Ryan Motors’ chief technical officer thinks that Chile would not be a

QUESTION

Ryan Motors’ chief technical officer thinks that Chile would not be a good place to sell cars because its average per-capita income is not as high as those of some other emerging markets. Which of the following assumptions does his argument rely on?

A) Chile has an unequal distribution of wealth.
B) The middle class in Chile is not as well educated as that of the United States.
C) Chile’s trade policies discourage the country from importing products.
D) The distribution of income in Chile is similar to that in other emerging markets.
E) Chile has a relatively high rate of taxation.

ANSWER

Answer: D
Explanation: D) The CTO is assuming that given a normal income distribution, Chile’s average per-capita income accurately represents its consumers’ buying power. Thus, for example, a lower per-capita income suggests a lower ability to afford a car. The argument does not rely on Choice A, the assumption that Chile has an unequal distribution of wealth. Chile could have a very uniform distribution of wealth yet still have a low per-capita income that makes it a lousy car market. Issues relating to Chileans’ education (Choice B) or taxation rate (Choice E) are not relevant to whether average per-capita income is a useful statistic. Although Choice C undermines the case for selling in Chile, the argument does not depend on it.