Part 3:Reasoning Archives

Section 2:Past Years` Solved Questions from the XAT

4. XAT 2009

Directions for Questions 1 and 2:

Please go through the following passage. The Yoga system is divided into two principal parts-Hatha and Raja Yoga. Hatha Yoga deals principally with the physiological part of man with a view to establish his health and train his will. The processes prescribed to arrive at this end are so difficult that only a few resolute souls go through all the stages of its practice. Many have failed and some have died in the attempt. It is therefore strongly denounced by all the philosophers. The most illustrious Shankaracharya has remarked in his treatise called Aparokshanubhuti that "the system of Hatha Yoga was intended for those whose worldly desires are not pacified or uprooted."


    Ans .

    (e) The percentage of students who have successfully learnt Raja Yoga is more than the percentage of students who have successfully learnt Hatha Yoga


    1. Explanation :

      TSince Hatha Yoga is more difficult, the number of people having successfully learnt it has to be lesser than the number of people who have learnt Raja Yoga. Thus option (e) which says that the percentage of people who have successfully learnt Hatha Yoga is much lesser than the percentage of people who have successfully Raja Yoga is the correct option. Option (e) is correct





    Ans .

    (a) Hatha Yoga is for those whose worldly desires are not placated.


    1. Explanation :

      Shankaracharya said that Hatha Yoga is for people whose worldly desires are not pacified. Thus option (a) is the correct answer as pacified and placated mean the same thing. Option (a) is correct.



Directions for Questions 3-16:

Go through the questions below and answer them


    Ans .

    (e) Argument from analogy


    1. Explanation :

      Since a comparison is made here between a person casting off his worn out clothes and the soul casting off the body, this is clearly an analogy. Thus option (e) is correct





    Ans .

    (a) Inductive generalisation


    1. Explanation :

      Since there is a generalisation made and that too from a specific data, it is an inductive generalisation as it is from specific to general. Thus option (a) is correct.





    Ans .

    (c) Fleas must thrive in a warm environment. During warm weather my dog suffers from fleas more so than during cooler weather


    1. Explanation :

      Since we have to find the least dissimilar option, means we have to find the most similar option. Here the argument is from a general conclusion supported by a specific example, similarly in option (c) the general conclusion is supported by a specific example. Thus option (c) is correct





    Ans .

    (c) Countries finance ministers have insufficient control over their respective economies


    1. Explanation :

      As the question mentions that 'no single country' has control, we cannot conclude about any specific, or individual country. Hence option (c) which talks about lack of control of any finance minister seems to be the most logical conclusion. Thus option (c) is correct





    Ans .

    (a) The experienced entrepreneurs expect experienced directors to monitor the performance of the enterprise and be a sounding board.


    1. Explanation :

      An experienced board will definitely bring in a positive outlook and monitoring, thus option (a) seems to be the most logical reason.





    Ans .

    (a) True education implies a well-rounded exposure to major subjects.


    1. Explanation :

      The educated man is being labeled as stupid in the statement-once you take him off the subject in which he is educated. Obviously, the best counter to this criticism would be any logic which would talk about the educated man being able to think about and reason about subjects in which he has not been supposedly educated in.

      Option (c) clearly supports the contention of the author and hence can be rejected. Options (b) and (d) is irrelevant in the context of the author's contention as it is not related to what the author is saying.

      Option (a) best fits the required logic that would undermine the given logic since, if true education means a well-rounded exposure to major subjects, we can clearly say that the author's contention, that the educated man is stupid in anything other than his subject, is undermined Hence, option (a) is correct.





    Ans .

    (e) Conduct an experiment where both astrologers and economists would be asked to predict the future. Compare the percentage of predictions that come true.


    1. Explanation :

      The question is clearly asking as to what evidence best resolves the debate. Options (a) and (c) can be rejected as they are both talking about taking opinions of people. Opinions are always subjective and always have counter opinions. Hence they would never help you create evidence for or against anything.

      Option (b) talks about comparing number of predictions that have come true-which is not a valid measure as it depends on how many predictions were made by both; percentage of predictions which have come true might be a much better logic than simply comparing the number of predictions.

      Similarly, option (d) can be rejected because it talks about the number of predictions. Option (e) is much better than option (d) because it talks about comparing the percentage of predictions which come true. Hence, option (e) is the correct answer





    Ans .

    (b) Karl Marx labelled the capitalist a parasite on the back of labour because the whole value or produce created by the labouring man was expropriated by the capitalist.


    1. Explanation :

      A metaphor shows a comparison or a similarity between two things, without using the word..like, similarly, etc. Here the only similarity is shown in option (b), calling the capitalist as a parasite. Thus option (b) is correct.





    Ans .

    (c) Recent research provided stark evidence that in education money still plays an important role; it was found that children from poor households could not perform as well as children from rich households.


    1. Explanation :

      Personification is giving a non-living or inanimate thing a role or action performed by a human/animate being. Here in one of the options money is said to be playing [money plays]. This is a case of personification as money is inanimate and play is definitely an action by a human living being. Thus option (c) is correct





    Ans .

    (a) Most collectors of coins would give the Earth to own one of the copper coins issued by Mohammad Bin Tughlaq


    1. Explanation :

      Here the concept of 'hyperbole' means a wild exaggeration of something or a kind of a blabbering or bragging that is completely off the cuff. In one of the options the example of the coin collectors ready to 'give the earth' is a huge exaggeration. The earth does not belong to anybody, so no one can give it. Thus option (a) is correct





    Ans .

    (c) A cemetery is a place where people are buried when they pass away.


    1. Explanation :

      An euphemism is a mild way to say something. It generally tends to give a softened tone or manner and uses words which are mild forms of something. Here in option (c) referring to the people who have died as people who have 'passes away' is a clear example of euphemism. Option (c) is correct.





    Ans .

    (b) Public trust in politicians is at an all time low and we can`t insist that the politicians go back to school.


    1. Explanation :

      A fallacy where the conclusion is unrelated or totally contrary to the main statement is a nonsequitur. In the given options (a), (d) and (e) clearly had logical conclusions and (c) did not have a conclusion, thus all these four options were eliminated. Option (b) talked about lack of trust in politicians, but the conclusion about sending them back to school did not make any sense. Thus option (b) is correct.





    Ans .

    (b) beleaguered


    1. Explanation :

      Suspend means to stop or delay something and recommence means to start something again. Here the relationship in the analogy question is of opposites. The option (b) offers 'beleaguered' which means troubled is exactly opposite to 'nonchalant' which means apathetic. Thus option (b) is correct.





    Ans .

    (d) He loved his aunt but found her kindness suffocating.


    1. Explanation :

      Two words which are contradictory or opposite or which have both a positive and a negative element constitute an oxymoron. Here in option (d) it is mentioned in the sentence about 'kindness suffocating'. Kindness is positive, whereas suffocating is negative, hence both together would constitute an oxymoron. Hence option (d) is correct.



Directions for Questions 17-28

Each group of questions in this section is based on a set of conditions. In answering some of the questions, it may be useful to draw a rough diagram. Choose the response that most accurately and completely answers each question.

Directions for Questions 17-19:

Four married couples competed in a singing competition. Each couple had a unique team name. Points scored by the teams were 2, 4, 6 and 8. The 'Sweet Couple' won 2 points. The 'Bindas Singers' won two more points than Laxman's team. Mukesh's team won four points more than Linas's team, but Lina's team didn't score the least amount of points. 'Just Singing' won 6 points. Waheda wasn't on the team called 'New Singers'. Sanjeev's team won 4 points. Divya wasn't on the 'Bindas Singers' team. Tapas and Sania were on the same team, but it wasn't the 'Sweet Couple'


    Ans .

    (e) Waheda and Sweet couple


    1. Explanation :

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      XAT 2009

      Waheda and Sweet couple. Option (e) is correct.





    Ans .

    (d) Sweet Couple, Bindas Singers, Just Singing, New Singers.


