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Question

The cost of producing mobile phones in Rotrua is ten percent less than the cost of producing mobile phones in Polokwane. Even after transportation fees and tariff charges are added, it is still cheaper for a company to import mobile phones from Rotrua to Polokwane than to produce mobile phones in Polokwane.

The statements above, if true, best support which of the following assertions?
  1. Labor costs in Rotrua are ten percent below those in Polokwane.
  2. The tariff on a mobile phone imported from Rotrua to Polokwane is less than ten percent of the cost of manufacturing the mobile phone in Polokwane.
  3. importing mobile phones from Rotrua to Polokwane will eliminate ten percent of the manufacturing jobs in Polokwane.
  4. The fee for transporting a mobile phone from Rotrua to Polokwane is more than ten percent of the cost of manufacturing the mobile phone in Rotrua.


Solution

The correct option is B The tariff on a mobile phone imported from Rotrua to Polokwane is less than ten percent of the cost of manufacturing the mobile phone in Polokwane.

If the tariff on importing mobile phones from Rotrua to Polokwane were as high as ten percent or more of the cost of producing mobile phones in ROTRUA, then, contrary to what the passage says, the cost of importing mobile phones from POLOKWANE to ROTRUA would be equal to or more than the cost of producing mobile phones in ROTRUA. thus, the tariff cannot be that high, and C is the best answer.

A give possible partial explanations for the cost difference, but neither is supported by the passage because the cost advantage in POLOKWANE might be attributable to other factors.

B and D are both consistent with the information in the passage, but the passage provides no evidence to support them.

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