Farmers in developing countries claim that the United States : GMAT Critical Reasoning (CR)
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# Farmers in developing countries claim that the United States

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Farmers in developing countries claim that the United States [#permalink]

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21 Nov 2006, 09:27
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Farmers in developing countries claim that the United States government, through farm subsidies, is responsible for the artificially low global price of wheat. Because the U.S. government buys whatever wheat American farmers are unable to sell on the open market, American farmers have no incentive to modulate the size of their crops according to the needs of the global market. As a result, American farmers routinely produce more wheat than the global market can absorb and the global price of wheat is kept low. Without these subsidies, the farmers in developing economies claim, American farmers would produce only the amount of wheat that they could sell on the open market and the global price of wheat would rise.

Which of the following, if true, most weakens the claims of the farmers in developing countries regarding the price of wheat?

Wheat that is not processed for consumption can be used for certain industrial applications.
Non-governmental buyers of wheat and wheat products are able to predict how much wheat they will need several years in advance.
The United States government offers similar subsidies to soybean farmers, though the global price of soybeans is significantly higher than that of wheat.
Other countries, such as Canada and Russia, are likely to produce more wheat if the United States were to reduce its output.
The price of sorghum, a crop for which the United States government offers no subsidies, is lower than that of wheat.
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Re: Farmers in developing countries claim that the United States [#permalink]

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21 Nov 2006, 09:37
karlfurt wrote:
Farmers in developing countries claim that the United States government, through farm subsidies, is responsible for the artificially low global price of wheat. Because the U.S. government buys whatever wheat American farmers are unable to sell on the open market, American farmers have no incentive to modulate the size of their crops according to the needs of the global market. As a result, American farmers routinely produce more wheat than the global market can absorb and the global price of wheat is kept low. Without these subsidies, the farmers in developing economies claim, American farmers would produce only the amount of wheat that they could sell on the open market and the global price of wheat would rise.

Which of the following, if true, most weakens the claims of the farmers in developing countries regarding the price of wheat?

Wheat that is not processed for consumption can be used for certain industrial applications.
Non-governmental buyers of wheat and wheat products are able to predict how much wheat they will need several years in advance.
The United States government offers similar subsidies to soybean farmers, though the global price of soybeans is significantly higher than that of wheat.
Other countries, such as Canada and Russia, are likely to produce more wheat if the United States were to reduce its output.
The price of sorghum, a crop for which the United States government offers no subsidies, is lower than that of wheat.

It appears to be A - though I am not sure.

Here's my reasoning -

The main argument is this -
Farmers don't regulate the amount of wheat they produce - because whatever is left over from the non-sales on the global market is brought over by the US Govt. Hence US Govt is indirectly responsible for low wheat price.

A brings a new element by saying - "wheat not processed for consumption" has industrial application - hence it is possible that the farmers actually produce CONSUMABLE and NON CONSUMABLE wheat - the latter being purchased by the Govt for Industrial applications.
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Re: Farmers in developing countries claim that the United States [#permalink]

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21 Nov 2006, 09:57
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karlfurt wrote:
Farmers in developing countries claim that the United States government, through farm subsidies, is responsible for the artificially low global price of wheat. Because the U.S. government buys whatever wheat American farmers are unable to sell on the open market, American farmers have no incentive to modulate the size of their crops according to the needs of the global market. As a result, American farmers routinely produce more wheat than the global market can absorb and the global price of wheat is kept low. Without these subsidies, the farmers in developing economies claim, American farmers would produce only the amount of wheat that they could sell on the open market and the global price of wheat would rise.

Which of the following, if true, most weakens the claims of the farmers in developing countries regarding the price of wheat?

Wheat that is not processed for consumption can be used for certain industrial applications.

I think open market will include both consumption and use in industrial applications.

Non-governmental buyers of wheat and wheat products are able to predict how much wheat they will need several years in advance.
The United States government offers similar subsidies to soybean farmers, though the global price of soybeans is significantly higher than that of wheat.
Other countries, such as Canada and Russia, are likely to produce more wheat if the United States were to reduce its output.

I think D is the answer. Even if the US were to reduce to production, other countries will increase, and the price will remain at the same level.

The price of sorghum, a crop for which the United States government offers no subsidies, is lower than that of wheat.

