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Difficulty: EasyEvaluating Argument Validity and Test of Variance

A local coffee shop owner plans to increase total monthly profits by raising the price of all specialty espresso drinks by 10 percent. The owner reasons that because demand for specialty drinks has remained steady over the past year, customers will continue to buy the exact same quantity of drinks despite the price increase.

Which of the following would be most useful to evaluate the validity of the coffee shop owner's argument?

  1. A
    Whether coffee shops in neighboring towns raised their specialty drink prices six months ago.
  2. B
    Whether the historical cost of raw coffee beans has fluctuated significantly over the past decade.
  3. Whether the price increase will cause a significant number of customers to switch to cheaper alternatives or stop buying drinks.Answer
  4. D
    Whether customer satisfaction ratings for the coffee shop were higher this year than in previous years.
  5. E
    Whether reducing the price of non-espresso drip coffee would double the total number of cups sold per day.

Answer

Determining whether the price increase will cause a significant number of customers to switch to cheaper alternatives or stop buying drinks is most useful for evaluating the argument.
The correct answer provides information that directly addresses the core assumption of the argument. Applying the Test of Variance: if the price increase causes customers to switch to cheaper drinks or leave, sales volume will decline and ruin profitability; if it does not cause customer loss, revenue and profits will rise as intended. Because the two extreme answers produce opposite impacts on the conclusion, this information is critical for evaluating argument validity.

Step-by-Step Solution

1
Identify the argument's core structure and conclusion.
Conclusion: Raising specialty espresso prices by 10 percent will increase total monthly profits. Premise: Past demand was steady, so quantity sold will remain unchanged.
Understanding the logic gap between price increase and total revenue requires testing the unstated assumption that volume will not decline.
2
Apply the Test of Variance to evaluate the impact of opposite responses.
If YES (customers switch or stop buying), total volume drops, which shatters the argument. If NO (customers buy the same quantity), total revenue increases, validating the argument.
A question that produces opposite impacts on the argument's conclusion under extreme answers is the definitive evaluation metric.

Key Concept

Evaluating Argument Validity and Test of Variance
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Topics

Evaluating Argument Validity and Test of Variance

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