Multiple choice

Compulsory regulatory audits have revealed that PhoneTel, a mobile services provider, has erred in generating the bills it presents to its customers. But PhoneTel’s chairman asserted that the profits of his company would not be affected by a revision of its customers’ billing statements, since just as many customers had been overcharged as undercharged.

Which of the following is a reasoning error that the chairman makes in concluding that correcting the customers’ billing statements would leave Phone Tel’s profits unaffected?

  1. Depending on the standing of Phone Tel as a trusted name in the mobile services domain to retain the company’s customers after its billing error becomes widely known.

  2. Inability to establish that Phone Ttel imposes on all its customers the same charges for similar services.

  3. Ignoring the chance that the amount by which Phone Tel’s customers had been overcharged might be greater than the amount by which they had been undercharged.

  4. Hoping that the customers who had been overcharged by Phone Tel had not noticed the error in their billing statements.

  5. Assuming that each one of Phone Tel’s customers had either been overcharged or undercharged in the billing error.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The chairman asserts that the profits of his company would not be affected as the number of customers overcharged equals the number of customers undercharged. But what he fails to see clearly is the fact that the quantum of overcharging or undercharging might not be same something stated clearly in option (3). Hence (3)

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