Abhi077 wrote:
Increasing the prices of retail products and reducing the number of franchise locations are the two solutions Mighty-Mart can enact to substantially increase profit margins. Increasing the prices of products will produce more money through revenue than closing franchise locations will save in reduced real estate costs. Thus, increasing the prices of retail products is the most Mighty-Mart can do to improve its profit margins.
Which of the following is an assumption on which the argument depends?
A. The revenue lost in closing franchise locations would be negligible.
B. Mighty-Mart can generate more revenue by only raising the prices of specific products, depending on their popularity.
C. Increasing profits at Mighty-Mart would be desirable but unnecessary.
D. Mighty-Mart's profit margins cannot be improved further by enacting both solutions rather than the price increases by themselves.
E. Except for a few troublesome locations, most Mighty-Mart franchises produce more money through revenue than they consume in real estate costs
Source - Ready4Gmat
Assumption Series
Correct answer: D
(A): Incorrect. The argument claims that the most Mighty-Mart can do to improve profits is increase prices; this conclusion does not consider what would happen if Mighty-Mart closed stores.
(B): Incorrect. Out of scope; the argument does not hone in on the products whose prices Mighty-Mart can increase in order to increase profits.
(C): Incorrect. The argument gives no indication that Mighty-Mart does not need to increase profits.
(D): Correct. The argument assumes that the most Mighty-Mart can do to increase profits is to raise prices, not to raise prices in conjunction with closing stores. Therefore, the argument assumes that the profit margins canot be improved further by enacting both solutions rather than the price increases by themselves.
(E): Incorrect. The argument does not require that "most" franchises are profitable; (E) still allows that some Mighty-Mart locations are quite unprofitable and could be closed in order to improve profit.