Why is this correct
Started by
Sallyanne-Tejan
· started 2022-07-20 01:19
· last activity 2022-07-22 19:13
· 1 reply
Do you mind explaining why this answer choice is correct?
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Emil-Kunkin
· 2022-07-22 19:13
Hi Sallyanne,
The argument tells us that there is little room for growth in the carpet market due to the way that people buy (once when young, once when old), and so the only way to grow would be through mergers.
At first glance, I would like D only because A, B, C, and E clearly do not weaken. However, I think we could tell a story about why D would weaken the argument. D tells us that cutting prices has forced some producers to leave the market. Let's try a thought experiment.
100 Carpets/year
5 firms, each sell 20/year.
If we remove one firm (as D tells us is happening), each of our four remaining firms could now sell 35 carpets/year. So, these firms were all able to grow without having to resort to mergers.
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