The words "would undermine the conclusion" indicate that this is a Weaken question. The correct answer will make it less likely that the conclusion follows from the stated evidence.
The conclusion is that there is no economic justification for the proposal. The evidence is that the costs of the proposal outweigh the saved medical costs from asthma attacks and other respiratory problems.
Notice how extreme the language of the conclusion is, claiming there is "no economic rationale," even though the evidence just mentioned medical costs. The author is assuming that there are no economic costs involved besides the stated medical ones. The correct choice will attack the author's assumption. It will suggest some other economic costs, besides the medical costs mentioned in the evidence, that undermine the conclusion that there is no economic rational for further reductions in automobile emissions.
(E) suggests that there are costs involved besides the medical costs the author admits to. This undermines the conclusion that there is no economic rationale for reducing emissions, making (E) the correct choice.
(A) is incorrect because whether or not economic factors should control the decision making process, the author argues only on economic factors. The correct choice must attack the argument on its own terms.
(B) makes an irrelevant comparison. Both costs mentioned in (B) are already accounted for by the author in the total costs of reducing emissions. All that matters to the author's argument is the total costs, not the breakdown of the costs.
(C) is a 180. If the medical costs will decrease, then it is more likely they will be outweighed by the costs of modifying automobiles and additional costs to new cars. This would strengthen the author's argument.
(D) is irrelevant. However the costs of the modifications that will be required compare to voluntary modifications consumers are already making, the question is whether the overall costs, in aggregate, outweigh the medical costs. (D) has nothing to do with that.
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