hasStill more.
Still more has realized lower profits per dollar of sales than has Lexton.
The product mix offered by each of the company's divisions has remained unchanged.
Highly profitable products accounted for a higher percentage of Stillmore's sales than of those of Lexton.
Question 122
Shereen cosmetics sometimes discount the price of its premium eye shadows to retailers for a promotion period when the product is advertised to consumers. Such promotions often result in a dramatic increase in amount of premium eye shadows sold by the manufacturers to retailers. Nevertheless, the manufacturers could often make more profit by not holding the promotions. Which of the following, if true, most strongly supports the claim above about the manufacturers' profit?
The amount of discount generally offered by manufacturers to retailers is carefully calculated to represent the minimum needed to draw consumers' attention to the eye shadows.
For many consumer products the period of advertising discounted prices to consumers is about a week, not sufficiently long for consumers to become used to the sale price.
For cosmetics that are not newly introduced, the purpose of such promotions is to keep the products in the minds of consumers and to attract consumers who are currently using competing products.
During such a promotion retailers tend to accumulate in their warehouses inventory bought at discount; they then sell much of it later at their regular price.
If a manufacturer fails to offer such promotions but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's
Question 123
New home buyers are all financially protected against bankruptcy of the contractor because of a law requiring the contractor to get bank backing to insure all individual investments. An economist argues that this insurance is partly responsible for the high rate of bankruptcies among contractors, since it removes from buyers any financial incentive to find out the financial status of the contractor they are hiring. If buyers were more selective, then contractors would need to be secure in order to compete for buyers. The economist's argument makes which of the following assumptions?
Bankruptcy is caused when contractors default on loan repayments to their banks.
A significant proportion of contractors use the services of sub-contractors to do the bulk of the work.
The more a homebuyer has to invest in a house he or she is building, the more careful he or she tends to be in selecting a contractor.
The difference in the payment schedules to contractors is not a significant factor in bankruptcies.
People looking for a contractor to build their houses are able to determine which contractors are secure against bankruptcy.
Question 124
Which of the following, if true, most seriously weakens the economist's argument?
Before the law requiring the contractor to get bank backing to insure all individual investments was passed, there was a lower rate of bankruptcy than there is now.
When the law did not insure buyers against the bankruptcies of building contractors, frequent bankruptcies occurred as result of depositors' fears of investing money in a newly built house.
Surveys show that a significant proportion of new home buyers are aware that their investments are protected by law.
There is an upper limit on the amount of an individual's investment for which a contractor is required by law to get bank backing, but very few individuals' investments exceed this limit.
The security of a contractor against bankruptcy depends on the percentage of its assets reinvested into the business.
Question 125
Between 1990 and 1998, occupancy in Branson Hospital averaged 79 percent of capacity, while admission rates remained constant, at an average of 9 admissions per 100 beds per year. Between 1998 and 2002, however, occupancy rates increased to an average of 85 percent of capacity, while admission rates declined to 8 per 100 beds per year. Which of the following conclusions can be most properly drawn from the info given above?
The average stay for Branson Hospital residents rose between 1998 and 2002.
The proportion of children staying in Branson hospital was greater in 2002 than in 1990.
Hospital admission rates tend to decline whenever occupancy rates rise.
Hospitals built prior to 1998 generally had fewer beds than did hospitals built between 1998 and 2002.
The more beds a nursing home has, the higher its occupancy rate is likely to be.