Question

Is it more profitable for Company M to produce Q? Statements: I. Product R is sold at a price four times that of Q.
II. One unit of Q requires 2 units of labour, while one unit of R requires 5 units of labour. There is no other constraint on production.

• A. Statement I alone is sufficient
• B. Statement II alone is sufficient
• C. Both statements I and II together are sufficient
• D. Neither statement I nor II is sufficient

Hint:

Profit comparisons require both cost and revenue data. Price alone or cost alone won’t help in isolation.

Answer 1

The Correct Option is C

To evaluate profitability between products Q and R, we need to compare: \[ \text{Profit per unit} = \text{Revenue per unit} - \text{Cost per unit (labour)} \] From Statement I: We only know the revenue side: R's selling price is 4 times Q’s.
This alone doesn't help without knowing labour input (cost), so I is insufficient. From Statement II: We are told the labour units required per product, which reflects the cost side.
But we do not know the selling price of either product, hence cannot compute profit.
So, II alone is also insufficient. Combining I and II: We know selling price (via ratio from I) and labour required per unit (from II). Assuming profit is based only on labour cost and revenue, we can compute profit for both Q and R and compare. Hence, together the two statements are sufficient.