In the question below, a statement is given followed by three assumptions…
2024
In the question below, a statement is given followed by three assumptions numbered I, II and III. You have to consider the statement and decide which of the assumptions is implicit in the statement.
Statement: In order to reduce the gap between income and expenditure, the company has decided to increase the price of its product from next month.
Assumptions:
I. The rate will remain more or less same after the increase.
II. The expenditure will more or less remain the same in near future.
III. The rival companies will also increase the price of the similar product.
- A.
Only I and II are implicit
- B.
Only II and III are implicit
- C.
Only III is implicit
- D.
All are implicit
Show answer & explanation
Correct answer: A
Concept: In a Statement-and-Assumption question, an assumption counts as 'implicit' when it is something the person/organisation taking the described action is evidently PRESUMING to be true for that action to be a sensible, purposeful move — not a fact the statement proves, but a condition the decision-maker is visibly taking for granted. Test each assumption with the negation method: if assuming its opposite would make the described decision look pointless or irrational, the assumption is implicit; if the decision still reads as sensible regardless, it is not implicit.
Application to this statement (here, 'the rate' in Assumption I refers to the rate at which the product sells — i.e. demand/sales volume — not to the price itself, which the statement already says is being raised):
Assumption I: negate it — suppose the company expected sales volume to fall noticeably once the price rises. A company that anticipated a sharp drop in how much it sells would have little reason to expect the move to help its income position at all, so announcing this price rise as a way to close the gap only reads as purposeful if the company is presuming sales will hold up more or less as before. That presumption is implicit.
Assumption II: negate it — suppose the company expected its expenditure to climb by a comparable amount in the near future anyway. Framing a PRICE rise as the way to close the income-expenditure gap only makes sense if the company is presuming expenditure will stay roughly where it is, so that the extra income from the price rise is what does the work of narrowing the gap. That presumption is implicit.
Assumption III: negate it — suppose rival companies do NOT raise their prices at all. The statement is only about this company's own pricing and expenditure position; nothing about announcing ITS OWN price rise reads as depending on whether competitors happen to follow suit. The decision reads as equally purposeful either way, so this is not something the company needs to be presuming.
Cross-check: reapplying the same test to all three together shows the same pattern — treating I or II as false would make the announced move look pointless, while III being true or false either way leaves the company's own rationale unaffected. So exactly I and II are implicit, matching "Only I and II are implicit".