Re: In the past, every ten-percentage-point increase in cigarette prices i
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23 Jul 2023, 05:09
It's stated in the premise that increase in the price leads to decrease in the sales.
Every 10% increase in price -> 4 % dec in sales.
This year, the increase is 9 cents ~ 10% of the base price of 90 cents. So, the author concludes that this would lead to a decrease in the sales.
However, it is possible that the companies decide to decrease their base price to offset the increase in price. This would not impact their sales and hence it is essential to our conclusion that companies do not lower their base price.
A - clearly states that Tobacco companies are unlikely to reduce their profit per pack of cigarettes to avoid an increase in the cost per pack to consumers in Coponia. If we reverse this answer choice, it would weaken our conclusion, and hence, this should be the answer.
B. Previous increases in cigarette prices in Coponia have generally been due to increases in taxes on cigarettes.
It can be true but does not relate to how it would impact the current scenario ( Out of scope)
C. Any decrease in per capita sales of cigarettes in Coponia will result mainly from an increase in the number of people who quit smoking entirely.
No mention about the people quitting smoking - OS
D. At present, the price of a pack of cigarettes in Coponia includes taxes that amount to less than ten percent of the total selling price.
If it is the case, the case at hand relates to how the overall increase in price impacts the sales. The conclusion says that price increases -> sales decrease. Tax may play a role, but it is not essential to our conclusion, so this OA is incorrect.
E. The number of people in Coponia who smoke cigarettes has remained relatively constant for the past several years.
It does not relate to the increase in price and impact on sales anyways. Incorrect.