Computer store manager: Support Last year we made an average of 13 percent profit on the high-end computer modelsβthose priced over $1,000βthat we sold, Support while low-end modelsβthose priced below $1,000βtypically returned at least 25 percent profit. βββββ βββββ ββ β βββββ ββ βββ ββββ ββββββ ββ βββ βββββββ βββ βββββ ββ ββββββ ββββ ββββ βββββββ βββββββ ββββ βββββ ββββββββ βββ ββββββββ βββββ ββ βββββ ββββββββ ββββ ββ ββββ βββββββ ββββββ ββ ββββ ββ βββ ββ ββββ ββ ββ βββββ ββββ ββββ βββββ ββββββββ ββ ββ βββββββββ ββ ββββ βββββ
The manager concludes that the store should only sell low-end computers because they bring in more money as a percentage of their price, and the total number of units sold would likely remain the same as the number sold when the store sells both high-end and low-end models.
The problem with this argument is that it only establishes the modelsβ profit percentages and not the total earnings from the sales. If the high-end models are significantly more expensive, then a lower percentage margin would still earn the store significantly more money per sale. For example, 13% of a $1,000 model ($130) is far more than 25% of a $100 one ($25).
The reasoning in the manager's ββββββββ ββ ββββββββββ ββ βββββββββ ββ βββββ βββ ββ βββ βββββββββ ββββββββ
The argument fails ββ ββββββββ βββ βββββββββββ ββββ βββ βββββ ββββββ ββ ββββ ββββββββ ββββββββ ββ βββββββββββββ ββββββ ββββ βββ βββββ ββββββ ββ ββββ βββββββ βββββββββ
The argument fails ββ βββββββ βββ βββββββββββ βββββ βββββββ βββ βββββ βββββββββββββ βββ βββββ ββββ ββ ββββ ββββββββ ββββββ ββ βββββββ ββββββ ββββ βββββ
The argument ignores βββ βββββββββββ ββββ ββββ βββββββββ βββ ββββ ββββ β ββββββββ βββββ βββββββββ ββ ββββββββ β βββββββ βββββ βββ ββ ββββββββββ β ββββββββ ββββββ
The argument presumes, βββββββ βββββββββ ββββββββββββββ ββββ βββ ββββ βββββββββ ββ ββββββββ βββ ββββββββ βββββ ββββββ ββ ββββββββββ ββββββββ
The argument fails ββ βββββββββ ββββ ββββββ βββββ ββ βββββββ βββββββββ βββ βββ ββ βββ ββββ ββ ββββ ββββββ