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Escalating worldwide demand for corn has led to a sharp

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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 observers’ 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.
[Reveal] Spoiler: OA
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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.

There is something that causes a short-term decrease in meat prices in spite of increase in corn prices.

Which of the following, if true, most helps to justify the observers’ 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. - irrelevant
B. Generally, farmers who are squeezed out of the livestock business send their livestock to market much earlier than they otherwise would. - straightforward point to unambiguous short-term decrease in meat prices
C. Some people who ate meat regularly in the past are converting to diets that include little or no meat.- irrelevant. It does not explain a short-term phenomena.
D. As meat prices rise, the number of livestock producers is likely to rise again. - irrelevant. It explains a short-term increase in meat prices with following decrease.
E. Livestock producers who stay in the business will start using feed other than corn more extensively than they did in the past.- irrelevant. It may vague explain a short-term increase in meat prices or a long-term decrease.

B is clear for me. Only B explains s short-term decrease unambiguously.
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We shoudl find a reason for the observers expectation that their would be a decrese in meat price.

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.(Corn is not observers are talking about)
B. Generally, farmers who are squeezed out of the livestock business send their livestock to market much earlier than they otherwise would.(Could be. b'coz if the farmers send their livestock early to the market, their would be more supply which will cause the decrese in prices)
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.([color=#BF00800]Observer is talking about price decrese[/color])
E. Livestock producers who stay in the business will start using feed other than corn more extensively than they did in the past.(The farmers investment on the livestock will increase or decrese. V dont know if the feeder being used it expensive than corn or not)


So, will go for B

OA?
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marcodonzelli wrote:
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 observers’ 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.


Another trap by the GMAT in which a lot of takers (including me) fall into.

Conclusion says "IMMEDIATE short-term decrease" ... so an answer choice could be true but it doesn't address the "IMMEDIATE" short-term decrease

This is the reason why D is wrong. Because when you say "again" you are talking about a long term kind of thing.

If you look at B, it address something IMMEDIATE.

Good job GMAC :)

Kudos please? :(
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Re: Escalating worldwide demand for corn has led to a sharp [#permalink]

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minwoswoh wrote:
pinoygmat wrote:
marcodonzelli wrote:
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 observers’ 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.


Another trap by the GMAT in which a lot of takers (including me) fall into.

Conclusion says "IMMEDIATE short-term decrease" ... so an answer choice could be true but it doesn't address the "IMMEDIATE" short-term decrease

This is the reason why D is wrong. Because when you say "again" you are talking about a long term kind of thing.

If you look at B, it address something IMMEDIATE.

Good job GMAC :)

Kudos please? :(

Hi,

Good observation. However, I think that this question does require some outside knowledge, since nowhere in the passage is it mentioned that more supply of meat would yield lower prices of meat... don´t you agree?

Since I am very limited on Economy, can I ask you if the following statements are mostly true:
- If Demand increases and Supply remains equal, then Price increases
- If Demand decreases and Supply remains equal, then Price decreases
- If Supply increases and Demand remains equal, then Price decreases
- If Supply decreases and Demand remains equal, then Price increases.

Thank you so much!


Hi,

GMAT is not formal logic and thus, require use of common sense knowledge (what is common sense? We don't know! But GMAT has its own criteria perhaps).

This post gives even more examples where GMAT requires common sense: as-a-construction-material-bamboo-is-as-strong-as-steel-and-135997.html#p1218565

Also, all of your observations about economics are correct. Price is directly related to demand and inversely related to supply.

Thanks,
Chiranjeev
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Re: Escalating worldwide demand for corn has led to a sharp [#permalink]

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New post 18 Dec 2015, 21:08
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The fundamental concept in Economics is if demand is more and supply is less, the price rises and vice versa. "B" implies that if the livestock are sent early, supply is more and demand is not commensurate with that - hence the price falls.
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New post 27 Jan 2008, 02:25
i think its E...whats the OA?
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New post 27 Jan 2008, 02:35
rafiaiqbal wrote:
i think its E...whats the OA?



B...I donìt know why!
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New post 28 Jan 2008, 10:51
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walker wrote:
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.

There is something that causes a short-term decrease in meat prices in spite of increase in corn prices.

Which of the following, if true, most helps to justify the observers’ 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. - irrelevant
B. Generally, farmers who are squeezed out of the livestock business send their livestock to market much earlier than they otherwise would. - straightforward point to unambiguous short-term decrease in meat prices
C. Some people who ate meat regularly in the past are converting to diets that include little or no meat.- irrelevant. It does not explain a short-term phenomena.
D. As meat prices rise, the number of livestock producers is likely to rise again. - irrelevant. It explains a short-term increase in meat prices with following decrease.
E. Livestock producers who stay in the business will start using feed other than corn more extensively than they did in the past.- irrelevant. It may vague explain a short-term increase in meat prices or a long-term decrease.

