medium · GMAT Verbal
Last quarter, a coffee chain raised the price of every drink by 15%, and the number of drinks it sold barely changed. Yet the chain's total profit from drinks rose only slightly.
Which of the following, if true, best explains why profit rose only slightly despite the price increase and steady sales volume?
- Over the same quarter, the price the chain paid for coffee beans and milk increased sharply.
- The chain opened several new locations during the quarter, each drawing its own stream of customers.
- Customers bought slightly fewer pastries alongside their drinks than in the previous quarter.
- A competing coffee chain across town lowered its own drink prices sharply during the same quarter.
- The chain noticeably reduced its spending on advertising over the course of the quarter.
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