If the price was $X per pack, govt. made it $X+0.2 per pack. The conclusion says that the increase in price led the decrease in cigarette smokers.
(A) Residents of the locality have not increased their use of other tobacco products such as snuff and chewing tobacco since the campaign went into effect.
Incorrect, the conclusion is strictly about
cigarette smokers, we don't care about people taking other products.
(B) A substantial number of cigarette smokers in the locality who did not quit smoking during the campaign now smoke less than they did before it began.
Incorrect, people
smoking less are not the part of people who have
left smoking (covered in 3%) so this option doesn't help us anyway and is irrelevant.
(C) Admissions to the local hospital for chronic respiratory ailments were down by 15 percent one year after the campaign began.
Incorrect, this just shows the effect of decrease in smokers but doesn't change our confidence in the relationship that increase in price per pack led the decrease in cigarette smokers.
(D) Merchants in the locality responded to the local tax by reducing the price at which they sold cigarettes by 20 cents per pack.
Correct, this means that price per pack remained unchanged at $X per pack so it definitely creates a doubt that price per pack was somehow responsible for the decrease in cigarette smokers. This seems a good weakener so let's keep it for now.
(E) Smokers in the locality had incomes that on average were 25 percent lower than those of nonsmokers.
Incorrect, this somewhat strengthens the conclusion that increase in price per pack might have caused the decrease in cigarette smokers.