GMAT Critical Reasoning
In 1999, America Mart, which previously only sold through retail outlets, began selling on the internet while keeping its retail stores open. Total sales increased in 1999, but profits were less than in 1998.
Which of the following, if true, contributes most to explaining why America Mart's profits were more in 1998 than in 1999?
- A There was a two percent increase in sales tax in 1999 that consumers had to pay on all retail purchases.
- B A greater number of promotions for their internet site were made available to previous customers than to people who had never shopped at America Mart before.
- C In 1999, America Mart's wholesale purchase costs increased by a smaller amount than the selling price of goods on their internet site.
- D Customers who had never previously purchased products from America Mart purchased, on average, fewer products in 1999 than previous customers did.
- E The increase in costs due to setting up the web site in 1999 was greater than the increase in revenue from sales in 1999.
Correct Answer: E