Best Support the conclusion question

[AnuragRatna]

Management: Our position relative to our main competitor, which is located in the country of Patrio, has improved this year. The Patrian government has placed steep tariffs on imported steel, forcing our competitor to buy steel from sources inside the country at a much higher price. We can conclude that their costs have increased greatly this year, to levels much higher than ours, and they will be forced to deplete their cash reserves, leaving them with less cash in reserve than we will to spend on marketing next year.

Which of the following conclusions is best supported by these comments about the management about its company and its competitor in Patrio?


A. Prior to this year, the competitor in Patrio had cash reserves no greater than those of the management's company.

B. The management's company and its competitor in Patrio have no other major competitors.

C. The management's company and its competitor in Patrio primarily market steel.

D. Prior to this year, the competitor in Patrio was in a position superior to the management's company.

E. This year, the revenues obtained by the competitor in Patrio declined considerably.

Can someone please answer it with explanation?

[MartyMurray]

Supposedly the correct answer to this question is A.

However, that answer is not very tight.

The basis for that being the right answer lies in the idea that the cash reserves of the two companies must be approximately the same prior to this year in order for the cash reserves of the competitor in Patrio to become lower than those of the company "Management" manages.

However this does not have to be the case. It is entirely possible that the steel prices the competitor is paying this year are high enough that there would be a huge cash drain that would deplete cash reserves much higher than those of the company "Management" manages, and there is not given any reason to believe otherwise.

So the OA is not well supported and this question needs work. I am sending a note to the writer now.