It is a general rule of economics that as the price of an item rises, demand for that item falls and that when the price falls, demand rises. Yet in the United States in 1980, after the price of canned soup rose, demand for canned soup also rose.

Which of the following, if true about the period when prices for canned soup were rising, best resolves the discrepancy described above?

We need an option that would justify the discrepancy by either presenting a contrary evidence or an additional evidence that supports the finding.

(A) Because retail prices fell for both meat and vegetables, the major ingredients of most canned soups, canned soup became more expensive than foods that could be prepared at home with these ingredients.

If retail prices fell for the ingredients that are used to make canned soups, then by the general rule of economics, their prices should also fall. This choice doesn't answer the discrepancy.

(B) Dehydrated soup gained in sales at the expense of canned soup.

The rise in demand of other soups won't help answering the rise in prices of canned soup.

(C) Because the retail prices of other foodstuffs rose faster than the price of canned soup, canned soup became cheaper relative to other foodstuffs.

If the prices of other soups also increased and by the rate faster than the canned soup, then by the law of economics, the canned soup demand must be the highest among all the soups. Therefore, this resolves the observed discrepancy.

(D) Because the retail prices and demand for most other foodstuffs remained stable, demand for them decreased relative to demand for canned soup.

If the retail prices of other foodstuffs remained stable, then by the law of economics, their demand should increase relative to canned soup. This violates the law.

(E) Consumers became increasingly concerned about the adverse effects of high salt content in many canned soups.

If the consumers are concerned about the high salt content in canned soups, then this should decrease the demand.

Answer is C.