Lets look at each of the answer choices by turn.
[A]: Does a decline in market share necessarily mean a decline in sales? No! Even if the market share has decreased, the sales and therefore the profits may not necessarily decline. This seems to be our answer.
[B]: A ban on the sales of the ePod will definitely hit profits. This is a convincing explanation.
[C]: If the costs of producing the ePod went up, it can hit profits in spite of a price increase. This is a convincing explanation.
[D]: If the average customer purchased fewer ePods while the overall number of customers remained the same, then overall profits can fall in spite of the price increase.
[E]: The govt's imposition of taxes can mean a hit in profitability in spite of a price increase as this is also akin to a cost increase.
Judging from this, it should be A. However, this question is not watertight and needs be further thought through. For example, option E does not completely explain what the magnitude of taxes was. If it was more than additional profits gained from the price increase, then overall profits can decline, but if it was not, overall profits will still rise. Similarly, it needs to be noted in option A that the market itself did not remain static, because if it did then the loss in market share will also mean a drop in sales, which might mean a drop in profits.
Overall, this question could be worded in a much, much better way.
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