CAT Practice Test - 2 
(Data Interpretation and Logical Reasoning)

Question No. 17: MCQ (with negative marking)

Directions (for questions 16 and 17): Read the following and answer the questions.

  A company 'Yu-me' which manufactures and sells noodles has a long standing in the consumer market and has a majority share in its business realm. As it also enjoys a long standing, and is quality oriented, it has over the years increased its overhead expenses substantially. However, it is surviving with good monetary results due to it's large market share. The factory is situated in DreamLand and is far away from the main consumer markets, thus, further increase in cost of the marketed product.

  Another new Company 'Me-U' (started few year ago) has factory situated near WonderLand, nearer to the main land and consumer markets. The product manufactured by 'Me-U' is almost similar to that of 'Yu-me' in all disciplines. In view of of its proximity with the consumer market, transportation cost being incurred by company 'Me-U' is comparatively less adding to this it has controlled overhead expenses. Taking these as advantage 'Me-U's product are introduced at a slightly lesser price compare to that of 'Yu-me' thereby slowly penetrating into the market share of company, 'Yu-me'.

  The company 'Yu-me' is now faced with the problem of completing with this new company 'Me-U' without compromising with the quality of the products or reducing its price as it will effect it's profit immensely. 'Yume' company's board is now faced with the problem of competing with company 'Me-U' not just by maintaining it's image and reputation in the market but also influence its profits.

  Surya, a young and dynamic board member decided to undertake a detailed market survey and study all types of instant noodles marketed allover the country. By examining the competitor's products it was clear that the product marketed by 'Yu-me' was a quick consumption item of the highest quality, having a longer expiry date compared to others in the market. It was also observed that the product was packed in an aluminum container but after consumption of the noodles containers became useless as it didn't have any resell value. At the same time government had imposed a ban on use of regular plastic for packing of edible products. So the board decided to use either Biodegradable plastic enhanced with BioSphere Plastic's Additive, a new innovation or Cardboard packing (both approved by the government) or both. Carboard packing were added weight, couldn't withstand varying climatic conditions and consumed more space compared to Biodegradable plastic packing during transportation board decided to rule out the option of using cardboard packing. This resulted in drastic reduction of expenditure on packing, 15% to be precise. Thus board was able to reduce the price of the instant noodles by about 10%, adding 5% to existing profit margin and maintain the companies reputation to public. 

  17. The market survey conducted by company 'Yu-me' reveled that their product was a quick consumption item of a higher quality with a longer expiry date. What was the conclusion drawn from the survey?

  (i) Begin a quick consumption item, it can have a cheaper packaging, as the problem of aging will not be there.
  (ii) Longer expiry date shows that the product has durability and therefore can stand for a longer period in the market without changes in the quality of the product.
  (iii) Their product enjoyed better reputation than that of company 'Me-U'. 

Options:
Option (a): I only.
Option (b): III only.
Option (c): I and II.
Option (d): II and III.