Statement: “Despite a hike in the electricity tariff, power is still cheap in City X,” says the Power Minister. Assumptions: I. The cost of purchasing or generating electricity is much higher in City X than in the neighbouring states. II. A hike in tariff generally makes power costlier for consumers. Which of the above assumptions is implicit in the statement?

Introduction / Context:
The minister asserts that even after a tariff hike, electricity remains cheap in City X. In verbal reasoning, an “assumption” is a proposition taken for granted for the statement to be sensible. We must test which background belief is necessary for this claim to carry meaning and persuasive force.

Given Data / Assumptions:

• Claim: Power is still cheap in City X despite a tariff increase.
• Assumption I: Generation/purchase cost in City X is much higher than in neighbouring states.
• Assumption II: Increasing tariff tends to increase the effective cost to consumers (i.e., makes power costly).

Concept / Approach:
The key connective phrase is “despite hike.” This signals that a tariff hike normally pushes prices upward; yet, in City X, electricity remains “cheap” relative to some baseline (past prices or a benchmark market). The logic relies on the general effect of hikes (II), not on cross-state production cost comparisons (I).

Step-by-Step Solution:

Verification / Alternative check:
Even if generation costs in neighbouring states were lower or higher, the statement’s contrast (“still cheap” despite a hike) stands as long as tariff hikes generally raise consumer costs. Hence I is extraneous, II is essential.

Why Other Options Are Wrong:

Common Pitfalls:
Confusing supportive rhetoric (regional comparisons) with logical necessity. The minimal assumption is about the usual impact of tariff hikes, not inter-state cost structures.

Final Answer:
Only Assumption II is implicit.