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08 Dec 2007, 16:59
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Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
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A small country, Country S, has instituted a hefty tax on imported electronics in an attempt to protect the largest company and employer in the country. As a result of this import tax, the national electronics company is now able to compete in the electronics market.
Which of the following can be inferred from the information above?
a) Only small quantities of electronics from companies outside of Country S will now be sold in Country S.
b) To take further advantage of the import tax, the national electronics company will expand its product line.
c) Electronics have become more expensive to import not only due to the added import taxes but also due to increased transportation costs.
d) Electronics are cheaper to produce outside Country S than inside Country S.
e) The national electronics company not only sells electronics products in Country S but also exports them to Country T and Country U
Please explain your answer
Which of the following can be inferred from the information above?
a) Only small quantities of electronics from companies outside of Country S will now be sold in Country S.
b) To take further advantage of the import tax, the national electronics company will expand its product line.
c) Electronics have become more expensive to import not only due to the added import taxes but also due to increased transportation costs.
d) Electronics are cheaper to produce outside Country S than inside Country S.
e) The national electronics company not only sells electronics products in Country S but also exports them to Country T and Country U
Please explain your answer
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08 Dec 2007, 21:18
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tarek99
Premise: Country S imposes hefty import tax on electronics to protect large electronic company
Conclusion: National electronics companies are more competitive as the result of the hefty import tax.
The missing information is "what benefit does import tax has on helping national electronics companies more competitive?" Hefty import tax makes electronics products outside of country S becomes more expensive, thus making domestic electronics more competitive. That also means imported electronics prior to import tax being imposed was cheaper. Thus, D is the correct answer.
09 Dec 2007, 02:57
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you're logic was sound and the OA is D. however, i personally didn't understand it that way, which lead me to choose a wrong answer. here is why:
d) Electronics are cheaper to produce outside Country S than inside Country S
How could you tell whether the production costs are cheaper to produce outside of country S? we only know that the import tax will make the selling price of imported electronics more expensive than that of the national electronics, making the national electronics more competitive. And in order for the national electronics to enjoy a higher profit margin than the imported electronics, the production costs within country S must also be cheaper, which can also allow the national electronics to be even more competitive. so how can we say that the production costs outside of country S is cheaper? that i don't get it.
d) Electronics are cheaper to produce outside Country S than inside Country S
How could you tell whether the production costs are cheaper to produce outside of country S? we only know that the import tax will make the selling price of imported electronics more expensive than that of the national electronics, making the national electronics more competitive. And in order for the national electronics to enjoy a higher profit margin than the imported electronics, the production costs within country S must also be cheaper, which can also allow the national electronics to be even more competitive. so how can we say that the production costs outside of country S is cheaper? that i don't get it.
