#1 - Big-budget movies often gross two or three times the

[Administrator]

Complete Question Explanation

Resolve the Paradox—#%. The correct answer choice is (B)

This stimulus presents a fairly simple paradox regarding the movie industry: big budget movies often gross double or triple their costs, yet the majority of the movie industry’s total revenue comes from smaller budget movies. The correct answer choice will be consistent with both these facts.

Answer choice (A): This answer choice may look tempting, unless we consider the fact that we’re dealing with the industry’s revenues, not profits, so the requirements to recoup production costs are irrelevant.

Answer choice (B): This is the correct answer choice, as it helps to resolve the paradox from the stimulus. How can it be that big budget movies can often make big profits, yet make up a minority of the industry’s revenues? There are more low-budget movies made, so each one doesn’t have to be as successful as the big-budget blockbusters.

Answer choice (C): Such a decline in the industry overall does not help to explain the discrepancy between the huge revenues of big-budget movies, and the fact that those movies nonetheless contribute a minority of the industry’s overall revenues.

Answer choice (D): This answer choice is wrong for the same reason as answer choice (A) above. Since we’re discussing revenues, higher costs for the big-budget movies would not come into play in resolving the paradox from the stimulus, and this choice cannot be correct.

Answer choice (E): This answer is incorrect for the same reason as answer choices (A) and (D) above: the expense associated with making a movie does not have any effect on the revenues earned by the movie, so this answer choice fails to resolve the discrepancy in the stimulus.

[Mustafaabdulmalek]

I don't understand how choice B resolve the paradox
It could simply be 10 low budget movies and two high budget movie but they still making more money for movie industry than the low budget once

[Emily Haney-Caron]

Hi Mustafa,

Big-budget movies cost a fortune but make 2-3 times that back (so, presumably, a lot of money). But most of the revenue comes from low-budget movies...why could that be? B is the only answer that explains it; there are many more low-budget movies, so even though they don't make as much money each, together they make more money. Remember that to resolve the paradox, it doesn't have to be the only possible answer that could possibly resolve the paradox, it just has to be the best one of the choices given.

Hope that helps!

[sakfi]

Hi Powerscore staff,

The first time I read the stimulus and answer choices I was down to B and D, and I correctly chose B because it sounded like a stronger answer. But I was kind of bothered by the fact that it also mentioned "medium budget movies". On the other hand, for answer choice D, I wasn't completely confident about it being totally wrong because it mentioned higher insurance so revenue would be lowered as a result because insurance had to be deducted from it.

So my question is, is it because that answer D mentions what happens BEFORE the movies even start to make revenue, and thus it has already been accounted for. And the same goes for answer choice E? So whatever revenue these big budget movies make afterwards is independent and separate from these production costs (which come way before)?

Hope I'm making sense and my reasoning is clear. Can someone please confirm it?

Thank you.

[Jay Donnell]

Hi sakfi!

You are correct in your reasonings, but I wanted to help dig a little deeper to help confirm your awesomeness

Though it seems a bit out of place at first, the mentioning of the medium budget movies does still serve a helpful purpose. By mentioning medium budgets and keeping both them and the big budget films in a comparatively lower occurrence, it helps to further highlight the low budget films as the main source of total revenue to help resolve the paradox.


You're spot-on with the reasoning behind D and E, and we can even throw A into the same category. The facts on both sides of the paradox must remain true and unchanged, so regardless of the tickets that need to be sold, insurance that must be provided, or time spent in making the movie, we still know that the big budget movies have high production costs and yet still often gross two or three times what it cost to produce and market the movie.


Thanks for asking this question so I can keep the movie buzz going after just watching the Oscars! The Best Picture winner was a well-deserved underdog, but no spoilers here

Keep up the great work!

[sakfi]

Thank you Jay!

[zoezoe6021]

I struggle between (B) and (D), and I still have two questions after reading all the posts above.

1. Does "gross" in the first sentence mean "gross profit" or "gross income"?

2. Does "insurance premiums" count as a part of "production cost"?

[Rachael Wilkenfeld]

Hi zoe,

The definition of gross is without deduction of costs, so the amount is the amount they bring in as a whole. Still, that amount is 2-3x cost of production and marketing. Therefore the revenue is a large amount---if the movie cost 1 million to produce, and it grossed 2-3x that, it means the revenue would be 1-2 million in revenue. Insurance premiums would absolutely be a production cost. It's an expense that you pay in order to make the movie.

Hope that helps!