Let's break down the passage:
- Southern Haul Cargo Railway owns all the railroad tracks in a growing city
- The city council is concerned that this new subway system would have an unfair advantage over existing bus services
- Railway could potentially subsidize the subway using profits from its monopoly on cargo transport
A. Is a cargo railway as efficient as a subway in providing transport by rail?The passage does not provide any information about the efficiency of cargo railways compared to subways. It only discusses the possibility of Southern Haul Cargo Railway starting a subway system.
Eliminate A. B. If the cargo railway were allowed to provide bus transport, would it want to do so?There is no mention of Southern Haul Cargo Railway’s desire or intention to offer bus transport, nor is there any discussion about whether it would be allowed to do so.
Eliminate B.C. Does the city believe that Southern Haul Cargo Railway makes a profit on cargo transport?The passage clearly states that the city council is concerned that the subway system could be subsidized by the profits from Southern Haul Cargo Railway’s cargo transport. This suggests that the city council
believes the company is profitable in cargo transport.
Keep this.D. Is the cargo railway forbidden to offer bus transport?The passage does not provide any information regarding regulations that would forbid the railway from offering bus transport. It only discusses subway transport in relation to the bus system.
Eliminate D.
E. Is it expected that the cargo railway will have a long-term monopoly on commuter traffic?The passage does not discuss any long-term expectations regarding a monopoly on commuter traffic. It only mentions the potential advantage the railway could have over the bus system if it starts a subway service.
Eliminate E.
The only question that can be answered based on the information in the passage is
whether the city believes that Southern Haul Cargo Railway makes a profit on cargo transport. The passage implies this belief because of the concern about subsidizing the subway system with those profits.
Hence the correct answer is (C).