This is a necessary assumption question.
Problems caused by leaching of pollutants are worst in countries with a per capita economic output between $4,000 and $5,000
+
Pollution problems diminish after industrial development increases
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Country X has a per capita economic output of $5,000
→
Problems caused by leaching of pollutants should begin to diminish
This is a lengthy core but everything here is necessary, I promise, in order to gain the fullest understanding of the question and the answer choices. This argument is saying that the pollution problems are the worst (aka they cannot get any worse) when economic output is between $4,000 and $5,000. Well country X has $5,000 - the highest amount possible to still have the worst pollution problems. Thus, the author is concluding that X's problems will "begin to diminish." This is obviously so because they are at the top of the totem pole! Even a dollar increase of per capita economic output would lead to a betterment of the situation because, hey!, they aren't the worst anymore!
But wait, what is the problem here? The problem is that this argument is assuming that this increase in per capita economic output will in fact increase. What if it doesn't? If this is the case, there is no reason to believe that the problems should "begin to diminish."
***Notice how the argument is talking only about specific problems. The conclusion is saying that "problems caused by leaching in country X." Thus, pollution in country X could get worse while the problems caused by leaching could get substantially better. For example, what if X cleans up its act and doesn't cause any of its own pollution problems anymore but Country Y comes in and dumps all of its toxic waste in X. Country X wouldn't have caused the problem. It is important to note that a problem like this - like country Y dumping its toxic waste in Country X - is not the problem that this stimulus is talking about. It is talking about only those caused by X.
(A) What will this "system of fines" do? We simply don't know. It could make the problems worse for all we know! Maybe people will get so upset at the fines that everyone will dump toxic waste into X's water system. Who knows? Because we don't, this cannot be a necessary assumption.
(B) We don't care about "countries surrounding." What they do is irrelevant - we only care about country X and what country X does.
(D) This is the trick answer. I'm very surprised no one has written about this one yet. Why is this not necessary? This is not necessary for a few reasons: (1) This would actually weaken the argument. The argument states, "pollution problems increase during the early stages of a country's industrial development..." Therefore, if Country X were to begin the process of industrialization, the pollution problems would actually increase, not diminish. (2) It is not necessary for the process to begin in the next few years. It could have began 3 years ago!
(E) Like (B), we don't care about other countries! Maybe other countries do have pollution problems that are as severe; maybe they don't. Who cares, right?!
(C) is the correct answer here. We are given information in the premises and that information is all we know about the situation. We know that "Pollution problems diminish after industrial development increases." Thus, if industrial development doesn't increase, then how can we conclude from the premises that Country X's problems will "begin to diminish."