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Country X imposes heavy tariffs on imported manufactured goods. Compan

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GeminiHeat
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Country X imposes heavy tariffs on imported manufactured goods. Compan [#permalink] New post   04 Apr 2021, 06:00
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Country X imposes heavy tariffs on imported manufactured goods. 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.

For Company Y's determination to be true, which of the following assumptions must also be true?


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

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

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

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

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

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Country X imposes heavy tariffs on imported manufactured goods. Compan [#permalink] New post   04 Apr 2021, 08:06
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Company Y is planning to open a factory due to heavy tariffs imposed by country X on imported goods.

We are asked to find an assumption, an unstated premise that is needed for the conclusion to hold true.

One way to find the assumption is to negate the answer choices and if it destroys the conclusion then it is the answer.

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

B. Company Y currently produces no goods outside its home country. - out of scope

C. A sustainable market for Company Y's goods currently exists in Country X. - Let's negate this. There is no market for company Y's goods in country X. Now if company Y opens the factory and there is not sufficient market then there is no need to open the factory as not much positive will come with this decision.

D. Company Y's home country does not impose tariffs on imported goods. - out of scope

E. Labor costs in Country X are lower than those in Company Y's home country. - By negating - Labor costs are higher in country X. Still it can be manageable. This choice does not make much impact on the decision to open the factory.
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raghavarao68
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Re: Country X imposes heavy tariffs on imported manufactured goods. Compan [#permalink] New post   08 Jun 2021, 06:20
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Determination :- Company Y is determined to make profits in long term,

C. A sustainable market for Company Y's goods currently exists in Country X. - Let's negate this. There is no market for company Y's goods in country X. Now if company Y opens the factory and there is not sufficient market then there is no need to open the factory as not much positive will come with this decision.

Now when you negate this, even though there isn't much demand/market for company Y's good currently, It might happen in future (Market may arise in future) -- which doesn't damages the Company's determination.

Can you help me in understanding why the answer can still be C?
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Re: Country X imposes heavy tariffs on imported manufactured goods. Compan [#permalink] New post   08 Jun 2021, 08:42
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raghavarao68 wrote:
Determination :- Company Y is determined to make profits in long term,

C. A sustainable market for Company Y's goods currently exists in Country X. - Let's negate this. There is no market for company Y's goods in country X. Now if company Y opens the factory and there is not sufficient market then there is no need to open the factory as not much positive will come with this decision.

Now when you negate this, even though there isn't much demand/market for company Y's good currently, It might happen in future (Market may arise in future) -- which doesn't damages the Company's determination.

Can you help me in understanding why the answer can still be C?


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
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Re: Country X imposes heavy tariffs on imported manufactured goods. Compan [#permalink] New post   08 Jun 2021, 18:25
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raghavarao68 wrote:
Determination :- Company Y is determined to make profits in long term,

C. A sustainable market for Company Y's goods currently exists in Country X. - Let's negate this. There is no market for company Y's goods in country X. Now if company Y opens the factory and there is not sufficient market then there is no need to open the factory as not much positive will come with this decision.

Now when you negate this, even though there isn't much demand/market for company Y's good currently, It might happen in future (Market may arise in future) -- which doesn't damages the Company's determination.

Can you help me in understanding why the answer can still be C?


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!
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