#15 - For a ten month period, the total monthly sales of new

[lemonade42]

I have a question about the part of (B) that talks about how we shouldn't assume this is a Must Be True answer. The book says: "It would be consistent with the stimulus if Marvel doubled sales in the first month and then remained constant for the remaining nine months, which would allow for its competitors to gain market share during the last three months. Does this mean, that Marvel could double sales in the first month, then decrease in sales and remain constant at that lower sales amount for the remaining nine months? The "remained constant" part in the explanation is confusing me because it's making me think that Marvel's sales doubled and then had that doubled number amount constantly for the rest of the nine months. But if Marvel's sales never decreased after the doubling in the first month, how would the competitors increase in market share (since the total remains the same in the 10 months too)?

[Hanin Abu Amara]

Hi Lemonade42,

Ok so AC B has us looking at whether the shares of OTHER companies other than Marvel went down. And this is possible because we know they had to. Since shares are always going to add up to 100%, if the Marvel's shares go up, that has to mean that other companies shares' went down. In the three months before the imposition, Mariel's shares went up and as such we can make that inference. Since this is possible, it is the wrong answer.

Hope that clears up why B is wrong.

[lemonade42]

Hello!

Thank you for clarifying. However, you also said "And this is possible because we know they had to". But the explanation said this is not a Must Be True answer, so it doesn't have to happen. So my question was aimed more towards examining the book's explanation given about why the market share of companies other than Marvel does not have to decrease. Could you elaborate more on that part? Thank you!

[Dana D]

Hey Lemonade,

Think of the market as a big pie chart, and a company's slice of the pie as their market share. The market share is proportional to the overall size of the pie - if only two people make cars, Marvel and Ford, then they are the only companies with slices of the pie and market shares. Selling more cars than each other will increase their individual market shares, because they will have more cars on the market. However, if they both sell 50 cars a year, their market shares are each 50%, and if they increase their sells equally, that market share never changes. For example, if the next year they each sell 100 cars, they still each have a 50% market share. Now if another company comes onto the market and starts selling cars, they eat into Ford and Marvel's market shares. We still have to have a pie chart that equals 100% of the market, but now we're splitting that market among 3 companies rather than 2. The decision on how the market is split is determined by how many cars each company is selling compared to each other. So again, let's say Ford and Marvel push out 100 cars each but now this new company, Chevy, makes 25 cars. Ford and Marvel still own most of the market shares, but Chevy is getting a portion of the market as well. Raw number of sales is not enough to determine everyone's slice of the pie - we need to know how much they are selling in relation to each other.

Answer choice (B) could be true, because we are talking about the combined shares of other companies. If Marvel increased in market shares and sales, then the market shares for the other companies other than Marvel must have decreased. To continue with the above example, if Marvel is getting a bigger portion of our pie, then Ford and Chevy have to have an overall smaller portion.