PrepTest 79, Section 2, Question 22
Consumer advocate: Economists reason that price gougingÔøΩincreasing the price of goods when no alternative seller is availableÔøΩis efficient because it allocates goods to people whose willingness to pay more shows that they really need those goods. But willingness to pay is not proportional to need. In the real world, some people simply cannot pay as much as others. As a result, a price increase will allocate goods to the people with the most money, not to those with the most need.
Consumer advocate: Economists reason that price gougingÔøΩincreasing the price of goods when no alternative seller is availableÔøΩis efficient because it allocates goods to people whose willingness to pay more shows that they really need those goods. But willingness to pay is not proportional to need. In the real world, some people simply cannot pay as much as others. As a result, a price increase will allocate goods to the people with the most money, not to those with the most need.
Consumer advocate: Economists reason that price gougingÔøΩincreasing the price of goods when no alternative seller is availableÔøΩis efficient because it allocates goods to people whose willingness to pay more shows that they really need those goods. But willingness to pay is not proportional to need. In the real world, some people simply cannot pay as much as others. As a result, a price increase will allocate goods to the people with the most money, not to those with the most need.
Consumer advocate: Economists reason that price gougingÔøΩincreasing the price of goods when no alternative seller is availableÔøΩis efficient because it allocates goods to people whose willingness to pay more shows that they really need those goods. But willingness to pay is not proportional to need. In the real world, some people simply cannot pay as much as others. As a result, a price increase will allocate goods to the people with the most money, not to those with the most need.
Which one of the following most accurately describes the role played in the consumer advocate's argument by the claim that willingness to pay is not proportional to need?
It disputes one explanation in order to make way for an alternative explanation.
It is the overall conclusion of the argument.
It is a component of reasoning disputed in the argument.
It is a general principle whose validity the argument questions.
It denies a claim that the argument takes to be assumed in the reasoning that it rejects.
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