    1. Explanation :

      The ascending order arrangement of the teams' based on the points they scored was: Sweet Couple -Bindas Singers - Just Singing - New Singers. Option (d) is correct.





    Ans .

    (d) Sanjeev, Lina


    1. Explanation :

      Sanjeev-Lina is the only pair which is correctly matched. Hence, option (d) is correct.



Directions for Questions 20-23:

The regular mathematics faculty could not teach because of being sick. As a stop gap arrangement, different visiting faculty taught different topics on 4 different days in a week. The scheduled time for class was 7:00 am with maximum permissible delay of 20 minutes. The monsoon made the city bus schedules erratic and therefore the classes started on different times on different days.
Mr. Singh didn't teach on Thursday. Calculus was taught in the class that started at 7:20 am. Mr. Chatterjee took the class on Wednesday, but he didn't teach Probability. The class on Monday started at 7:00 am, but Mr. Singh didn't teach it. Mr. Dutta didn't teach Ratio and Proportion. Mr. Banerjee, who didn't teach set theory, taught a class that started five minutes later than the class featuring the teacher who taught Probability. The teacher in Friday's class taught Set Theory. Wednesday's class didn't start at 7:10 am. No two classes started at the same time.


    Ans .

    (b) 7:20 am and the topic was Calculus.


    1. Explanation :

      XAT 2009
      XAT 2009
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      XAT 2009

      Wednesday's class started at 7:20 AM and the topic was Calculus. Option (b) is correct.





    Ans .

    (e) Mr. Singh-Set Theory


    1. Explanation :

      The only pair which is correctly matched is Mr. Singh-Set Theory. Option (e) is correct.





    Ans .

    (a) Mr. Dutta on Monday


    1. Explanation :

      Probability was taught by Mr. Dutta on Monday. Option (a) is correct.





    Ans .

    (e) Wednesday-7:20 am, Thursday-7:05 am, Friday-7:10 am


    1. Explanation :

      The combination given in option (e) is correct.



Directions for Questions 24-28:

Five people joined different engineering colleges. Their first names were Sarah (Ms.), Swati (Ms.), Jackie, Mohan and Priya (Ms.). The surnames were Reddy, Gupta, Sanyal, Kumar and Chatterjee. Except for one college which was rated as 3 star, all other colleges were rated either 4 star or 5 star.

The 'Techno Institute' had a higher rating than the college where Priya studied. The three star college was not 'Deccan College'. Mohan's last name was Gupta but he didn't study at 'Barla College'. Sarah, whose last name wasn't Sanyal, joined 'Techno Institute'. Ms. Kumar and Jackie both studied at four-star colleges. Ms. Reddy studied at the 'Anipal Institute', which wasn't a five-star college. The 'Barla College' was a five-star college. Swati's last name wasn't Chatterjee. The 'Chemical College' was rated with one star less than the college where Sanyal studied. Only one college was rated five star



    Ans .

    (e) Jackie Chatterjee, Priya Reddy, Swati Sanyal


    1. Explanation :

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      XAT 2009
      XAT 2009
      XAT 2009
      XAT 2009
      XAT 2009
      XAT 2009





    Ans .

    (b) Swati-Barla, Priya-Anipal, Jackie-Deccan


    1. Explanation :

      This question asks us for a possible student-institute combination. Hence, if we can spot the given combination in an option, even in one of our two possible solution scenarios, we can conclude that the option is correct.

      Checking the options in the question we see that the combination given under option (b) (Swati- Barla; Priya-Anipal; Jackie-Deccan) is possible under possibility 2. Hence, Option (b) is the correct answer





    Ans .

    (d) Chemical College which had 4 star rating


    1. Explanation :

      This question asks us for a possible student-institute combination. Hence, if we can spot the given combination in an option, even in one of our two possible solution scenarios, we can conclude that the option is correct. Under possibility 2, Mohan Gupta is in Chemical College and it is a 4 star college. Option (d) is correct





    Ans .

