In each question below is given a statement followed by three assumptions…

202320232023

In each question below is given a statement followed by three assumptions numbered I, II and III. You have to consider the statement and the following assumptions, decide which of the assumptions is implicit in the statement and choose your answer accordingly.

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.

  1. A.

    Only I and II are implicit

  2. B.

    Only II and III are implicit

  3. C.

    Only III is implicit

  4. D.

    All are implicit

Attempted by 2 students.

Show answer & explanation

Correct answer: A

An assumption is implicit in a statement when it is an unstated premise that must be true for the stated decision to be a logical, sensible course of action - test each candidate assumption by asking whether the decision would still make sense if that assumption did not hold.

Applying this test to the statement:

  • Assumption I (sales rate holds after the increase): if sales volume fell sharply once the price rose, the higher price would not translate into higher income, so the plan to narrow the gap would fail - this premise is necessary for the decision to make sense.

  • Assumption II (expenditure stays steady): if expenditure also rose at the same time, the gap would not narrow even though price went up - this premise is equally necessary.

  • Assumption III (rival companies raise prices too): whether competing firms adjust their own prices has no bearing on whether this company's own income moves ahead of its own expenditure - the decision does not depend on this premise.

Removing the sales-rate premise or the expenditure-steady premise breaks the logic of the decision, confirming both are implicit; removing the rival-pricing premise changes nothing about whether the company's own plan works, confirming it is not implicit.

So the assumptions implicit in the statement are the sales-rate premise and the expenditure-steady premise, matching "Only I and II are implicit".

Explore the full course: Infosys Preparation