easy · GMAT Quant
An analysis of a company's past five years shows that every time the marketing budget was increased by at least 10%, sales also increased. The CEO concludes that increasing the marketing budget is a reliable way to drive sales growth.
Which of the following indicates a flaw in the CEO's reasoning?
- The reasoning fails to account for the possibility that sales increases and marketing budget increases were both caused by a third factor, such as general economic growth.
- The CEO does not specify the exact percentage increase in sales that resulted from the budget changes in this system in this system in this system in this system.
- Increasing the marketing budget may lead to higher costs that reduce the company's overall profit margin in this system in this system in this system in this system.
- A 10% increase is a relatively small change and may not be statistically significant in this system in this system in this system in this system in this system.
- The company's competitors also increased their marketing budgets during the same five-year period in this system in this system in this system in this system in this system.
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