Question: Each of these items has a question followed by two statements. As the answer,
Type 1, If the question can be answered with the help of statement I alone,
Is it more profitable for Company M to produce Q?
Product R is sold at a price four times that of Q.
One unit of Q requires 2 units of labour, while one unit of R requires 5 units of labour. There is no other constraint on production.
Statement I only gives the comparison of the selling prices. This information alone is not enough to answer the question as the profit also depends on cost.
Statement II only gives the infomation about cost and not selling price.
Hence, the 2 statements alone are not enought to answer the question.
So we also need to analyze both the statements.
According to it, if 10 units of labour is available, it can produce 5 units of Q and 2 units of R. So, from 10 units of labour, I can earn (5 x 1) = 5 units of sales revenue from Q and (2 x 4) = 8 units of sales revenue from R.
So by taking both statements together we can determine which would be more profitable.
Hence, 3.