But even without the negation technique - which I advise only in the super tough questions, otherwise, it is a waste of time - the only reasonable assumption is C.

You will open a factory in country X only and if only your profit is > of the costs. And you have profit if you have a market share to cover.

Pretty simple

Hi There!

Adding to Carass's point. We only need assumption which is relevant to the argument. You are making another assumption which, might not be required for the above question. For assumption questions, we need to select option choice relevant to the argument, here, all the other choices are too distant to make and requires us to make additional assumption (like the one you did above) or are out of scope.

Hope this helps!

Carcass and Ks1859

I think the answer should be E.

C does not logically cover the argument of the market. The fact that country X currently exports to Y and Y imposes a heavy tariff means that the goods are being sold in volume in Y, implying that Y already has a market that is big enough to be covered. Logically saying no country would introduce a heavy tarrif if a certain thing isn't selling. (If usa imposes a fine on japanese on chinese cars selling to the usa the idea is to bolster production in usa with indigenous companies and hence a heavy tariff proves to be a hindrance for the former.)

Conversely, Labour is directly proportional to profits. Higher the labour cost, lesser the chance of profits.

P.S. Where is the question taken from?

Conclusion: Company Y could increase profits by putting factory in Country X
Premise: Country X has heavy tariffs on imports
Assumption: People actually buy Company Y's stuff in Country X

This is a tough question because of answer choice A. You're supposed to look at it and say "Well, if they can't even open the factory, won't that negate the conclusion?" And you'd be right, if not for one little word in the passage: could. If this passage said, Company Y WILL make a big profit next year by building a factory, then answer choice A would be correct, because that makes it impossible for them to actually build the factory.

But this passage merely says they "could" make a profit by opening the factory. In this hypothetical universe, the factory has already opened. Whether or not there are impediments to making this happen is immaterial. The issue is whether the existence of the factory will make them a profit.

A: Company Y will be able to obtain all the necessary permits to open a factory in Country X.
Problem: We don't need to know how hard it is to make the factory. The conclusion implies that the factory is already open.

B: Company Y currently produces no goods outside its home country.
Problem: This has no connection to whether or not they will make money if they DO produce goods outside the home country.

C: A sustainable market for Company Y's goods currently exists in Country X.
Answer: You can't make a profit if nobody's buying, no matter how many tariffs you dodge.

D: Company Y's home country does not impose tariffs on imported goods.
Problem: This doesn't matter, because Company Y wants to make a profit on goods sold in Country X.

E: Labor costs in Country X are lower than those in Company Y's home country.
Problem: This strengthens the argument a bit (because the factory in Country X will be cheaper, leading to potential profit), but it isn't necessary. If we take the negation ("Labor costs in Country X are NOT lower than in Country Y), the argument does not fall apart.

Alwyas take a look above to the source tag> Manhattan GRE

Therefore, the source is well reliable

Carcass, how did you determine that E is not necessary? I chose E , and I am struggling to understand why assumption stated in E is not a reguirement.

Country X imposes heavy tariffs on imported manufactured goods.

Ok we will have tariffs on imported good in a certain country. That means the supply chain will be more expensive. And in the end the food and other items at grocery store will have a higher price than before

Company Y has determined that it could increase its profits in the long term by opening a factory in Country X to manufacture the goods that it currently produces in its home country for sale in Country X.


Company Y probably exports into X, so it will move in country X for not pay the tariffs and steel its products directly in that specific market

Notice how the question assumes that company Y, if it wants to export to country X, must pay more taxes or tariffs. Therefore, it will reduce its profit margins. That's why it will relocate the production abroad.

Now, this is false because the tariffs over the imports will increase the final selling price and the customers will pay MORE for at the grocery store.



We need to find the assumption and therefore to sustain the conclusion that Y is correct


A. Company Y will be able to obtain all the necessary permits to open a factory in Country X.


Irrelevant. We are talking about profits and margins and if the plan is cogent. NOT the permission at the customs or else to import goods


B. Company Y currently produces no goods outside its home country.


Ridiculous statement. We are dealing with the fact that Y wants to relocate the production in country X NOT if Y does something else in other countries


C. A sustainable market for Company Y's goods currently exists in Country X.

This is our assumption. Pretty clear and net. If Y has a market and this will be viable to attack, the is good. Otherwise, Y is wasting its time to operate in country X

D. Company Y's home country does not impose tariffs on imported goods.

Just a fact, a news, ..........something to be aware but sure not our assumption

E. Labor costs in Country X are lower than those in Company Y's home country.

Just another news.we need a viabòle market where to sell our goods. Even if labor market costs are 1 million they are just fixed costs. Our goal is we have a market where to have profits. Labor costs are just a voice in our annual budget


I hope now is more clear