Multiple choice

Directions: For this question, select the best of the answer choices given.

Mechanicorp's newest product costs so little to make that it appears doubtful the company will be able to sell it without increasing the markup the company usually allows for profit: potential clients would simply not believe that something so inexpensive would really work. Yet Mechanicorp's reputation is built on fair prices incorporating only modest profit margins. The statements above, if true, most strongly support which of the following?

  1. Mechanicorp will encounter difficulties in trying to set a price for its newest product that will promote sales without threatening to compromise the company's reputation.

  2. Mechanicorp achieves large annual profits, despite small profits per unit sold, by means of a high volume of sales.

  3. Mechanicorp made a significant computational error in calculating the production costs for its newest product.

  4. Mechanicorp's newest product is intended to perform tasks that can be performed by other devices costing less to manufacture.

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The passage creates a dilemma: the product costs very little to make, so normal markup would make it seem suspiciously cheap to customers, but the company's reputation is built on fair prices with modest profits. This strongly supports the conclusion that Mechanicorp will struggle to set a price that seems high enough to be credible while maintaining its reputation for fair, modest-profit pricing. Option A directly captures this tension.

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