The Revenue of a Company is Directly Proportional to the Number of Customers GMAT Data Sufficiency

Question: The revenue of a company is directly proportional to the number of customers it serves, which in turn is directly proportional to the marketing spend of the company. What is the revenue of the company if it spends one million dollars in marketing?

(1) If the company spends $250,000 in marketing, it earns a revenue of ten million dollars
(2) The ratio of revenue of the company to the number of customers it serves is 4:1

1. Statement (1) ALONE is sufficient, but statement (2) alone is not sufficient.
2. Statement (2) ALONE is sufficient, but statement (1) alone is not sufficient.
3. BOTH statements TOGETHER are sufficient, but NEITHER statement ALONE is sufficient.
4. EACH statement ALONE is sufficient.
5. Statements (1) and (2) TOGETHER are not sufficient.

“The Revenue of a Company is Directly Proportional to the Number of Customers”– is a topic of the GMAT Quantitative reasoning section of the GMAT exam. The GMAT Quant section comprises a sum of 31 questions. Out of these 31 questions, 15 questions belong to the GMAT data sufficiency section.
GMAT Data Sufficiency questions include a problem statement that cites two factual statements. The quantitative section of the GMAT exam improves the candidate’s efficiency in solving mathematical problems. This GMAT data sufficiency enables the candidate to test their skills in reasoning, quantitative problems, and graph. The candidates can further enhance their quantitive skills by practicing more questions from "GMAT Quantitative Review".

Solution and Explanation:

Approach Solution 1:

It is given in the question that Revenue is directly proportional to the number of customers and the money that customers Marketing spend.
We have to find if Revenue when one million dollars spent on marketing
Statement 1: $250,000 in marketing implies 10,000,000 in revenue
$1,000,000 in marketing implies 40,000,000 Revenue (SUFFICIENT)
Statement 2: revenue of the company: number of customers = 4:1(INSUFFICIENT)

Correct Answer: A

Approach Solution 2:

Let, Revenue =k(No. of Customers) and No. of Customers = x(Marketing spent)
This implies that Revenue = k * x * No. of Customers *Marketing spent (here k, and x are constant)

Statement 1: If the company spends $250,000 in marketing, it earns a revenue of ten million dollars.

This implies 10 $ Million = k*x ( No. of Customers spends 250000$)
This implies If All other constants stay the same, we can calculate the revenue when the marketing spend is 10 $ Million. (Sufficient.)

Statement 2: The ratio of the revenue of the company to the number of customers it serves is 4:1

This implies Revenue = 1/4(No. of Customers)
This implies But we do not have the value of x. (Insufficient)

Correct Answer: A

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