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12 Jan 2026, 22:00
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Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
85%
(hard)
Question Stats:
46% (01:58) correct
54%
(02:10)
wrong
based on 182
sessions
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Looking to bolster the domestic luxury cars industry, a member of parliament has introduced a bill that would levy additional taxes on the import of luxury cars. The reasoning behind the bill is that the taxes will raise the prices of foreign luxury cars above those of the luxury cars by their domestic counterparts, prompting consumers to buy luxury cars produced domestically instead.
Which of the following statements, if true, provides the strongest evidence that the reasoning put forward by the member of parliament is flawed?
A. Projected increases in the price of international shipping will increase the cost of importing luxury cars.
B. Each year, the imports of luxury cars account for thirty percent of the total sales amount from luxury cars sold in the country.
C. Most of the wholesalers currently dealing only in domestic luxury cars cannot afford to import foreign ones.
D. Some wholesalers of imported luxury cars are willing to pay the additional taxes for importing luxury cars.
E. Regular upkeep of imported luxury cars is already significantly more expensive than that of domestic luxury cars.
Which of the following statements, if true, provides the strongest evidence that the reasoning put forward by the member of parliament is flawed?
A. Projected increases in the price of international shipping will increase the cost of importing luxury cars.
B. Each year, the imports of luxury cars account for thirty percent of the total sales amount from luxury cars sold in the country.
C. Most of the wholesalers currently dealing only in domestic luxury cars cannot afford to import foreign ones.
D. Some wholesalers of imported luxury cars are willing to pay the additional taxes for importing luxury cars.
E. Regular upkeep of imported luxury cars is already significantly more expensive than that of domestic luxury cars.
13 Jan 2026, 08:11
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In order to support the Domestic Luxury car industry, the Member of Parliament (MP) is planning to introduce a new bill that imposes taxes on imported luxury cars. The additional tax burden on the imported luxury cars will act as a deterrent against consumers running after the imported luxury cars. The outcome is domestic luxury cars sales will increase and imported luxury car sales will decline.
We need to find the flaw in the reasoning of MP.
A. Projected increases in the price of international shipping will increase the cost of importing luxury cars.
This option mentions the alternative route by which the imported luxury cars will see an increase in price. So, even though this might be factually correct. Does it question the reasoning of the MP? No. Hence, Wrong.
B. Each year, the imports of luxury cars account for thirty percent of the total sales amount from luxury cars sold in the country.
The option compares the percentage share on the total sales amount, when the issue is the actual numbers of luxury cars sold. Because a higher price point, pushes the quantity sold down for the same total sales. Thus, when the price is low, the qty sold can be increased to match the share of 30% in total sales amount. Hence, Wrong.
C. Most of the wholesalers currently dealing only in domestic luxury cars cannot afford to import foreign ones.
This option explains the current market players, but misses out an important aspect of new entrants or foreign players who can pool in resources and create opportunities for selling imported luxury cars. The issue is not what hinders the domestic wholesalers from selling imported luxury cars. Hence, Wrong.
D. Some wholesalers of imported luxury cars are willing to pay the additional taxes for importing luxury cars.
Some of the wholesalers are willing go an extra mile in paying the additional taxes. What’s the outcome from this act - Imported luxury goods reach the market , but pegged at a higher price point than earlier. The question which needs justification is whether the consumers are willing to spend the extra dime from their pocket. Since, this doesn’t validate the angle from consumer perspective. It’s wrong.
E. Regular upkeep of imported luxury cars is already significantly more expensive than that of domestic luxury cars.
This option is the only one left, and being kept at the last makes it an easier choice as answer. But, let’s drill deeper into the reason why this is correct.
Regular upkeep refers to the maintenance costs involved in smooth functioning of the Imported luxury cars, if these costs are extremely high, then the additional taxation will not strike the pocket so hard. The consumers will be paying the extra few cents as taxes. Thus, this questions the reasoning of the MP, that taxation will hamper purchase. Actually, the owners of luxury cars see the taxation as extra cents to be spent. Hence, correct answer.
Option E
18 Jan 2026, 15:00
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Video explanation:
