The Maxilux car company's design for its new luxury model, the Max 100,…
2024
The Maxilux car company's design for its new luxury model, the Max 100, included a special design for the tires. That was intended to complement the model's image. The winning bid for supplying these tires was submitted by Rubco. Analysts concluded that the bid would only just cover Rubco's costs on the tires, but Rubco executives claim that winning the bid will actually make a profit for the company. Which of the following, if true, most strongly justifies the claim made by Rubco's executives?
Answer: D. When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type. — CONCEPTTo strengthen a claim, identify the gap between the stated evidence and the conclusion, then look for a fact that supplies the missing link. When a…
- A.
In any Maxilux model, the spare tire is exactly the same make and model as the tires that are mounted on the wheels.
- B.
Rubco holds exclusive contracts to supply Maxilux with the tires for a number of other models made by Maxilux.
- C.
The production facilities for the Max 100 and those for the tires to be supplied by Rubco are located very near each other.
- D.
When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type.
Show answer & explanation
Correct answer: D
CONCEPT
To strengthen a claim, identify the gap between the stated evidence and the conclusion, then look for a fact that supplies the missing link. When a contract appears to break even, a profit claim requires a credible benefit or revenue mechanism beyond the costs already counted in that contract.
APPLICATION
The bid itself only just covers Rubco’s tire costs, so the initial supply transaction does not explain the claimed profit.
The special Max 100 tires can establish a continuing relationship with owners after their cars have been sold.
If luxury-car owners almost always replace worn parts with the same make and type, worn Max 100 tires create repeat demand specifically for Rubco’s tires.
Those later replacement sales are separate from the break-even original-equipment bid and provide the missing route to profit.
CROSS-CHECK / CONTRAST
The same-make spare concerns an additional tire supplied with the new car, so it remains part of the original supply volume.
Exclusive contracts for other Maxilux models do not establish that the Max 100 contract changes the profitability of those separate agreements.
Nearby production facilities may reduce transport expense, but the analysts’ break-even estimate already states the overall cost result for the bid.
The replacement behavior creates repeat purchases after the initial vehicle sale, supplying the additional revenue mechanism needed by the executives’ claim.
Therefore, the strongest justification is that luxury-car owners almost invariably replace worn parts with parts of exactly the same make and type.