#3 - It might seem that an airline could increase profits by

[Administrator]

Complete Question Explanation

Resolve the Paradox. The correct answer choice is (C)

The author of this stimulus presents a paradox regarding the airline industry’s pricing. We might presume that selling all seats at a discount would increase profitability, but while doing so has increased the numbers of tickets sold, some such offers have actually cut the airline profits. To resolve this paradox, we should look for the answer choice which explains how solid discount ticket sales could still decrease profitability. Correct answer choice (C) is consistent with both premises, and provides an explanation of the apparent paradox: such discount offers cut into the profits of the planes that would normally be filled anyway, and don’t increase profits elsewhere. Thus, overall profitability could understandably decrease.

[reop6780]

Resolve 26)

I chose the right answer of C, but C does not seem to explain the sale of large numbers of reduced-price tickets.

I feel as if the answer should be "...increase revenues on flight..."

Could anyone explain to me this answer fully explain decrease of revenue regardless of increase in the sale of discount fares?

[Steve Stein]

Hi reop678,

Good question--take another look at the wording--those discounts have resulted in the sale of a large number of reduced price tickets." But, as this choice provides, if those reduced-price tickets are displacing full fares, then that would drive the revenues down.

In other words, if the reduced-fare people are buying up the seats in the popular flights (the ones that would have sold out anyway, even at full price), that would drive down the revenues.

I hope that's helpful! Please let me know whether this is clear--thanks!

~Steve

[reop6780]

Thanks, that helps !

[PamelaO]

hi can you explain why A is wrong?

[Eric Ockert]

Hi Pamela

Careful with the language on answer choice (A). It says that fewer than 10 percent make no attempt at seeking out discount fares. That statement is almost like a double negative and translates to: "More than 90 percent of all air travelers do make an attempt to seek out discount fares.

With that in mind, look at the paradox itself. Essentially, the paradox is that sales of discounted tickets have gone up, yet profits have gone down. Any answer we select has to provide a possible explanation for why that might have occurred.

If the statement in answer choice (A) is true, and the vast majority of travelers are looking for a discount, this could explain how the discounts resulted in sales of large numbers of discounted tickets. However, this doesn't really help explain why the profits are lower. This is a classic type of incorrect answer on Resolve the Paradox questions, one in which the answer only helps explain one side of the paradox, but doesn't really explain the whole situation.

Hope that helps!

[andriana.caban]

Can someone explain why answer choice D is incorrect?

Thanks!

[Jeremy Press]

Hi Andriana!

Remember that in a Resolve the Paradox question (notice the question stem asks for answer to "resolve the apparent discrepancy" in the stimulus) we are being asked to explain how seemingly inconsistent claims or facts could simultaneously be true. In this stimulus we need to explain both how (a) "[o]ffers of across-the-board discount fares have, indeed, resulted in the sale of large numbers of reduced-price tickets," and (b) such offers have, in the past, actually cut the airline's profits."

Answer choice D is especially problematic when it comes to explaining fact (a) that I identified above. How could it be that these offers have resulted in the sale of large numbers of reduced-price tickets, when all answer choice D says is that only a small number of a subset of people (those who have never before traveled by air) are even persuaded by the offer? Since answer choice D does not help explain that fact, it cannot fully resolve the discrepancy identified in the stimulus.

I hope this helps!

Jeremy

[yournoona]

Complete Question Explanation

Resolve the Paradox. The correct answer choice is (C)

The author of this stimulus presents a paradox regarding the airline industry’s pricing. We might presume that selling all seats at a discount would increase profitability, but while doing so has increased the numbers of tickets sold, some such offers have actually cut the airline profits. To resolve this paradox, we should look for the answer choice which explains how solid discount ticket sales could still decrease profitability. Correct answer choice (C) is consistent with both premises, and provides an explanation of the apparent paradox: such discount offers cut into the profits of the planes that would normally be filled anyway, and don’t increase profits elsewhere. Thus, overall profitability could understandably decrease.

I understand why C is correct but how is E wrong.
E also helps prove both the premises..... It is given that Low prices High sales. However, since to make people aware of the low prices there is a far more spending of money that eventually nullifies the profits so gained. Doesn't this resolve the paradox too?
Thanks

[KelseyWoods]

Hi yournoona!

Answer choice (E) doesn't say that it is difficult to make the public aware of the discount fares instead it says that it's difficult to advertise the fares AND explain the restrictions at the same time. Just because it is difficult to explain the restrictions on the discount fares, that does not explain why discount fares have actually cut airline profits even though they also result in the sale of large numbers of discounted tickets. Even without the part about explaining the restrictions, the difficulty of advertising would not help us resolve this paradox. We know that low prices result in high sales but also decreased profits. We need an answer choice that explains how we could have both a high number of tickets sold and a decrease in profits. Answer choice (E) does not do that.

Hope this helps!

Best,
Kelsey