LSAT 145 – Section 4 – Question 21

LSAT 145 - Section 4 - Question 21

December 2015

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Question
QuickView		 Type Tags Answer
Choices		 Curve Question
Difficulty		 Psg/Game/S
Difficulty		 Explanation
PT145 S4 Q21
+LR
Except +Exc
Resolve reconcile or explain +RRE
Math +Math
A
2%
157
B
74%
166
C
8%
159
D
10%
159
E
5%
157
147
155
163
 +Harder 148.528 +SubsectionMedium

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In a recent study, researchers collected current prices for the 300 most common pharmaceutical drugs from the leading wholesalers specializing in bulk sales. It was found that these prices average 60 to 80 percent below the suggested wholesale prices listed for the same drugs in the current annual edition of a widely used, independently published pharmaceutical price guidebook.

"Surprising" Phenomenon

Why were the current prices for the 300 most common drugs from top wholesalers 60-80% lower than the suggested wholesale prices in a popular, independent pharmaceutical price guide?

Objective

Four of the answer choices will provide a hypothesis that helps to explain the difference between the actual drug prices and the suggested drug prices in the study.

Note that we are looking for the answer choice that does not help to explain this difference.

A
A price war wherein pharmaceutical drug wholesalers tried to undercut each others’ prices began shortly before the study was conducted.

This helps to explain why drug prices from top wholesalers were lower than the suggested wholesale prices in the guidebook. If a price war among drug wholesalers began shortly before the study was conducted, it could have caused the studied prices to be lower than usual.

B
Suggested wholesale prices for the most common pharmaceutical drugs tend to be less than those for less common pharmaceutical drugs.

This does not help to explain why prices for the 300 most common drugs were lower than the suggested prices in the guidebook. Since we're only talking about these 300 drugs, it doesn't matter if suggested prices for less common drugs are usually higher.

C
Wholesale prices for pharmaceutical drugs often fluctuate dramatically from one month to the next.

This helps to explain why drug prices from top wholesalers were lower than the suggested wholesale prices in the guidebook. If wholesale drug prices fluctuate significantly each month, it makes sense that the annual guidebook might not reflect the prices for any given month.

D
Wholesale prices suggested by the independently published pharmaceutical price guidebook are calculated to allow every pharmaceutical wholesaler to make substantial profits.

This helps explain the difference in the actual and suggested prices. The guidebook prices allow wholesalers to make a profit, so they can still profit by charging 60-80% of the suggested price. Wholesalers might want to charge less to stay competitive or reduce consumer costs.

E
The prices suggested by the independently published pharmaceutical price guidebook are for sales of relatively small quantities of pharmaceutical drugs to individual doctors.

This helps to explain why drug prices from top wholesalers were lower than the suggested wholesale prices in the guidebook. If the suggested prices are for smaller sales to individual doctors, these wholesalers who specialize in bulk sales might charge less for bulk purchases.

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LSAT PrepTest 145 Explanations

Section 1 - Reading Comprehension

Section 2 - Logical Reasoning

Section 3 - Reading Comprehension

Section 4 - Logical Reasoning

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