Final answer:
The assumption made is that customers prefer to shop at charity bookshops which can charge lower prices due to VAT exemption. The answer, based on common economic principles, is A. Assumption Made.
Step-by-step explanation:
The question revolves around the assumption related to customer behavior when it comes to pricing in charity and non-charity bookshops. Given the scenario that charities don't have to charge VAT to customers, allowing charity bookshops to potentially charge lower prices, it assumes that customers gravitate towards these lower prices, preferring to shop where they have to pay less.
The information provided does not directly address the assumption; however, it's a common economic principle that consumers seek to maximize their utility and are likely to prefer shopping where they can get goods for a lower price. Thus, the answer would be A. Assumption Made. Charities using their VAT exemption to charge lower prices can attract customers who are sensitive to price differences.
The broader principles of taxation, such as the benefit principle and the ability-to-pay principle, underpin taxation policies but are not directly applicable to the question about VAT and charity bookshops.