Harper’s Pencils manufactures and sells

Harper’s Pencils manufactures and sells the same pencils as Johnson’s Supply.  Employee wages account for forty percent of the cost of manufacturing pencils at both factories.  Harper’s is seeking a competitive edge over Johnson’s supply.  Therefore, to promote this end, Harper’s should lower employee wages.

Which of the following, if true, seriously weakens the argument above?

A.  Because they make a small number of specialty artist’s pencils, pencil manufacturers cannot receive volume discounts on raw materials.

B.  Lowering wages would reduce the quality of employee work and this reduced quality would lead to lowered sales.

C.  Harper’s Pencils has taken away twenty percent of Johnson’s Supply business over the last year.

D.  Johnson’s Supply pays its employees, on average, ten percent more than does Harper’s Pencils.

E.  Many people who work for manufacturing plants live in areas in which the manufacturing plant they work for is the only industry.

 

The best answer is B.  The effect of lowering wages is to reduce quality sufficiently to reduce sales.  This is a good reason to doubt that wage cuts would give Johnson any competitive edge.