Question

 

A study of ticket sales at a summer theater festival found that people who bought tickets to individual plays had a no-show rate of less than 1 percent, while those who paid in advance for all ten plays being performed that summer had a no-show rate of nearly 30 percent. This may be at least in part because the greater the awareness customers retain about the cost of an item, the more likely they are to use it.

Which of the following would, if true, best serve as an alternative explanation of the results of the study?

(This question is from Official Guide. Therefore, because of copyrights, the complete question cannot be copied here. The question can be accessed at GMAT Club)

Difficulty: Medium                                         Accuracy: 80%                                Based on: 7163 sessions

Solution


The Story

A study of ticket sales at a summer theater festival found that people who bought tickets to individual plays had a no-show rate of less than 1 percent, while those who paid in advance for all ten plays being performed that summer had a no-show rate of nearly 30 percent.

No-show rates of two groups of people for a particular theater festival are compared.

  • Individual-ticket buyers: No-show rate of <1%
  • Advance ticket buyers for all ten plays: No-show rate of ~30%

This may be at least in part because the greater the awareness customers retain about the cost of an item, the more likely they are to use it. – 

“This” – The significant difference in the no-show rates between the two groups.

“May be” – we’re given a potential reason

“At least in part” – it is a partial reason

What’s the partial, potential reason for the 1% v/s 30% no-show rates?

More the people recall the cost of an item, the more likely they are to use it.

How is this a potential reason for the 30x difference in the no-show rates?

The author must be thinking that if people have bought tickets for the 10 shows in advance, they are less likely to retain awareness about their cost, and thus they are less likely to use them. That could be a reason for the 30x no-show rate for the advance buyers.(I guess that’s what happened with me and my annual gym membership.)

Gap(s) in logic

  • Do we know that people who paid in advance for all ten plays are more likely to forget about the cost of the tickets?
  • Maybe buying in advance got the buyers deep discounts. E.g. maybe they got 10 tickets for the price of 5. And so, even if they watch 6-7 plays (no-shows to the rest) the advance payment makes financial sense.

                                            Question Stem

Which of the following would, if true, best serve as an alternative explanation of the results of the study?

We’re looking for an alternate explanation of the results of the study.

  1. What are the results of the study?

The no-show rates.

  1. <1% for people who bought tickets to individual plays
  2. ~30% for people who bought tickets to all the ten plays in advance
  3.  What is the given explanation?

People who buy tickets in advance are more likely to forget the cost of the tickets → The more likely people are to forget the cost of a ticket, the less likely they are to use it.

  1. What do they mean by ‘an alternative explanation’?

What else could explain why the no-show rates were so starkly different? That’s what we’ll look for in the answer choices. What else could explain why in one case no-show rates are negligible (<1%) and why they are so high (30%) in the other case.

  1. What could be an alternative explanation?

I’ve mentioned one alternative explanation above (second point under ‘gaps’).

Another one I can think of: Maybe at the time of buying the ten tickets, the customers were enthusiastic, but later on they got tied up in life and did not attend many plays. (My gym membership 🙁 )

There could be other explanations for the results as well. These are what I could think of. Let’s head on to the answer choices.

                                     Answer choice analysis

 

Answer Choice: A                                                 Incorrect                                        Selected by: 12%

 This answer choice is the opposite of a potential alternative reason. Had the price difference been significant, I’d have believed that that could have been a reason for the much higher no-show rates for the advance buyers. 

But if the tickets are only “slightly cheaper” for the advance buyers, the people who bought the ten tickets in advance did not get significant cost-savings. So I don’t see how this could be a potential reason for the much-higher no-show rate.

 

Answer Choice: B                                                 Incorrect                                        Selected by: 3%

Are you thinking that maybe in this case people bought the tickets in advance with never any intention to attend the plays? Maybe they just wanted to support the festival financially.

If you are, that reasoning is wrong. 

The answer choice talks about ‘many people who attended the theater festival’. So, anyway we’re talking about people who showed up to attend a play. I don’t see any relation between wanting to support the festival and attending a play at the festival. 

Moreover, the same logic could apply to individual-ticket buyers as well. Maybe they bought the tickets to support the festival financially with no intention to attend the plays. This answer choice does not help us understand why the no-show rates are different.

 

Answer Choice: C                                                 Incorrect                                        Selected by: 4%

If that’s the case, perhaps the advance buyers would be incentivized to attend all ten plays, no? 

Our job is to give an alternative reason for why the no-show rates are so different. All I get from this answer choice is a reason for why the no-show rate for the advance buyers should be low. No explanation for why the rate is 30x the single ticket buyers’ rate.

Moreover, the partial refund would be for anyone who attended all ten plays – individual-ticket-buyer or a bulk-buyer.

 

Answer Choice: D                                                 Correct                                        Selected by: 80%

This answer choice tells us when individual-ticket buyers bought their tickets. They usually bought them immediately prior to the performance.

So what?

Well, if I bought the ticket to a play immediately prior to the show, I’ll most probably attend it. The chances of me not attending the play are quite low. I think that’s true for most people.

Compare that with people who bought tickets in advance. We are not explicitly given this, but we can understand that the chance of someone who bought a ticket in advance not showing up would be greater than someone who bought the ticket just before the show.

So this could be an alternative reason for the stark difference in the no-show rates.

 

Answer Choice: E                                                 Incorrect                                        Selected by: 2%

This answer choice deals with how much before the performance people show up. This would hold true for individual-ticket-buyers and bulk-buyers alike.This answer choice is irrelevant to what’s going on in the passage.

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