B is clear for me. Only B explains s short-term decrease unambiguously.


now it is clear!
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Re: Escalating worldwide demand for corn has led to a sharp [#permalink]

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New post 28 Jan 2008, 11:38
I agree. B must be the answer.

marcodonzelli wrote:
walker wrote:
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.

There is something that causes a short-term decrease in meat prices in spite of increase in corn prices.

Which of the following, if true, most helps to justify the observers’ 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. - irrelevant
B. Generally, farmers who are squeezed out of the livestock business send their livestock to market much earlier than they otherwise would. - straightforward point to unambiguous short-term decrease in meat prices
C. Some people who ate meat regularly in the past are converting to diets that include little or no meat.- irrelevant. It does not explain a short-term phenomena.
D. As meat prices rise, the number of livestock producers is likely to rise again. - irrelevant. It explains a short-term increase in meat prices with following decrease.
E. Livestock producers who stay in the business will start using feed other than corn more extensively than they did in the past.- irrelevant. It may vague explain a short-term increase in meat prices or a long-term decrease.

B is clear for me. Only B explains s short-term decrease unambiguously.


now it is clear!
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New post 28 Jan 2008, 22:09
Here is my take - hope this helps!

Conclusion: Observers expect an immediate short-term decrease in meat prices.
Argument: Corn is extensive feed for livestock and because profit margins are tight in the livestock business, many farmers leaving the Corn business.


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 argument is concerned about immediate decline in livestock price – nothing to do with corn prices decline – eliminate it]

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

C. Some people who ate meat regularly in the past are converting to diets that include little or no meat.[Nothing discussed about dietary habits in the passage – eliminate it]

D. As meat prices rise, the number of livestock producers is likely to rise again.[Nothing addressing the short-term decline – eliminate it]

E. Livestock producers who stay in the business will start using feed other than corn more extensively than they did in the past.[This is also no specified as part of the argument – eliminate it]

Answer: B
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New post 29 Aug 2011, 18:47
WAs a close call btw B and D.

The word short term decrease made me choose B.
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New post 07 Sep 2011, 16:56
marcodonzelli wrote:
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 observers’ 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.


B it is. The rest of answer choices does not explain why the meat prices might decrease.
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New post 02 Jun 2014, 00:14
I am unable to understand this question. Can you please elaborate this demand-supply problem?
My Premises:
1. Corn Demand Increase
--leads to --> Corn Prise Increase
2. Farmers leave Corn Business, because a) Corn will be used as a livestock b) Margins are tight in livestock. (I am not clear in this )
--leads to --> Fewer suppliers of Corn?
Questions:
#1. Farmers leave livestock business OR Corn business ?
#2. As margins in livestock are tight. They leave livestock business and join Corn business. Is it correct ?
#3. If farmers join Corn business after leaving livestock business, Price of meat should increase.

Conclusion:
Immediate short-term decrease in meat prices.
#4. I tempted to chose E, but its wrong.
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New post 13 Dec 2015, 16:41
pinoygmat wrote:
marcodonzelli wrote:
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 observers’ 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.


Another trap by the GMAT in which a lot of takers (including me) fall into.

Conclusion says "IMMEDIATE short-term decrease" ... so an answer choice could be true but it doesn't address the "IMMEDIATE" short-term decrease

This is the reason why D is wrong. Because when you say "again" you are talking about a long term kind of thing.

If you look at B, it address something IMMEDIATE.

Good job GMAC :)

Kudos please? :(

Hi,

Good observation. However, I think that this question does require some outside knowledge, since nowhere in the passage is it mentioned that more supply of meat would yield lower prices of meat... don´t you agree?

Since I am very limited on Economy, can I ask you if the following statements are mostly true:
- If Demand increases and Supply remains equal, then Price increases
- If Demand decreases and Supply remains equal, then Price decreases
- If Supply increases and Demand remains equal, then Price decreases
- If Supply decreases and Demand remains equal, then Price increases.

Thank you so much!
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New post 14 Dec 2015, 12:33
Hi chiranjeev12,
Thanks for the taking the time to read my post and answer my (very basic!) questions about Economy.
+1 for you
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Escalating worldwide demand for corn has led to a sharp [#permalink]

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New post 14 Dec 2015, 12:57
Hi Chirankeev,

One more question if you don´t mind. I know I am kind of going off topic here but... you stated that "Price is directly related to demand and inversely related to supply". You used the words "directly related" and "indirectly related", meaning that even though these relationships exist, they are not actually "directly proportional" or "inversely proportional". In other words, we cannot state that "Price = k * Demand" or that "Price = k / Supply", correct?

I´ve seen in your profile that your concentration is in Economics/Finance so I thought you maybe wouldn´t mind answering this simple question.

Thank you so much!
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Escalating worldwide demand for corn has led to a sharp   [#permalink] 14 Dec 2015, 12:57
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