Hank Preston is the owner of PrestonMechanics, anauto-repair shop that does automobile servicing and repairs. Faced with an increasing number ofcustomers, Hank decides to revise his compensation policies in order to provide faster and better service. He feels that acommission-based system, as opposed to the currentstraight-time paysystem, will incentivize his workers to service more cars in lesser time. Hispartner, LarryGomez, does not agree. He argues that the commission system will not significantly increase the number of cars being serviced per hour. Infact, he feels that productivity and service quality might actually fall.

Which of thefollowing, iftrue, will strengthenHank's claim?

A.

Labor costs form a high proportion of PrestonMechanics' total costs.

B.

The fixed cost of setting up anauto-repair shop is relatively high.

C.

The price elasticity of demand for PrestonMechanics' services is high.

D.

Onaverage, tasks currently are taking more time than expected.

E.

The market forauto-repair workers is competitive.