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09 Apr 2004, 14:30
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The U.S. gets 5 percent of its oil from Mexico. If Mexico raises the price of its oil by 20 percent, that will result in an increase of 1 percent (5 percent times 20 percent) in the price of oil products in the U.S.
Which of the following is an assumption upon which the above argument depends?
A) Oil prices in the U.S. are not affected by inflation in Mexico
B) Other countries will not increase oil exports to the U.S.
C) The price increase will not result in a decrease in the sales of Mexican oil products
D) People will not substitute other products for those made from Mexican oil
E) A 1 percent price increase in oil products will not be recognized by the buying public
Which of the following is an assumption upon which the above argument depends?
A) Oil prices in the U.S. are not affected by inflation in Mexico
B) Other countries will not increase oil exports to the U.S.
C) The price increase will not result in a decrease in the sales of Mexican oil products
D) People will not substitute other products for those made from Mexican oil
E) A 1 percent price increase in oil products will not be recognized by the buying public
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09 Apr 2004, 15:20
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This is a tough one. It smells like a LSAT questions! If not, I won't
worry too much. Lot of loose ends!!
The choices are B and C.
Price stability will be reached either by reduced sales of higher priced
item or increased supply of lower priced item.
Assume that the overall demand stays the same, then one can't lower the
import from Mexico. Only way is to substitute Mexico oil for some other
country oil. So, other countries must be in a position to supply oil for
the original price.
In this scenario, the answer B makes more sense.
Assume that demand is elastic, then any increase in price results in
decresed demand. In this scenario, the highest priced supplier suffers the
most and answer C makes sense.
Well, In CR, one should not assume other than what has been stated.
Going by the rule, I don't know what to choose.
But, if one can use the external knowledge, then I would go with C.
worry too much. Lot of loose ends!!
The choices are B and C.
Price stability will be reached either by reduced sales of higher priced
item or increased supply of lower priced item.
Assume that the overall demand stays the same, then one can't lower the
import from Mexico. Only way is to substitute Mexico oil for some other
country oil. So, other countries must be in a position to supply oil for
the original price.
In this scenario, the answer B makes more sense.
Assume that demand is elastic, then any increase in price results in
decresed demand. In this scenario, the highest priced supplier suffers the
most and answer C makes sense.
Well, In CR, one should not assume other than what has been stated.
Going by the rule, I don't know what to choose.
But, if one can use the external knowledge, then I would go with C.
09 Apr 2004, 15:47
Kudos
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I think B.
The premise is that we get 5% of our oil from Mexico.
The assumption is that the percentage will remain steady and result (conclusion) in a 1% increase in price.
B half way states this assumption. Kind of..... If you negate B, it does a pretty good job of undermining the argument.
C states that the price increase will not not result in a decrease in sales. The conclusion is that the price will increase. C is an assumption that will occur after the conclusion is achieved and seems outside the scope of the argument.
Just my 2 cents. Tough question.
The premise is that we get 5% of our oil from Mexico.
The assumption is that the percentage will remain steady and result (conclusion) in a 1% increase in price.
B half way states this assumption. Kind of..... If you negate B, it does a pretty good job of undermining the argument.
C states that the price increase will not not result in a decrease in sales. The conclusion is that the price will increase. C is an assumption that will occur after the conclusion is achieved and seems outside the scope of the argument.
Just my 2 cents. Tough question.
