Logical reasoning PrepTest 120 · Section 4 · Question 1

Incorrect. This answer about production costs might address profitability, but revenue is just about the amount of money from ticket sales. Additionally, the stimulus compares big-budget movie grosses to their production costs, so we already know that they sell a lot of tickets.

Correct. Argument or Facts:
Facts

Question Type:
Paradox

Stimulus Summary:
Big-budget movies make 2-3x their production costs and marketing, but most revenue comes from low-budget movies

Answer Anticipation:
As with all Paradox questions, let's start by clearly defining the paradox. Here, a big-budget movie, by definition, has a bigger budget than a small-budget movie. And those big-budget movies make 2-3x their budget (or, at least, a significant portion of it—marketing and production) in ticket sales.

From this, you might expect that the majority of revenue made by the movie industry comes from these big-budget movies. However, it's noted that the low-budget movies actually make up the majority of the revenue.

The only way this can happen is if the low-budget movies sell more tickets, overall, than the big-budget movies. This means that either there are fewer low-budget movies but they sell a lot more tickets; there are about an equal number of both types of movies but the low-budget ones sell more; or there are a lot more low-budget movies to sell more tickets overall despite fewer tickets sold per movie. From the fact that big-budget movies sell a lot of tickets (they do make 2-3x their budget, after all), the first two seem unlikely, so let's look for an answer stating that there are significantly more low-budget movies released.

Also, it's important to note that the paradox here is about revenue, not profit. As such, all that matters is the amount of money brought in, not how much is left over after costs are considered.

Answer Explanation:
If there are a lot of low-budget movies, then they might overall sell more tickets than the fewer big-budget movies that sell a lot of tickets per film. This answer thus resolves the paradox.

Key Takeaway:
One thing you're expected to know for the LSAT is the difference and relationship between cost, revenue, and profits. The short version that'll get you through the exam is: Profits = Revenue—Costs. But even just knowing that these are each distinct concepts and need to be distinguished when you're dealing with a question addressing them can be enough to avoid some trap answers.

Incorrect. The paradox is about the relative revenue of big- and low-budget movies currently, so the changes over the past few decades are out of scope.

Incorrect. This answer brings up a cost that would be higher in big-budget films than low-budget ones, but that's relevant to costs/profitability, not revenue.

Incorrect. Time spent making a movie isn't discussed nor hinted at in the stimulus—big-budget films might be faster to make; low-budget films might take longer, for all we know.