In Venusland, foreign mining companies often sell hydranite at prices below the production costs of local mining companies. To protect local industry, some legislators propose requiring all hydranite sold in Venusland to be priced at least 20% above the average production cost of Venusland mining companies.
Which of the following, if true, most strongly indicates that the legislators' proposal will fail to achieve its goal?The goal is: protect local hydranite mining companies from being undercut by cheaper foreign hydranite. The proposal is a price floor: every hydranite sale must be priced at least 20% above local average production cost. The best “fail” evidence shows that even with this rule, local companies still will not be protected (or will be harmed).
A. Some hydranite extraction in Venusland is done by small-scale miners who are not part of large mining companies.
This is about who extracts locally, but it does not show the price floor will fail to protect local industry.
B. Most hydranite deposits in Venusland are of low quality and have little commercial value.
Low quality could hurt locals, but it does not directly show the pricing rule fails to stop foreign undercutting or protect locals.
C. Foreign mining companies currently sell some of their hydranite to Venusland mining companies for further processing.
This is a relationship detail, but it does not show the proposed minimum price fails to protect local producers.
D. Many industries in Venusland do not rely on hydranite for their operations.
Irrelevant to whether local hydranite mining companies are protected.
E. Most hydranite is extracted by large-scale mining operations, and they would cease operations in Venusland if forced to sell at the proposed minimum price.
If the major producers stop operating, the market can shift in ways that defeat the purpose of the policy. But this statement is ambiguous: if “they” are the foreign companies, their exit could actually help locals by removing cheap competition; if “they” are local large-scale miners, the policy would directly damage the local industry rather than protect it, so the goal fails. Interpreting “they” as the local large-scale operations makes this the strongest indication of failure, because the policy would drive local production out.
That is exactly the opposite of protection.Answer: (E)