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Ace Automotive Group, a publicly held manufacturer of cars and light trucks, plans to move the production of engines for its automobiles to Mexico from plants in Indiana. However, Ace Automotive will still assemble its cars and trucks in the United States. The president of Ace Automotive announced to Wall Street analysts that this move will save the company $20 million per year even after accounting for the increased transportation costs needed to get the Mexican produced engines to Ace's assembly plants versus current engine transportation costs.

The statements above, if true, best support which of the following assertions?

(A) Ace Automotive Group's stock price will rise.
(B) Ace Automotive will have to deal with pickets and protests when it closes its engine production facilities in Indiana.
(C) Ace Automotive would save more than $20 million per year from this move if engine transportation charges from Mexico equaled the old transportation charges from Indiana.
(D) Ace Automotive Group's assembly plants are, on average, closer to the old Indiana engine plants than they are to the new Mexican engine plants.
(E) Ace plans to spend less than $20 million on increased transportation costs.

OE to follow

this is a must be true question, and we need an answer choice that is:
a - in the scope of the passage
b - can be logically deducted from the argument
c - does not present outside information.

A - it can, or it can not. so no
B - probably..but not a good answer.
C - yes! the company will save 20 mln/year even after accounting "increased transportation costs". so transportation costs from Mexican plant would be higher than those from Indiana plant.
D - not really..what if the transportation costs include tolls in Mexico that are waaay higher? what if to cross border - the company has to pay? since it leaves possibilities for a NO, this is not the correct answer.
E - the company will save 20$ mln, not that it would spend less 20 mln on transportation.
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When a question stem uses the phrase "strongly support," make sure to note what direction the support is going. Here, the stimulus supports the correct answer, so this is an Inference question.

In the stimulus, it is learned that Ace is moving its production of engines to Mexico, that car and truck assembly will still occur in the United States, that the company will save $20 million from the move after increased transportation charges, and that it costs more to transport engines from the new plants than it did to transport them from the old plants.

It's often hard to predict an answer to an Inference question, so if nothing jumps to mind, evaluate the answer choices and look for one that must be true based on the stimulus.

If the company will save $20 million per year after the difference in transportation costs is considered, then the company would definitely save more than that if there were no difference in transportation costs. Thus, (C) is correct.

None of the other answer choices has to be correct. (A) and (B) may seem likely, but they do not have to be true. It could be true that profits at Ace will be negatively affected by some other factor (perhaps consumers will stop buying Ace cars when they hear the news), driving the stock price down. Also, Ace could be redeploying all old employees of the engine plant to new roles, obviating any protests.

(D) may be tempting since it is known that transportation costs are higher from the Mexican plants. However, this choice does not have to be true - it could be that there is some sort of surcharge for crossing a border that affects pricing. Similarly, it could be true that gasoline or other transportation inputs are more expensive in Mexico.

(E) does not have any support in the stimulus. There's no breakdown of savings versus increased costs, so the truth of this statement can't be determined.
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