Which of the following, if true, weakens the argument for a price incr

QUESTION

Which of the following, if true, weakens the argument for a price increase?

A) The input costs of raw materials are expected to increase further in the coming months.
B) Customers are loyal to the brand mainly because they believe in the quality of ingredients used.
C) Anon’s competitors have announced an increase in prices.
D) One of Anon’s major competitors has just declared bankruptcy.
E) Market research done by the company reveals that demand for widgets is readily affected by the price.

ANSWER

Answer: E
Explanation: E) If the quantity demanded changes greatly with price, as Choice E indicates, an increase in prices will lead to greatly reduced sales. Choice A suggests that the pressure to raise prices is going to increase in the future. This sounds like it would strengthen the case for a price increase, but even so, Choice A doesn’t do the job because it doesn’t tell us how consumers will react. Choices B, C, and D strengthen the argument for a price increase by suggesting that customers would be willing to pay a higher price (Choice B) or that customers will have less access to low-cost options (Choices C and D).