    (a) Anipal Institute


    1. Explanation :

      Under both the possibilities, Priya was in Anipal Institute. Option (a) is correct.





    Ans .

    (b) Swati studying in Barla College


    1. Explanation :

      Under both possibilities Swati Sanyal was in Barla College. Option (b) is correct.



Directions for Questions 29-32:

Read the following and choose the best alternative. Decisions are often risky in the sense that their outcomes are not known with certainty. Presented with a choice between a risky prospect that offers a 50 per cent chance to win $200 (otherwise nothing) and an alternative of receiving $100 for sure, most people prefer the sure gain over the gamble, although the two prospects have the same expected value. (Expected value is the sum of possible outcomes weighted by their probability of occurrence.) Preference for a sure outcome over risky prospect of equal expected value is called risk averse; indeed, people tend to be risk averse when choosing between prospects with positive outcomes.
The tendency towards risk aversion can be explained by the notion of diminishing sensitivity, first formalised by Daniel Bernoulli in 1738. Just as the impact of a candle is greater when it is brought into a dark room than into a room that is well lit so, suggested Bernoulli, the utility resulting from a small increase in wealth will be inversely proportional to the amount of wealth already in one's possession. It has since been assumed that people have a subjective utility function, and that preferences should be described using expected utility instead of expected value. According to expected utility, the worth of a gamble offering a 50 per cent chance to win $200 (otherwise nothing) is 0.50 * u($200), where u is the person's concave utility function. (A function is concave or convex if a line joining two points on the curve lies entirely below or above the curves, respectively). It follows from a concave function that the subjective value attached to a gain of $100 is more than 50 per cent of the value attached to a gain of $200, which entails preference for the sure $100 gain and hence, risk aversion.
Consider now a choice between losses. When asked to choose between a prospect that offers a 50 per cent chance to lose $200 (otherwise nothing) and the alternative of losing $100 for sure, most people prefer to take an even chance at losing $200 or nothing over a sure $100 loss. This is because diminishing sensitivity applies to negative as well as to positive outcomes-the impact of an initial $100 loss is greater than that of the next $100. This results in a convex function for losses and a preference for risky prospects over sure outcomes of equal expected value, called risk seeking. With the exception of prospects that involve very small probabilities, risk aversion is generally observed in choices involving gains, whereas risk seeking tends to hold in choices involving losses. Based on the above logic, analyse the decision situations faced by three persons: Babu, Babitha and Bablu.


    Ans .

    (e) A, B and C


    1. Explanation :

      Since, it is given that for Babu, instant and further utility of each unit of gain is same, it follows that he has a straight line function of Utility. Hence, Babu's choice can be either based on expected value or on expected utility. Hence, it also follows that Roy associates final advice would be redundant. Hence, option (e) is correct. .





    Ans .

    (a) First


    1. Explanation :

      It can be seen that Babitha's expected value in each of the three cases would be the same. Since Babitha is defined as a risk taking person, it follows that Babitha would go for maximising her return even at the cost of taking a higher risk. This would be achieved if she took the first option. Hence, option (a) is correct.





    Ans .

    (e) Data is insufficient to answer the question


    1. Explanation :

      Babitha would go for expected value with a risk taking approach in case she has lost the previous game. However, if she had won the previous game, expected utility might be a better option to decide her behaviour. Since, we do not know the outcome of the previous game, we do not have sufficient information to answer the question. Hence, option (e) is correct





    Ans .

    (a) Bablu is risk taking.


    1. Explanation :

      Since Bablu is going for maximum return (even at the cost of taking a bigger risk) his decision making is that of a risk taker. Hence, option (a) is correct.



Directions for Questions 33-37:

This group of questions is based on a set of conditions. In answering some of the questions, it may be useful to draw a rough diagram. Choose a response that most accurately and completely answers each question.

A circular field, with inner radius of 10 meters and outer radius of 20 meters, was divided into five successive stages for ploughing. The ploughing of each stage was handed over to a different farmer.

