Critical Reasoning — Implicit Assumptions Pricing notice: “To reduce the gap between income and expenditure, the company will increase the price of its product from next month.”

Introduction / Context:
The company plans a price increase next month to narrow the deficit between income and expenditure. Which assumptions are essential for this step to help?

Given Data / Assumptions:

• I. The rate (sales volume/revenue run-rate) will remain more or less the same after the increase.
• II. Expenditure will more or less remain the same in the near future.
• III. Rival companies will also increase the price of similar products.

Concept / Approach:
To reduce the income–expenditure gap via pricing, the firm must assume revenue does not drop sharply and costs do not simultaneously rise. Competitors’ pricing moves are not strictly necessary for the firm’s decision to make sense.

Step-by-Step Solution:

Verification / Alternative check:
Negate I or II: the intended narrowing may fail. Negate III: the action can still succeed if brand loyalty or differentiation protects volume.

Why Other Options Are Wrong:

• II and III / III only / All are implicit: they add a competitor requirement that is not essential.
• None of these: incorrect because I and II together are necessary.

Common Pitfalls:
Believing competitor action is always required. Many markets allow unilateral pricing when demand is sticky.

Final Answer:
Only I and II are implicit