Contrary to earlier predictions, demand for sugarcane has : GMAT Critical Reasoning (CR)
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# Contrary to earlier predictions, demand for sugarcane has

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Contrary to earlier predictions, demand for sugarcane has [#permalink]

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23 Sep 2004, 02:39
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Contrary to earlier predictions, demand for sugarcane has not increased in recent years. Yet, even though prices and production amounts have also been stable during the last three years, sugarcane growers last year increased their profits by more than ten percent over the previous yearâ€™s level.

Any of the following statements, if true about last year, helps to explain the rise in profits EXCEPT:

(A) Many countries that are large consumers of sugarcane increased their production of sugarcane-based ethanol, yet their overall consumption of sugarcane decreased.
(B) Sugarcane growers have saved money on wages by switching from paying laborers an hourly wage to paying them by the amount harvested.
(C) The price of oil, the major energy source used by sugarcane growers in harvesting their crops, dropped by over twenty percent.
(D) Many small sugarcane growers joined together to form an association of sugarcane producers and began to buy supplies at low group rates.
(E) Rainfall in sugarcane-growing regions was higher than it had been during the previous year, allowing the growers to save money on expensive artificial irrigation.
[Reveal] Spoiler: OA
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Re: Contrary to earlier predictions, demand for sugarcane has [#permalink]

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23 Sep 2004, 04:41
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A it is
B talks about sugarcane growers saving money on wages and thus increased their profitability
A talks about supply and demand. It says that sugarcane supply increased and demand decreased. This means that there is an oversupply of sugarcane and either that prices should have come down or sugarcane itself would not sell. It cannot explain why profitability increased
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Re: Contrary to earlier predictions, demand for sugarcane has [#permalink]

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23 Sep 2004, 04:32
Eliminated C,D,E for the following reasons.
(C) Price of oil dropped. Decrease in cost price.Profit increases.
(D) Raw material at low rates. So profit increases.
(E) Saved money thru irrigation. Hence, decrease in costs incurred. Profit increases.

Iam not sure between A and B.
I don't totally understand what option A talks about.

(B) talks about paying at an hourly rate instead of paying them by amount harvested. We do not know if the hourly rate is lesser than the
amount that'll be paid for the amount harvested.

So I'll vote for B.
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Re: Contrary to earlier predictions, demand for sugarcane has [#permalink]

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23 Sep 2004, 09:01
Hmm, i accord Paul - A should be it.

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Re: Contrary to earlier predictions, demand for sugarcane has [#permalink]

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23 Sep 2004, 12:45
It's A.

With B...it still explains why profits have increased while production/price is the same.
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Re: Contrary to earlier predictions, demand for sugarcane has [#permalink]

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23 Sep 2004, 13:42
A for sure .... used POE
and used Profits=Rev-Cost
BCDE all say in some way or the other that the costs were lower last yr
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Re: Contrary to earlier predictions, demand for sugarcane has [#permalink]

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23 Sep 2004, 17:33
Definitely A. CDE are of course out. B also clearly states the farmers saved money which shld reflect positively on profit.
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27 Apr 2011, 10:36
clear A . i dont understand how B can even come into contention
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Re: Contrary to earlier predictions, demand for sugarcane has [#permalink]

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05 May 2014, 11:27
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Contrary to earlier predictions, demand for sugarcane has [#permalink]

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15 Feb 2015, 11:59
Nice question from OG. Eliminated b,c,d,e as they all are talking about cutting costs -> so all of them help to explain the rise in profits (revenue - costs). So A is the only answer left. A can be found by elimination of other answer choices or --> A is just wrong, as it talks about sugarcane-based ethanol and not about sugarcane... Is ethanol representative of the whole usage of sugarcane ? NO
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Re: Contrary to earlier predictions, demand for sugarcane has [#permalink]

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03 Jun 2016, 20:32
Argument analysis :
Contrary to earlier predictions, demand for sugarcane has not increased in recent years. A background information.

Yet, even though prices and production amounts have also been stable during the last three years, sugarcane growers last year increased their profits by more than ten percent over the previous years level. Yet: indicating contrast

Profit = Revenue – Cost
Revenue = Price*Quantity Price. Neither demand (Quantity) nor Price increased.

increase in Profit : different possiblities
a. Revenue  - Not possible as mentioned in the premise
b. Cost  - Only possibility to justify the increase in profit
c. Both happened - Not possible as mentioned in the premise
d. Other possibilities as well such as i and ii - cannot happen because Revenue has not changed
I. Revenue  and Cost  - Yet Absolute value was more
II. Revenue  and Cost  - Yet Absolute value was more

Question Stem : Any of the following statements, if true about last year, helps to explain the rise in profits EXCEPT:
Except: 4 options will talk about decrease in cost and 1 will mention about increase or any other irrelevant data point.

(A) Many countries that are large consumers of sugarcane increased their production of sugarcane-based ethanol, yet their overall consumption of sugarcane decreased. Irrelevant
(B) Sugarcane growers have saved money on wages by switching from paying laborers an hourly wage to paying them by the amount harvested. Mentions decrease in cost
(C) The price of oil, the major energy source used by sugarcane growers in harvesting their crops, dropped by over twenty percent. Mentions decrease in cost
(D) Many small sugarcane growers joined together to form an association of sugarcane producers and began to buy supplies at low group rates. Mentions decrease in cost
(E) Rainfall in sugarcane-growing regions was higher than it had been during the previous year, allowing the growers to save money on expensive artificial irrigation. Mentions decrease in cost.
Option A
Re: Contrary to earlier predictions, demand for sugarcane has   [#permalink] 03 Jun 2016, 20:32
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