Mario: I see that the only rug store in Glendale has gone out of business. Evidently there's little demand for rugs i...

Sean on November 5, 2018

PT 78, S1, Q6

I don't follow the reasoning on this one. I chose C instead of B. To me, it seems like Mario is saying that you can determine the market, as in there is none in Glendale, while Renate is saying that the rug store's going out of business is not enough info to determine the market and its wide open. Can you please explain?

1 Reply

Ravi on December 28 at 07:30AM

@smilde11,

Happy to help. It sounds like you might have gotten confused about what Renate was saying in her statement. She isn't saying that there's not enough info to determine the market; what she's saying is that the rug store's closing had little to do with the product sold (it had to do with something else). That something else could be that the owners decided to retire and move to the Florida Keys. (Just a hypothetical scenario, there.)

She thinks that the market is wide open, so she has to think that it's possible to determine the market for rugs in Glendale. In order to believe that a market for something is wide open, one must believe it's possible to determien the market for that thing.

In the stimulus, we have two people discussing a topic.

Mario says that the only rug store in Glendale has gone out of business. He then says that there's evidently little demand for rugs in Glendale. Mario ends his argument by concluding that if you're planning to open a new business there, rugs would be one product to avoid.

From this, we know that Mario thinks it's a bad idea to open a rug store in Glendale, as he thinks there's little demand for rugs in Glendale.

Renate says that it's true the store is gone, but its closing as little to do with the product it sold. She then concludes that the market for rugs is Glendale is wide open.

This suggests that Renate thinks there is a big opportunity to enter the rug business in Glendale.

The question stem asks us to identify the answer that highlights what Mario and Renate are disagreeing about in their dialogue.

Answer A says the rug store in Glendale sold rugs of inferior quality. This is incorrect because we have no information in the stimulus that mentions rug quality of the Glendale store at all.

Answer B says it's a good idea to open a rug store in Glendale. Mario does not agree with this statement, as his conclusion goes directly against this. Renate, however, agrees, as she thinks that the market is wide open for rugs in Glendale. This suggests that she thinks it'd be a good idea to open a rug store in Glendale. Answer B describes what they disagree about, so it's our answer choice.

Answer C says it's possible to determine the market for rugs in Glendale. Mario would clearly agree with this statement, as he says that there is little demand for rugs in Glendale. In order to believe that there is little demand, he must believe that it's possible to determine the market for rugs in Glendale. Renate also would agree with this statement. The fact that she says that the market for rugs is wide open in Glendale means that she believes that there is a large market opportunity. In order for her to believe that there exists a large market opportunity, she must also believe that it's possible to determine the market for rugs in Glendale. In short, they would both almost certainly agree with this statement.

Answer D is incorrect because we have no idea if Mario or Renate think of whether any other stores have gone out of business in Glendale. We can eliminate this answer.

Answer E says that rug stores can close because of insufficient demand for rugs. Mario seems to think this is true, as he says there is little demand for rugs in Glendale. We don't have any information about whether Renate agrees with this, but we have reason to think that she either would be neutral or would agree. We have no support that she would disagree with this statement, so we can eliminate this answer.

Hope this helps. Let us know if you have more questions!