- Sat Jul 13, 2024 1:40 pm
#107582
Answer A is about profits, Linabear218, but the evidence in the stimulus is only about sales and market share. The authors of the test love to try confusing us with those concepts, because many students overlook the differences between them.
Sales, or revenues, is just a measure of money coming into a business. If you sell 1000 widgets for $1 apiece, your revenue is $1000. But profit is that revenue minus whatever costs you incurred in producing and selling those widgets. If it cost you $800 to make and market those widgets, then your profit is only $200, even though you have revenue of $1000.
And market share is not about sales or profits, but only about what percentage of the total market a company has. If every year, 10,000 widgets are sold, and Company A sells 1000 of those widgets, their market share is 10% by volume. Market share can also be measured by revenues - if the market for widgets is $10,000 annually, and Company A sells $2000 worth of widgets, their share of the market by revenue is 20%. But a market share figure will not tell you anything about sales or profits, because those are different issues. Knowing that Company A is dominating the market might mean that they have the largest market share of all the businesses in that industry, but it tells you nothing at all about profits. They might be making very little profit, or even losing money!
Maybe the profits are higher on the high-end products? Maybe not? We just can't say for sure, and neither speaker takes a position on profits. They are only arguing about sales and market share (whether they will dominate the market or become less competitive). That's why answer A is not the point at issue, and is not the correct answer.
Adam M. Tyson
PowerScore LSAT, GRE, ACT and SAT Instructor
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