Residents of city Y have more purchasing power than residents of citie

Purchasing Power = The amount of goods or services that one unit of money.

Let the amount of money available be 100

Quantity that can be bought in City Y = 20 (Per unit price of commodity be 5) and Quantity that can be bought in City X = 10 (Per unit price of commodity be 10) , and that in City Z be 2 (Per unit price of commodity be 50)

Now, Check the options

(A) True, per unit cost of item is less in City Y than in City X and City Z
(B) Residents of city Y do not need to buy as much............... Irrelevant, need to buy is out of context..
(C) Sales tax is irrelevanat in the context of purchasing power...
(D) Y will definitely purchase more products than City X and Z as the per unit cost of item is less in CIty Y , but it can not be an inference, as it has been explicitly been stated that purchasing power is more in City Y.
(E) Paying more for other expenses is out of context ad scope of discussion.

Thus, Answer must be (A)