    1. Farmers are referred to by following symbols: F1, F2, F3, F4, F5.
    2. The points between different stages of the project are referred to by the following symbols: P1, P2, P3, P4, P5, not necessarily in that order.
    3. Farmer F5 was given the work of ploughing stage starting at point P4.
    4. The stage from point P5 to point P3 was not the first stage.
    5. Farmer F4 was given the work of the fourth stage.
    6. Stage 3 finished at point P1, and the work of which was not given to farmer F1
    7. Farmer F3 was given work of stage ending at point P5.


    Ans .

    (a) Bablu is risk taking.


    1. Explanation :

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      Farmer F2 finished at P1. Option (a) is correct.





    Ans .

    (e) Fifth


    1. Explanation :

      Farmer F5 ploughed Stage 5. Option (e) is correct.





    Ans .

    (b) P5 and P3


    1. Explanation :

      P5 and P3 were respectively the starting and ending points for Stage 2. Option (b) is correct





    Ans .

    (e) F5


    1. Explanation :

      P2 was a finishing point for F5. Option (e) is correct.





    Ans .

    (a) P2


    1. Explanation :

      P2 was the starting point for farmer F3. Option (a) is correct.





    Ans .

    (d) Premrajan


    1. Explanation :

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    Ans .

    (e) D > A = B > C


    1. Explanation :

      The jars A and B have the same capacity. Even though jar B has a greater height than jar A, the capacity of jar B would get restricted by the small pipe attached to it's outside. This is because water finds it's own level and even if you fill Jar B with more water than the height of the external pipe, the water in jar B would come down to the level of the external pipe. Thus, A=B. Jar C is obviously the lowest capacity because it has the least height, while Jar D has the maximum height and the external pipe attached to Jar D does not reduce the effective height of Jar D as it extends to the same height as the internal height of the jar. Thus we have D > A = B > C. Hence, option (e) is correct.



Directions for Questions 40-43:

Read the following caselet and choose the best alternative. Om Chowdhury was one of the supervisors in the Fire and Safety (F&S) department of Maqsood Textile Mills. He was distant cousin to Mr. Bhiwani, General Manager (Personal & Administration). Personal & Administration department was given the responsibility of all personnel related decisions. It was often rumored that Om had obtained the job due to his cousin's influence. However, Om was meticulous in the performance of his duties and didn't give anyone reason for complaint. It was known that Om was not much given to talking and kept to himself and to his duties. All F&S supervisors reported to Mr. Rabindra, the shop-floor manager. The mill operated on a threeshift basis and Rabindra allocated the supervisors to different shifts. They were required to be present at all times during the shift operation and carry out scheduled checks on all machinery and firefighting equipments. For some reasons, Om was allocated the night shifts more often than other supervisors. Om accepted these allocations without any objection, while it was known that other supervisors would often plead and bargain with Rabindra to be allocated the day shifts. During the night shift, keeping awake and remaining mentally alert were some of the major challenges faced by the supervisors.
Of late, Rabindra observed signs of indifference from Om. On two occasions he found Om absent from his cabin. Rabindra heard from others that Om was often found in different part of the shop-floor talking. Rabindra called him to his office and reminded Om of his responsibilities. Om did not counter Rabindra. He promised that he would not lax in his duties again. Rabindra also broached the subject with Mr. Bhiwani. Mr. Bhiwani called Om to his office and talked on a very personal basis.
He reminded Om that their family relations made it uncomfortable to all concerned. Om nodded and agreed to do better. Soon his performance became that of a model supervisor. It was often found he went beyond his official duties to sort out problems of employees. About three months later, Rabindra happened to visit the plant during the night. As he looked into the F&S office, he found Om playing Solitaire on the office computer. Mr. Rabindra immediately fired Om.
The next morning Mr. Bhiwani called Mr. Rabindra and asked how he can fire an employee. He suggested that Mr. Rabindra reconsider Om's dismissal. 'This decision has already been made. There will be no turning back' replied Rabindra


    Ans .

