Logic Breakdown

Passage Summary: Some people hate it when big companies drop prices to drive out small ones, but it's actually fine because the big company still can't overcharge us later—if they did, new competitors would just pop up again.

Conclusion: Predatory pricing should be considered an acceptable business practice.

Reasoning: Even if a company drives out all its current competitors, the simple possibility of new competitors entering the market will stop that company from charging unfair prices.

Analysis: The argument relies on the assumption that the 'threat of renewed competition' is a real and effective deterrent. If there were significant barriers to entry—like massive startup costs or legal hurdles—then a monopoly could raise prices without fear of new rivals. The argument *needs* it to be true that new competitors actually can and would enter the market if prices became 'unreasonable.' To find the necessary assumption, ask yourself: 'If this were false, would the argument die?' If the threat of competition is an empty one, the conclusion falls apart.

Passage Stimulus

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22.

Which one of the following is an assumption on which the argument depends?

Correct Answer
E
E: Correct. It supplies the needed bridge from the predicted outcome (no unreasonable prices) to the normative conclusion (practice should be acceptable). Without it, the conclusion does not follow.
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