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23 Nov 2025, 23:08
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A
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
15%
(low)
Question Stats:
84% (01:30) correct
16%
(01:46)
wrong
based on 146
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The prime principle of economics is that prices are determined by supply and demand, not by costs. Some products may cost 90 cents and sell for a dollar, while others go for a dollar yet cost only a cent to make. The second producer is neither a profiteer nor an exploiter, and the first producer is neither a benefactor nor a patron. Both producers merely respond to market signals based on supply and demand.
If the statements above are true, which of the following must be true?
(A) How much it costs to manufacture a product is not the primary determinant of its selling price.
(B) A product with a low manufacturing cost is more likely to succeed than a product with a high manufacturing cost.
(C) A manufacturer who sells a product with a low manufacturing cost at a high price to the customer is deceiving the customer.
(D) If a product costs a lot to manufacture then its manufacturer must ensure that he does not sell the product at a high price.
(E) A manufacturer who uses manufacturing costs of a product as a basis to determine the selling price of the product is bound to fail.
If the statements above are true, which of the following must be true?
(A) How much it costs to manufacture a product is not the primary determinant of its selling price.
(B) A product with a low manufacturing cost is more likely to succeed than a product with a high manufacturing cost.
(C) A manufacturer who sells a product with a low manufacturing cost at a high price to the customer is deceiving the customer.
(D) If a product costs a lot to manufacture then its manufacturer must ensure that he does not sell the product at a high price.
(E) A manufacturer who uses manufacturing costs of a product as a basis to determine the selling price of the product is bound to fail.
24 Nov 2025, 11:58
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Bunuel
The question begins to explain the prime principles of economics - that price of the product is determined by supply and demand and NOT costs. The subsequent statements are examples to illustrate this point.
Which of the following MUST BE TRUE :
(A) How much it costs to manufacture a product is not the primary determinant of its selling price.
This statement is an accurate representation of the crux of prime principles of economics, that NOT manufacturing costs determine the price, but supply and demand is the main factor in determining price. Hence, Correct.
(B) A product with a low manufacturing cost is more likely to succeed than a product with a high manufacturing cost.
The question doesn’t compare a product with high manufacturing cost to that with low manufacturing cost. It clearly states, not cost by supply and demand principle drives the price. Hence, wrong.
(C) A manufacturer who sells a product with a low manufacturing cost at a high price to the customer is deceiving the customer.
This might be a factual statement at first instance. There might be many factors that might have contributed to the higher price - may be the product is imported , taxation and transporting cost might have added to the price increase. We are concerned about the supply and demand factor. Hence, wrong.
(D) If a product costs a lot to manufacture then its manufacturer must ensure that he does not sell the product at a high price.
This statement shows that manufacturer is selling the product at loss. This is the role of the government or regulator who determines the price index. The question is not seeking the product for profit or loss, but the factor of supply and demand, which determines the product price. Hence, wrong.
(E) A manufacturer who uses manufacturing costs of a product as a basis to determine the selling price of the product is bound to fail.
This statement is an assumption made based solely on manufacturing costs, hence wrong. As there are many factors involved in determining the price of product. The factor of supply and demand is not taken into consideration. Hence, wrong.
Option A
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25 Nov 2025, 10:30
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The passage states :
Prices are determined by supply and demand, not by costs.
Some items cost a lot and sell for only a bit more.
Some items cost almost nothing but sell for much more.
Neither case reflects anything moral or deceptive — just market forces.
The only statement that must be true if all that is true is:
A) How much it costs to manufacture a product is not the primary determinant of its selling price.
This directly restates the core principle of the passage. A is correct.
Prices are determined by supply and demand, not by costs.
Some items cost a lot and sell for only a bit more.
Some items cost almost nothing but sell for much more.
Neither case reflects anything moral or deceptive — just market forces.
The only statement that must be true if all that is true is:
A) How much it costs to manufacture a product is not the primary determinant of its selling price.
This directly restates the core principle of the passage. A is correct.