    (d) Rabindra jumping to conclusions. Reason: He should have investigated whether Om had carried out his duties


    1. Explanation :

      The root cause of the problem in the caselet is obviously related to the firing of Om by Rabindra. However, option (e) can be eliminated as the reason given that it led to a clash between Rabindra and Bhiwani is not valid.

      It is evident that a mistake in the conclusion Rabindra made that Om was neglecting his duties. It is given clearly in the caselet that once he was talked to, Om's performance was that of a 'model supervisor' and he even went beyond his official duties to sort out problems of employees.

      Thus, it is evident that Rabindra's jumping to conclusions is the root cause of the problem & obviously he should have investigated whether Om had carried out his duties before deciding on an action as drastic as firing Om.

      Option (c) also seems close, but we do not have enough information to say that Rabindra was biased against Om.

      Option (a) is rejected because it is not true that Om was perpetually casual towards his duties.

      Option (b) also does not seem to be correct as it is not known that Om was relaxing on his job all the time.

      Hence, option (d) is the correct answer




    Ans .

    (b) Ask Om for clarification. It can be communicated that since Om had clarified regarding his duties, the order has been taken back.


    1. Explanation :

      The correct course of action obviously involves hiring Om back ( as he was a good employee and his firing was definitely not warranted). However, at the same time the top management should ensure that Rabindra should also have a face saving solution-as undermining his authority openly would make it difficult for Rabindra to perform his duties further. Options (a) and (c) are rejected because in these options the management would end up directly undermining Rabindra's action.

      Options (d) and (e) are incorrect because asking others would unnecessarily open up the issue further, and prolong it. Whereas the management should focus on closing the issue as fast as possible, ensuring least exposure to people who are not directly involved in the incident. Besides, if the opinion of other employees is sought in the issue, and they rule against Om it would end up making matters worse.

      Hence, the best course of action is to ask an explanation from Om and take the order back communicating to others that Om had clarified. Given his kind of personality explained in the caselet it is likely that Om would not react too drastically in his explanations. Hence, option (b) is correct.





    Ans .

    (c) Certain roles would have different ways of carrying out their duties.


    1. Explanation :

      It is evident that playing Solitaire is not necessarily going to affect the role Om was playing. It is quite likely that over the past three months when he was emerging as an ideal employee, he could have been playing Solitaire regularly while on duty. Hence, the learning is that certain roles might have different ways of carrying out their duties. Option (b) is also a learning that can be derived out of the incident but it is not the main learning arising out of the incident.

      The other options can be logically eliminated. Hence, option (c) is the correct answer





    Ans .

    (d) He should have checked if Om had done his duties or not.


    1. Explanation :

      The obvious thing for Mr. Rabindra to have done before blowing his fuse and reacting in this incident is that he should have checked whether Om had done his duties or not. An employee relaxing on the job after ensuring that his duties are done is a totally different scenario for a manager to handle than the employee relaxing on the job without having done his duties. Hence, option (d) is correct.



Directions for Questions 44-47:

Read the following caselet and choose the best alternative. Shekhar, an MBA from Singapore returned to his hometown Jamshedpur. Jamshedpur had a population of 10 lacs with one of the highest per capita income among Indian cities. Shekhar loved music. While listening to his favourite song on 'satellite radio', he wondered if he could mix his passion with business. Incidentally, a few weeks later, while browsing the internet, he came across an advertisement from Music world, which called for expression of interest from potential franchisees. Jamshedpur did not have a single good music outlet, where its residents could buy quality, variety and the latest from the world of music.

Music world wanted the potential franchisees to own minimum 1200 square feet space and invest '30 lacs. Profits were to be shared in the ratio of 3:7 between Music World and the franchisee. While Shekhar was excited about working with a renowned brand, he was worried if '30 lacs was too high an amount to shell out. He did not have the entire amount with him and was thinking of borrowing from the bank. He made enquiries with other Music World franchisees located in towns like Patna and Ranchi, as he expected similar footfall in Jamshedpur. A franchisee in Patna had sales revenue varying from 1-2 lacs rupees per month with profit margin in the range of 25-30%. Satisfied, Shekhar decided to proceed.

