This one had some annoyingly tricky answer choices.
Quote:
A. Defective chainsaws can seriously injure or even kill the people who use them.
B. Charlie's chief rival has recalled two of its products withing the past year.
C. Product recalls often result in a perception by customers that a given product is permanently defective, even after the defect has been remedied.
D. The stocks of publicly traded companies that announce product recalls often drop upon the announcement, but they generally return to the pre-announcement level within 12 months.
E. Three years ago a rival company went out of business because of large punitive damages awarded to a plaintiff who had been injured by a defective chainsaw.
A. The stimulus stated specifically that it had to be the best economic reason, not reasoning based in ethics or otherwise. While that may pull in some serious repercussions in real life, it doesn't matter because it's out of the scope of the question.
B. One would be inclined to think the damage of 2 recalled products must be worse than the damage caused by the recall of 1 product but there is nothing that indicates whether or not this is true.
C. This would weaken the conclusion. If the recall of a product makes customers think that the problems are irreparable, that would be a bad economic decision.
D. It is possible that the company doesn't at all make an announcement and continues to make money in that one year. The potential gains from keeping quiet could potentially outweigh the gains from announcing, so there's nothing that really indicates whether this is a good or bad economic decision.
E. This one seems most demanding of action. Where stocks can go up or down, having a company driven into the ground and going out of business is a different matter entirely. Of the provided reasons this is the one that most strongly supports the given conclusions.