Jeff Miller

GMAT OFFICIAL GUIDE PS – A manufacturer of a certain product can expect that…

A manufacturer of a certain product can expect that…

Solution:

We are given that a manufacturer produces 20,000 units and that between 0.3 and 0.5 percent of the units are defective. We also know that each unit is priced $2,500, and we

must determine the range of dollar amounts that the manufacturer will have to refund. We can determine this range in two parts; let’s start with the dollar amount the manufacturer would have to refund if 0.3 percent of the units were defective.

0.3/100 x 20,000

0.3 x 200 = 60 units

Since each unit is priced $2,500, the manufacturer would have to refund 60 x $2,500 = $150,000.

$150,000 represents the least number of dollars that the manufacturer will have to refund. When looking at our answer choices, we see that only answer choice D contains a minimum of $150,000. Thus, we know that answer choice D is correct.

Answer: D

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