Examkin

Question

Difficulty: EasyResolving Paradoxes and Discrepancies

Over the past year, a gourmet coffee subscription company recorded a significant increase in the total number of monthly account cancellations. However, during that same year, the company's monthly cancellation rate—defined as the percentage of total active subscribers who canceled their accounts each month—steadily decreased.

Which of the following, if true, best helps to resolve the apparent paradox described above?

  1. The total number of active subscribers to the coffee service increased substantially over the course of the year.Answer
  2. B
    Customer satisfaction surveys showed that most subscribers who canceled were dissatisfied with recent delivery delays.
  3. C
    The subscription company increased its monthly service fees substantially at the start of the year.
  4. D
    The company introduced several new premium coffee roasts mid-way through the year.
  5. E
    Competing subscription services experienced a similar rise in the overall number of customer cancellations.

Answer

The total number of active subscribers to the coffee service increased substantially over the course of the year.
The correct answer resolves the paradox by identifying a shift in the overall subscriber base. Total cancellations equal the cancellation rate multiplied by the total number of active subscribers. If the total subscriber base grew substantially, a lower percentage cancellation rate would still yield a higher absolute number of cancellations.

Step-by-Step Solution

1
Identify the two contradictory facts in the stimulus.
Fact 1: Total monthly cancellations increased. Fact 2: The monthly cancellation rate (percentage of active subscribers canceling) decreased.
Resolving a paradox requires finding an underlying factor that allows both facts to exist simultaneously without denying either premise.
2
Analyze the relationship between rate and total volume.
Total Cancellations = (Total Active Subscribers) × (Cancellation Rate).
If the cancellation rate drops while the total number of cancellations increases, the total number of active subscribers must have expanded.
3
Evaluate the option choices to find the statement establishing subscriber base growth.
The option stating that active subscribers increased substantially provides the missing mathematical linkage.
A much larger denominator (total active subscribers) yields a higher total count of cancellations even when the percentage fraction is smaller.

Key Concept

Resolving Rate versus Total Volume Discrepancies
Rate this question

Topics

Resolving Paradoxes and Discrepancies

More questions from this topic