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# Escalating worldwide demand for corn has led to a sharp

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Manager
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Escalating worldwide demand for corn has led to a sharp [#permalink]  21 Sep 2006, 09:03
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0% (00:00) correct 0% (00:00) wrong based on 3 sessions
1.
Escalating worldwide demand for corn has led to a sharp increase in the market price of corn, and corn prices are likely to remain high. Corn is extensive used as feed for livestock, and because profit margins are tight in the livestock business, many farmers are expected to leave the business. With fewer suppliers, meat prices will surely rise. Nonetheless, observers expect an immediate long-term decrease in meat prices.

Which of the following, if true, most helps to justify the observersâ€™ expectation?

A:The increase in corn prices is due more to a decline in the supply of corn than to a growth in demand for it.

B:Generally, farmers who are squeezed out of the livestock business send their livestock to market much earlier than they otherwise would.

C:Some people who ate meat regularly in the past are converting to diets that include little or no meat.

D:As meat prices rise, the number of livestock producers is likely to rise again.

E:Livestock producers who stay in the business will start using feed other than corn more extensively than they did in the past.

2.

Escalating worldwide demand for corn has led to a sharp increase in the market price of corn, and corn prices are likely to remain high. Corn is extensive used as feed for livestock, and because profit margins are tight in the livestock business, many farmers are expected to leave the business. With fewer suppliers, meat prices will surely rise. Nonetheless, observers expect an immediate short-term decrease in meat prices.

Which of the following, if true, most helps to justify the observersâ€™ expectation?

A:The increase in corn prices is due more to a decline in the supply of corn than to a growth in demand for it.

B:Generally, farmers who are squeezed out of the livestock business send their livestock to market much earlier than they otherwise would.

C:Some people who ate meat regularly in the past are converting to diets that include little or no meat.

D:As meat prices rise, the number of livestock producers is likely to rise again.

E:Livestock producers who stay in the business will start using feed other than corn more extensively than they did in the past.
Senior Manager
Joined: 05 Mar 2006
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E
B

Not sure though, can you tell me the source?
SVP
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1. D
2. B
Director
Joined: 10 Oct 2005
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Location: US
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C --- if people convert to no meat diets it will have long term impact. but if the remaining suppliers switch to other than corn food that may not increase the meat supply that reduced when the some of the suppliers quit their jobs.

B --- this will increase short term meat supply
Director
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Re: CR-meat price [#permalink]  21 Sep 2006, 10:07
1.

A:The increase in corn prices is due more to a decline in the supply of corn than to a growth in demand for it.
- The cause is not our concern here. Out.

B:Generally, farmers who are squeezed out of the livestock business send their livestock to market much earlier than they otherwise would.
- This actually opposes the observers' expectation. Out.

C:Some people who ate meat regularly in the past are converting to diets that include little or no meat.
- Hmm. Could be. But dietary habits are not discussed here. Out.

D:As meat prices rise, the number of livestock producers is likely to rise again.
- A weak assumption. In any case, the effect will not be immediate. There will be a rise, and then (possibly) a drop in prices. Out.

