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Complaints that milk bottlers take enormous markups on the

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Complaints that milk bottlers take enormous markups on the [#permalink]

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New post 14 Jul 2010, 02:59
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  35% (medium)

Question Stats:

64% (02:47) correct 36% (01:45) wrong based on 44 sessions

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Complaints that milk bottlers take enormous markups on the bottled milk sold to consumers are most likely to arise when least warranted by the actual spread between the price that bottlers pay for raw milk and the price at which they sell bottled milk. The complaints occur when the bottled-milk price rises, yet these price increases most often merely reflect the rising price of the raw milk that bottlers buy from dairy farmers. When the raw-milk price is rising, the bottlers’ markups are actually smallest proportionate to the retail price. When the raw-milk price is falling, however, the markups are greatest.
If all of the statements above are true, which one of the following must also be true on the basis of them?
(A) Consumers pay more for bottled milk when raw-milk prices are falling than when these prices are rising.
(B) Increases in dairy farmers’ cost of producing milk are generally not passed on to consumers.
(C) Milk bottlers take substantially greater markups on bottled milk when its price is low for an extended period than when it is high for an extended period.
(D) Milk bottlers generally do not respond to a decrease in raw-milk prices by straightaway proportionately lowering the price of the bottled milk they sell.
(E) Consumers tend to complain more about the price they pay for bottled milk when dairy farmers are earning their smallest profits.

Please help me know the difficulty level of this question.
[Reveal] Spoiler: OA
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Re: milk bottlers [#permalink]

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New post 14 Jul 2010, 03:37
Complaints that milk bottlers take enormous markups on the bottled milk sold to consumers are most likely to arise when least warranted by the actual spread between the price that bottlers pay for raw milk and the price at which they sell bottled milk. The complaints occur when the bottled-milk price rises, yet these price increases most often merely reflect the rising price of the raw milk that bottlers buy from dairy farmers. When the raw-milk price is rising, the bottlers’ markups are actually smallest proportionate to the retail price. When the raw-milk price is falling, however, the markups are greatest.
If all of the statements above are true, which one of the following must also be true on the basis of them?
(A) Consumers pay more for bottled milk when raw-milk prices are falling than when these prices are rising. CAn be true. the argument talks about " propotionate to retail price " and not actual price.
(B) Increases in dairy farmers’ cost of producing milk are generally not passed on to consumers. Incorrect. It might be passed on but not propotionately.(C) Milk bottlers take substantially greater markups on bottled milk when its price is low for an extended period than when it is high for an extended period.In correct.Extended period is not being discussed.
(D) Milk bottlers generally do not respond to a decrease in raw-milk prices by straightaway proportionately lowering the price of the bottled milk they sell.Correct,the markups are greatest.
(E) Consumers tend to complain more about the price they pay for bottled milk when dairy farmers are earning their smallest profits. naah
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Re: milk bottlers [#permalink]

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New post 14 Jul 2010, 08:33
Good questions I should say...what's the source rohit?
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Re: milk bottlers [#permalink]

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New post 13 Oct 2011, 18:38
thanks
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Re: milk bottlers [#permalink]

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New post 14 Oct 2011, 03:06
Good Question. D is the right answer :)
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Re: Complaints that milk bottlers take enormous markups on the [#permalink]

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New post 14 Feb 2015, 09:43
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Re: Complaints that milk bottlers take enormous markups on the   [#permalink] 14 Feb 2015, 09:43
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