Studio executives carefully examine how a film performs on its opening weekend in order to determine whether - and how - to invest more in that film. Many decisions, such as increasing the number of screens that show the film and expanding the marketing campaign, are best made after reaction ca be gathered from audience who actually purchased tickets. Therefore, to maximize returns on their marketing investments, studios should initially release all their films on a small number of screens and with a limited advertising campaign.
The plan to maximize returns by initially releasing films on only a small number of screens and limiting advertising depends on which of the following assumptions?
A) Large marketing investments made before the opening weekend never eventually yield greater profits than small initial marketing investments.
B) New advertising technique such as web-based viral marketing, haven’t substantially reduced the average marketing cost for films.
C) A film’s prior performance in noncommercial settings, such as festivals, is not well correlated with how the general public tends to react to than film.
D) Across the movie industry, marketing investments do not influence the eventual financial returns of films in predictable way.
E) How a film performs during its opening weekend is a strong indicator of the film’s financial performance over its lifetime.
The solutions say "A" however I argue that "E" is correct. While I agree that A does eliminate an alternate cause, the use of the word "never" is too strong. It may be possible that large marketing investments sometime yield larger profit margins but that studios should still release all their films to maximize profit.
I don't understand why E is incorrect. The argument is based on the fact that studios can use results from opening weekend to make marketing decisions. Thus, the assumption that opening weekend results are strong indicators of the film's overall performance seems to be valid...