The internet boom and subsequent bust of the turn of the century led to an oversupply of manufacturing facilities for integrated circuits, resulting in fierce competition among manufacturers of computer components like CD-ROMs and video cards. Due to advances in the underlying technology used in video cards, the quality of the average unit has increased dramatically and prices have risen for the past consecutive five years. During the same period, prices of CD-ROMs have remained flat. Since profit margins for both components are approximately the same, we can conclude that video card manufacturers have enjoyed larger profits than CD-ROM manufacturers for the past five years.
Which of the following describes an unsupported assumption made in the passage above?
A) Video card manufacturers have managed to adapt to the oversupply of production better than CD-ROM manufacturers.
B) The demand for CD-ROM components has fallen significantly over the past five years.
C) Five years ago, the price of the average video card was equal to or greater than the price of the average CD-ROM.
D) The advanced technology present in video cards has allowed manufacturers to demand higher profit margins.
E) Video card manufacturers are managed more effectively than CD-ROM manufacturers, resulting in higher returns on assets.
guys, when choosing your answer, please provide explanation as well!
I would say C. but im not sure if I understand what im actually suppose to answer for here.
C, in my opinion. Ex/ lets say CD-roms sold for 100$ and yielded a 50$ profit. VC's sold for 1$ and yielded a 1$ profit. Over the past few years VC's could have increased by 1000% to 10$ and thus a profit of lets say
5$. Without C, this scenario could exist.
If the prices were equal 5 years ago. Then the above is impossible and indeed VC's are selling for a higher profit.
I still am vonfused with the statement "an unsupported assumption." If I understand it the way I think its suppose to be taken, then I still say C. Even though C removes the above scenario, it doesnt say that the costs of producing the video card didnt go up. So we could have VC @ 150$ and it costs 149$ to make while the CD-Rom sells for 100$ and costs only 50$.
I think the question is asking for an assumption that the argument makes, but that this assumption does not leave the argument flawless (or greatly less flawed) as normal assumption questions are suppose to do.