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A retailer plans to raise total profit by cutting prices, expecting higher sales volume. The argument assumes that:
Athe increase in units sold will more than offset the lower margin per unit
Bthe retailer has many store locations
Ccustomers prefer expensive products
Dcompetitors will also cut their prices
Answer & Solution
Correct answer: A. the increase in units sold will more than offset the lower margin per unit
The plan works only if extra unit sales outweigh the smaller margin per unit — that is the load-bearing assumption.
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