#18 - Consumer demand for personal computers continues to increase

[Administrator]

Complete Question Explanation

Resolve the Paradox, Except. The correct answer choice is (B).

Answer choice (A):

Answer choice (B): This is the correct answer choice.

Answer choice (C):

Answer choice (D):

Answer choice (E):

This explanation is still in progress. Please post any questions below!

[jackielsat]

Could you please explain how A resolves the discrepancy?

[Luke Haqq]

Hi jackielsat!

Happy to address answer choice (A).

The paradox in the stimulus is that demand for computers has been increasing, but profit has remained "extremely low compared to that of other popular high-technology items."

Answer choice (A) states, "Rapid innovation in computer technology increases the likelihood of a store's stock becoming obsolete." If this were true, it allows it to be the case that consumer demand is high and also that profits are low--it's suggesting that rapid innovation is a reason for low profits. This answer choice is suggesting that low profits despite high demand could result if a company's product was already obsolete by the time stores started selling it, in which case the company would have little to no sales. In this way the answer choice raises tech innovation as something that allows both aspects of the paradox (high demand, but low profits) to be true.

[katnyc]

Can someone explain answer choice C also and all the answer choices. I cannot figure out even with the explanation with A. D and E i can understand how it explains the paradox.

[Luke Haqq]

Hi katnyc!

The paradox is that consumer demand for personal computers is rising, yet the profit they bring in remains low. An answer that resolves the paradox must account for both of these aspects.

Answer choice (A): This resolves the paradox by raising the possibility of unsold inventory that results from rapidly changing computer technology. This would allow there to be increasing consumer demand but also explains why there are also low profits--namely, because a lot of the computers do not end up being sold.

Answer choice (C): This resolves the paradox by indicating that making a sale for a personal computer takes up more time from store employees compared with other high tech. If an employee spends several hours making a sale for a single personal computer, for example, that takes time away from the employee making other sales.

Answer choice (D): This resolves the paradox by indicating that lots of stores put a low price on personal computers (in hopes that people will spend money on accessories). This again permits consumer demand to be high but explains why this doesn't result in high profits, namely, because the price is low.

Answer choice (E): This resolves the paradox by suggesting that the supply side of the market is being swamped with discount retail outlets. If many consumers are buying personal computers but are doing so from discount outlets, that again explains why profits are not high despite the demand.