E:Livestock producers who stay in the business will start using feed other than corn more extensively than they did in the past.
- $$. If the remaining livestock producers use other feed, then the prices will decrease, since raw material is cheaper. 2. A:The increase in corn prices is due more to a decline in the supply of corn than to a growth in demand for it. - Again. Out of scope. B:Generally, farmers who are squeezed out of the livestock business send their livestock to market much earlier than they otherwise would. -$$$. The glut of livestock in the market will pull down the rates, at least on a temporary basis. C:Some people who ate meat regularly in the past are converting to diets that include little or no meat. - Out of scope! D:As meat prices rise, the number of livestock producers is likely to rise again. - Likely to rise again? Hmm... we are not concerned about long-term. Out. E:Livestock producers who stay in the business will start using feed other than corn more extensively than they did in the past. - Okay, will reduce prices. But not immediately. And not short term. Out. Director Joined: 10 Oct 2005 Posts: 528 Location: US Followers: 1 Kudos [?]: 23 [0], given: 0 [#permalink] 21 Sep 2006, 10:24 paddyboy says ... E:Livestock producers who stay in the business will start using feed other than corn more extensively than they did in the past. - $$. If the remaining livestock producers use other feed, then the prices will decrease, since raw material is cheaper. But argument says the number of livestock producers reduce in number and this has effect on meat prices. So how will argument E takes care of this... Director Joined: 06 May 2006 Posts: 780 Followers: 3 Kudos [?]: 19 [0], given: 0 [#permalink] 21 Sep 2006, 10:32 My reasoning was that there would be two pressures on the prices. #1 - Upward pressure because for fewer producers. #2 - Downward pressure because of reduced rates of other grains. I may be hanging out on a limb, but I felt that E provids an option that would actually offset the upward pressure that is described in the question stem. VP Joined: 25 Jun 2006 Posts: 1173 Followers: 2 Kudos [?]: 87 [0], given: 0 [#permalink] 21 Sep 2006, 17:23 B for me. but these 2 questions are the same to me. VP Joined: 21 Aug 2006 Posts: 1025 Followers: 1 Kudos [?]: 22 [0], given: 0 [#permalink] 21 Sep 2006, 20:14 tennis_ball wrote: B for me. but these 2 questions are the same to me. Hey, 1st one is long-term, and 2nd one is short-term 1. D 2. B _________________ The path is long, but self-surrender makes it short; the way is difficult, but perfect trust makes it easy. VP Joined: 21 Mar 2006 Posts: 1134 Location: Bangalore Followers: 2 Kudos [?]: 31 [0], given: 0 [#permalink] 21 Sep 2006, 21:09 mahesh004 wrote: paddyboy says ... E:Livestock producers who stay in the business will start using feed other than corn more extensively than they did in the past. -$$$. If the remaining livestock producers use other feed, then the prices will decrease, since raw material is cheaper.

But argument says the number of livestock producers reduce in number and this has effect on meat prices. So how will argument E takes care of this...

It has to be D and B.
Senior Manager
Joined: 13 Jul 2006
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Agreed its got to be:
(D)
(B)
_________________

A well-balanced person is one who has a drink in each of his hands.

SVP
Joined: 24 Sep 2005
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Re: CR-meat price [#permalink]  12 Oct 2006, 08:05
1.
Escalating worldwide demand for corn has led to a sharp increase in the market price of corn, and corn prices are likely to remain high. Corn is extensive used as feed for livestock, and because profit margins are tight in the livestock business, many farmers are expected to leave the business. With fewer suppliers, meat prices will surely rise. Nonetheless, observers expect an immediate long-term decrease in meat prices.

Which of the following, if true, most helps to justify the observersâ€™ expectation?

D:As meat prices rise, the number of livestock producers is likely to rise again.

---> so in future, the supply of meat will increase ----> long-term decrease in price.

2.

Escalating worldwide demand for corn has led to a sharp increase in the market price of corn, and corn prices are likely to remain high. Corn is extensive used as feed for livestock, and because profit margins are tight in the livestock business, many farmers are expected to leave the business. With fewer suppliers, meat prices will surely rise. Nonetheless, observers expect an immediate short-term decrease in meat prices.

Which of the following, if true, most helps to justify the observersâ€™ expectation?

B:Generally, farmers who are squeezed out of the livestock business send their livestock to market much earlier than they otherwise would.

----> a sudden increase in the supply of meats ---> short-term decrease in meat prices.

one more vote for D and B.
SVP
Joined: 05 Jul 2006
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mY OPENION FOR QUESTION ONE IS C..........

D is wrong because the stem say immediate long term increase........

D doesnt reflect that
SVP
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OR B
Manager
Joined: 26 Oct 2006
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First Question is C. If the rise has to be IMMEDIATE AND LONGTERM, I see this as the only possibility

Second Question is B. Since this is short term, this makes the most sense

Is there an OA
Senior Manager
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D
B
Current Student
Joined: 29 Jan 2005
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1. (D) simple law of supply and demand. Equilibrium price will rise at first and then settle as more livestock breeders enter the market.

2. (B) those ranchers who are squeezed out will slaughter their current "stock" and cash out.
Senior Manager
Joined: 11 Jul 2006
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1. D

2. B
Manager
Joined: 29 Jul 2006
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Kudos [?]: 2 [0], given: 0

1) B
2) E
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