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Sales at a local sandwich shop have been declining steadily since a health food restaurant opened its doors for business on the same block three months ago. The owner of the sandwich shop concludes that the best way to raise sales back to prior levels is to offer special sandwich prices that compete with the low prices at the health food restaurant.
Which of the following assumptions helps to justify the owner's conclusion?
| Text from Passage | Analysis |
| Sales at a local sandwich shop have been declining steadily since a health food restaurant opened its doors for business on the same block three months ago. |
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| The owner of the sandwich shop concludes that the best way to raise sales back to prior levels is to offer special sandwich prices that compete with the low prices at the health food restaurant. |
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The argument starts by showing us a problem - the sandwich shop's sales dropped when a health food restaurant opened nearby. Then it tells us what the owner thinks the solution is - compete on price. The flow is: problem happened when competitor arrived → solution is to match their low prices.
The sandwich shop owner should offer special low prices that compete with the health food restaurant's prices to get sales back to where they were before.
The owner assumes that low prices are the main reason customers switched to the health food restaurant. The logic is: if price competition caused the problem, then price competition will solve it. But we don't actually know if price was the real reason customers switched - they might have switched because they wanted healthier food options instead.
Assumption - We need to find a statement that must be true for the owner's conclusion to be valid. If we negate any correct assumption, the conclusion should fall apart.
The owner's conclusion is very specific: lowering prices to compete with the health food restaurant's low prices is the BEST way to raise sales back to PRIOR levels. This is a claim about effectiveness of a specific strategy.
Since this is an assumption question, we need to identify what the owner is taking for granted. The owner sees declining sales since the health restaurant opened and concludes that matching their low prices will solve the problem. We should look for gaps in this reasoning - what must be true for price competition to actually work as the solution?
This states that local consumers prefer the sandwich shop's food over the health food restaurant's food. This is exactly what the owner must be assuming for the price competition strategy to work. If customers actually preferred the health restaurant's food, then simply lowering prices wouldn't be enough to bring them back - they'd stick with the food they like better even if it costs a bit more. For the owner's conclusion that price matching is the BEST solution to work, customers must prefer the sandwich shop's offerings. This assumption is necessary for the argument.
This tells us that sales peaked six months ago, which would be before the health restaurant opened three months ago. While this gives us some context about the sandwich shop's performance history, it doesn't help justify why price competition would be the best solution now. The timing of past sales peaks doesn't support the logic that matching the competitor's prices will solve the current problem.
This compares the sandwich shop's prices to those of a shop in a neighboring town, but that's not relevant to the owner's reasoning. The owner's conclusion is specifically about competing with the health food restaurant on the same block, not about pricing relative to distant competitors. What happens in neighboring towns doesn't justify why price competition with the local health restaurant would work.
This states that the sandwich shop doesn't offer healthy food items. This actually works against the owner's assumption rather than supporting it. If the sandwich shop lacks healthy options and that's why customers switched, then lowering prices alone wouldn't address the real issue. This would suggest the owner's price-focused solution might not be the best approach.
This suggests the health restaurant's low prices are temporary and will increase later. If anything, this would argue against the need for the sandwich shop to lower its prices now, since the price advantage would disappear naturally. This doesn't support the owner's conclusion that price competition is necessary at all.