Critical Reasoning

Credit card companies justify charging cardholders additional fees for late payments by asserting the principle that those who expose other individuals, companies, or institutions to financial risk should pay for that risk, and by pointing out that late-paying cardholders present a greater risk of default than other cardholders. Without late fees, the companies argue, they would have spread the cost of the risk over all cardholders.
The principle invoked by the credit card companies would, if established, be most usefully invoked in which one of the following arguments?
(A) School authorities should use student activity funds to pay for student-caused damages to school property since, even though only a few students cause any significant damage, authorities cannot in most instances determine which students caused the damage.
(B) Insurance companies should demand higher insurance rates of drivers of sports cars than of other drivers, since sports car drivers are more likely to cause accidents and thus are more likely to requite the companies pay money in claims.
(C) Libraries should charge high fines for overdue books, since if they did not do so some people would keep books out indefinitely, risking inconvenience to other library users who want to use the books.
(D) Cities should impose high fines for littering. The risk of being caught littering is quite low, so the fine for those who are caught must be correspondingly high in order to deter people form littering.
(E) Municipalities should use tax money to pay for the maintenance of municipal roads, since if individuals paid for only those roads they used, some important roads in remote areas would be inadequately maintained.

khindly make me understand the stimuls and each option

IMO B

Phirozz wrote:IMO B

pls explain your ans

Hard one as well.

So we have this argument:

Credit card companies charge fees for people who pay later because they present a higher risk. If they didn't do this (i.e. charge a category that is known to be risky), then they'd have to charge an overall higher fee for everyone to cover for this risk.

A is actually the other way around. They use general funds to cover for specific damage instead of having the "naughty" students pay for it (since there's a higher chance they did the damage).

B is correct here. People who own sports cars are in a high risk category, so they need to pay more money. If the insurance companies did not discriminate in this way, then they'd have to charge everyone else a higher fee to cover for the risk.

C - there's a difference between applying a lateness fee for anyone and charging extra for a "risk group". Here, for the reasoning to be parallel to that in the argument, you'd have to have something along the lines of: Libraries charge fees from their users. They charge students more than regular people, because students tend to forget about deadlines and bring the books in late.

D - this describes a deterrence mechanism and not a way of targeting one specific group.

E - again, similar to A, this is the opposite of the argument. Here, everyone pays no matter what. If the reasoning were parallel to that in the stimulus, then people who used certain roads would pay more than everyone.

I like the explanation on B