Set 1: Command of Evidence (Intermediate)
Explanation
PASSAGE
Economists generally agree that tariffs (taxes on imports) raise prices for consumers. However, a specific tariff on imported steel in Country Y did not lead to higher car prices. Analysts suggest this is because car manufacturers absorbed the cost instead of passing it on.
Which finding supports the analysts' suggestion?
Detailed Explanation
This question requires you to identify evidence that supports a claim. If manufacturers 'absorbed the cost', their costs went up while their prices stayed the same. This mathematically must reduce their profit margins. The best evidence directly and explicitly supports the stated claim without requiring assumptions. Match specific textual details or data points to the claim being made. The correct answer provides clear, direct support. Strong evidence directly addresses the claim without requiring additional interpretation. When evaluating options, look for quotes or data that explicitly support the statement. Weak evidence may be tangentially related but doesn't provide direct proof.
Key Evidence:
• "absorbed the cost instead of passing it on"
Why others are wrong: A (This option is incorrect.), B (This would happen if prices went UP.), C (Irrelevant to the *price* mechanism.).