The key to this question is noticing the difference between the revenue and profit. The revenue from last year was 200 million. However, this doesn’t tell us much about profit, which is how much a company makes after operation costs/expenses.
In this case, the video game company’s revenue may have been lower for this year, yet if its total expenses were less than those of last year, the company may end up being more profitable this year.
What does this depend on? On whether the amount the company lost in revenue (20 million according to the numbers) is less than what the company saved in total expenses.
So if the company costs 100 million to operate the first year, then as long as its total costs were <80 million, (or decreased by more than 20 million) it will be more profitable.
The analyst, in stating that the company is unable to make a profit, is assuming that its total costs did not decrease by more than 20 million. Therefore the answer is (A).
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