In 1960, 10 percent of every dollar paid in automobile insurance premi

Got an E as well, C is a trap as it talks about repair costs and not costs incurred because of injury

Although I chose E , VeritasKarishma generis GMATNinja Can you please explain why option D is incorrect and what is meant by "The price of insurance increased more rapidly than the rate of inflation between 1960 and 1990. " ?

"Inflation" is the general increase in prices over time, or a decrease in what you can buy for the same amount of money. For instance, in 1940 you could buy a coke for 5 cents, whereas now it costs $1.50.

The "rate of inflation" is the average rate at which prices are increasing. Let's say that, between 1960 and 1990, the price of goods doubled due to inflation (for example, a rubber ducky that cost $1 in 1960 cost $2 in 1990, and a toilet plunger that was $15 is now $30). If the price of something increases more rapidly than the rate of inflation, it means the price is even higher than it would be if only inflation played a role. So in this case, car insurance that was $20 per month could be $100 per month, instead of the expected $40 per month.

Going back to the question: we need to explain the discrepancy in the passage, which has to do with the percent of automobile insurance spent on healthcare increasing, despite cars becoming safer. The information in answer choice (D) tells us that the cost of car insurance has increased above the rate of inflation -- so, people spent more money on car insurance in 1990 than they spent in 1960. If healthcare costs are 50% of this increased amount versus only 10% of the previous lower amount, it just deepens the discrepancy in the passage. Why was so much more money spent on healthcare costs in 1990, despite cars becoming safer? (D) does not provide an explanation, so it is not the correct answer.

I hope that helps!

Let me talk about option C, which is incorrect here. Option C can be correct if I make the following change in the passage:

In 1960, 10 percent of every dollar paid in automobile insurance premiums went to pay costs arising from car accidents. In 1990, 50 percent of every dollar paid in automobile insurance premiums went toward such costs, despite the fact that cars were much safer in 1990 than in 1960.

Since costs arising from car accidents include the cost of repair, option C would become correct since it says that the costs of repair have increased over time.

However, the original passage talks about the costs of injuries, which have nothing to do with the costs of car repair. Thus, option C is irrelevant w.r.t. the original passage.

I has the same doubt about d. Awesome explanation GMATNinja. Inflation concept is quite clear now!

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