Statement — The government has decided against reducing the prices of petroleum products even though crude oil prices have dropped significantly in the international market.\n\nAssumptions —\nI. International crude prices may rise again in the near future.\nII. Keeping present product prices will help the government withstand possible future price increases.

Introduction / Context:
Choosing not to pass through a cost decrease often reflects a price smoothing strategy and a desire to build fiscal or pricing buffers. The policy stance implicitly anticipates volatility and the risk of rebound in crude prices, and it presumes that maintaining current levels strengthens the capacity to cope when costs rise again.

Given Data / Assumptions:

• Observed: global crude prices fell.
• Decision: retail product prices unchanged.
• I: crude may rise again soon.
• II: holding prices now provides a cushion for future shocks.

Concept / Approach:
Price smoothing uses favorable periods to create room for adverse periods. The decision therefore relies on expectations of possible reversal (I) and on the buffering effect of current prices (II). Both are needed to rationalize the choice.

Step-by-Step Solution:

Verification / Alternative check:
If no rebound risk existed and buffers were unnecessary, a reduction would be easier to justify; the decision contradicts that, confirming I and II.

Why Other Options Are Wrong:

Common Pitfalls:
Confusing political arguments with logical presuppositions; the question asks what must be assumed for the stated choice to make sense.

Final Answer:
Both Assumption I and II are implicit.