Critical Reasoning

Fish currently costs about the same at seafood stores throughout Eastville and its
surrounding suburbs. Seafood stores buy fish from the same wholesalers and at the
same prices, and other business expenses have also been about the same. But new tax
breaks will substantially lower the cost of doing business within the city. Therefore, in
the future, profit margins will be higher at seafood stores within the city than at
suburban seafood stores.
For the purposes of evaluating the argument, it would be most useful to know
whether.
(A)more fish wholesalers are located within the city than in the surrounding suburbs.
(B) Any people who currently own seafood stores in the suburbs surrounding Eastville
will relocate their businesses nearer to the city
(C) The wholesale price of fish is likely to fall in the future
(D)Fish has always cost about the same at seafood stores throughout Eastville and its
surrounding suburbs.
(E) Seafood stores within the city will in the future set prices that are lower than those
at suburban seafood stores.

IMO A.

I think E

crackgmat007 wrote:Fish currently costs about the same at seafood stores throughout Eastville and its
surrounding suburbs. Seafood stores buy fish from the same wholesalers and at the
same prices, and other business expenses have also been about the same. But new tax
breaks will substantially lower the cost of doing business within the city. Therefore, in
the future, profit margins will be higher at seafood stores within the city than at
suburban seafood stores.
For the purposes of evaluating the argument, it would be most useful to know
whether.
(A)more fish wholesalers are located within the city than in the surrounding suburbs.
(B) Any people who currently own seafood stores in the suburbs surrounding Eastville
will relocate their businesses nearer to the city
(C) The wholesale price of fish is likely to fall in the future
(D)Fish has always cost about the same at seafood stores throughout Eastville and its
surrounding suburbs.
(E) Seafood stores within the city will in the future set prices that are lower than those
at suburban seafood stores.

I'd go E...margins are all about percentage of revenue that's profit. The fluctuation of earnings and costs affect profit margin. The stimulus makes a comparison between a suburban fish business and urban fish business and states that their costs are equal. However, a tax break substantially lowers cost of business in the city, which widens the profit margin for the city seafood store. The conclusion affirms, "in the future profit margins will be higher in the city" but that's only if city restaurants do nothing to affect their earnings. Lowering price could close the differential margin that the tax break creates for the city business. So we'd need to ascertain that the city fish restaurant does not do that in the future.

You got this man!

IMO E

My Pick A

OA [spoiler]E[/spoiler]

Am confused as to why E is correct...i think D should be the correct one

Please help me with this one..

Regards,
Phil

ssgmatter wrote:Am confused as to why E is correct...i think D should be the correct one

Please help me with this one..

Regards,
Phil

Let price of fish from wholesalers be 15
Now the price of doing business be 2 $
After reduction the price of doing business in city be 1 $ . Thus the CP for sellers in city will be 16$ and Cost Price for sellers outside will be 17$
However Let the sellers in the city sell the fish for 17$ and sellers outside sell it for 18$. in that case their profits will be the same that is 1 $. Hence we have to know E. whether the sellers in town are selling the fish at a lower price .
Hope it makes sense ...

crackgmat007 wrote:Fish currently costs about the same at seafood stores throughout Eastville and its
surrounding suburbs. But new tax
breaks will substantially lower the cost of doing business within the city. Therefore, in
the future, profit margins will be higher at seafood stores within the city than at
suburban seafood stores.
For the purposes of evaluating the argument, it would be most useful to know
whether.

(D)Fish has always cost about the same at seafood stores throughout Eastville and its
surrounding suburbs.
This is the somewhat similar to the portion in the Blue Font. It cannot strengthen what has already been stated fact.
(E) Seafood stores within the city will in the future set prices that are lower than those
at suburban seafood stores.
The tax will substantially reduce the cost. The key word is substantially. So the city fishmonger will be in a position to reduce his price and still earn a higher profit margin than the suburban guys.

Am still not clear why E is wrong here

However I understand that option D is just the restating of the first line of the argument

Please explain in more details