Soon, he was on a look out for the space. Jamshedpur had three main areas-Bistupur, Sakchi and Sonari. All areas were inter-connected by good roads. Bistupur was a business area where most of the high-end retail formats were located. Most upper middle class and higher class customers shopped there. It was also the education hub of the city. On the other hand, Sakchi was a growing lower middle class business area and Sonari had mostly residential population.

Shekhar was in favour of choosing Bistupur as it was the place where he shopped. However, he soon stumbled across problems. Not only was it difficult to obtain space in Bistupur but property rentals touched 30-40 rupees per square feet per month. Rentals at Sakchi and Sonari were in the Range of 15-20 rupees per square feet per month. Also, Shekhar's friend, who stayed in Sakchi, told him that a few branded outlets were opening in Sakchi and it seemed to be the fastest growing market in Jamshedpur, with highest ratio of teenagers. But, Shekhar was not in favour of Sakchi due to its low image. He expected to target college going crowd in Bistupur.

High real estate prices in Bistupur and his low assessment of Sakchi market created confusion in Shekhar's mind. To give the decision a serious and fresh thought, he decided to hit JamshedpurRanchi highway in his newly acquired car.


    Ans .

    (d) Do a further in-depth study to find the drivers and potential of the business.


    1. Explanation :

      The situation is clearly one in which Shekhar does not have enough information about the drivers and potential of the business. He is making too many assumptions here-like the footfall he expects is similar to Patna and Ranchi etc. Thus, taking a concrete decision either for or against the franchise would be the wrong thing to do. This rejects options (a) and (b). Option (c) is rejected because the drivers and potential of his business cannot be studied in Singapore and Option (e) is rejected because going to another Music company would just get him an offer on similar lines. Hence, he should go ahead and do a further study of the business potential and the business drivers for his proposed business in Jamshedpur. Hence, option (d) is the correct answer





    Ans .

    (e) May be never


    1. Explanation :

      Again in this case, we are not sure of what rental values the Patna franchisee is paying. In the scenario that the revenues are likely to be in the range of 1 to 2 lacs with 25-30% profit margin (for the Patna franchisee) it is clear that the Patna franchisee makes somewhere between 25 to 60 thousand profit per month. In the event that Shekhar opens his shop in Bistupur, he would end up paying close to 36000-48000 as rent.

      In such a scenario his profit is likely to dip drastically and might not even be able to cover his interest costs.

      Hence, he might never recover his investment. Option (e) is the correct answer.





    Ans .

    (c) It was difficult for Shekhar to associate non-Bistupur areas with good quality products


    1. Explanation :

      The question is asking us to reason out why Shekhar has a bias for Bistupur. From the first line of the second last paragraph "Shekhar was in favour of choosing Bistupur as it was the place where he shopped", it seems that the reason for his bias is that it was difficult for Shekhar to associate non-Bistupur areas with good quality products. However, a closer look at the options shows us that it is also said that Shekhar expected to target college going crowd in Bistupur. This clearly shows that he must feel that they are the customers for the latest music and hence an important component for the success of the shop.

      Option (a) talks about the same logic and hence is the likely answer at this point. If you were to consider the other options, they get rejected because:

      Option (b) cannot be the answer as we cannot infer that he has a crowded image of Sakchi.

      Option (d) would tend to take him away from Bistupur rather than creating a bias for Bistupur. Option (e) is also not an apparent reason because the passage does not talk about executives and their families shopping in Bistupur. Hence, option (c) is the correct answer





    Ans .

    (c) Future market growth


    1. Explanation :

      The most important decision criterion in such a scenario depends on the likely long term success for the business. If the business has long term viabililty short term costs and risks can be justified.

      Looking through the options, it is option (c) that mirrors this thought. Future market growth is likely to have maximum impact on the future viability of the business. Although Real estate prices seem to be an important criterion in this case, it cannot be the main criterion as if the business is viable, real estate prices would automatically get accommodated through the profitability of the business. Hence, option (c) is the correct answer.




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