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Re: Farmers in developing countries claim that the United States [#permalink]

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21 Nov 2006, 10:20
Agree with D....nice explaination given above by ak_idc
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Re: Farmers in developing countries claim that the United States [#permalink]

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21 Nov 2006, 10:32
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ak_idc wrote:
karlfurt wrote:
Farmers in developing countries claim that the United States government, through farm subsidies, is responsible for the artificially low global price of wheat. Because the U.S. government buys whatever wheat American farmers are unable to sell on the open market, American farmers have no incentive to modulate the size of their crops according to the needs of the global market. As a result, American farmers routinely produce more wheat than the global market can absorb and the global price of wheat is kept low. Without these subsidies, the farmers in developing economies claim, American farmers would produce only the amount of wheat that they could sell on the open market and the global price of wheat would rise.

Which of the following, if true, most weakens the claims of the farmers in developing countries regarding the price of wheat?

Wheat that is not processed for consumption can be used for certain industrial applications.

I think open market will include both consumption and use in industrial applications.

Non-governmental buyers of wheat and wheat products are able to predict how much wheat they will need several years in advance.
The United States government offers similar subsidies to soybean farmers, though the global price of soybeans is significantly higher than that of wheat.
Other countries, such as Canada and Russia, are likely to produce more wheat if the United States were to reduce its output.

I think D is the answer. Even if the US were to reduce to production, other countries will increase, and the price will remain at the same level.

The price of sorghum, a crop for which the United States government offers no subsidies, is lower than that of wheat.

I agree...

I got mislead because I thought the argument was focused on the role of the US Govt..and the fact that because it buys excess wheat the price is low. D is clearly the choice if the focus is on QTY PRICE EQUATION. Other countries would still balance out the Quantity of wheat available...

I still feel there's a trap in D.

Karl brother..help us with the OA..
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Re: Farmers in developing countries claim that the United States [#permalink]

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21 Nov 2006, 11:45
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Agree with D.

A - Farmers are producing more wheat now because there is a guarantee that excess wheat will be bought. Industrial applications may already be consuming wheat. And there is no guarantee that all the extra wheat will be used by Industrial application
B - irrelevant
C - not right to compare soyabean price with that of wheat. teh 2 commodities can't be expected to cost the same
E - same as C
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Re: Farmers in developing countries claim that the United States [#permalink]

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21 Nov 2006, 17:25
Farmers in developing countries claim that the United States government, through farm subsidies, is responsible for the artificially low global price of wheat. Because the U.S. government buys whatever wheat American farmers are unable to sell on the open market, American farmers have no incentive to modulate the size of their crops according to the needs of the global market. As a result, American farmers routinely produce more wheat than the global market can absorb and the global price of wheat is kept low. Without these subsidies, the farmers in developing economies claim, American farmers would produce only the amount of wheat that they could sell on the open market and the global price of wheat would rise.

Quantity of wheat is what keeps the price low (or oversupplied by American farmers). If US farmers reduce wheat ouput, others will produce more, therefore quantity/price relationship stays same.

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Re: Farmers in developing countries claim that the United States [#permalink]

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21 Nov 2006, 17:41
I still think it's C.

dwivedys, why is it wrong to focus on the role of the US govt? The first sentence says: Farmers in developing countries claim that the United States government, through farm subsidies, is responsible for the artificially low global price of wheat.

So, they are clearly blaming the US govt. for the subsidies offered and the resulting low price.

Agreed soy is another product, but if evrything were governed by supply being far greater than demand, then soy should be around the same price, dont you think?
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Re: Farmers in developing countries claim that the United States [#permalink]

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21 Nov 2006, 18:46
Agree D.
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Re: Farmers in developing countries claim that the United States [#permalink]

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22 Nov 2006, 00:17
Farmers in developing countries claim that the United States government, through farm subsidies, is responsible for the artificially low global price of wheat. Because the U.S. government buys whatever wheat American farmers are unable to sell on the open market, American farmers have no incentive to modulate the size of their crops according to the needs of the global market. As a result, American farmers routinely produce more wheat than the global market can absorb and the global price of wheat is kept low. Without these subsidies, the farmers in developing economies claim, American farmers would produce only the amount of wheat that they could sell on the open market and the global price of wheat would rise.

Which of the following, if true, most weakens the claims of the farmers in developing countries regarding the price of wheat?

Wheat that is not processed for consumption can be used for certain industrial applications. Out of Scope
Non-governmental buyers of wheat and wheat products are able to predict how much wheat they will need several years in advance. Not relayted
The United States government offers similar subsidies to soybean farmers, though the global price of soybeans is significantly higher than that of wheat. This cast doubt that susidy is causing lower prices
Other countries, such as Canada and Russia, are likely to produce more wheat if the United States were to reduce its output. Not related
The price of sorghum, a crop for which the United States government offers no subsidies, is lower than that of wheat. Oout of scope
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22 Nov 2006, 07:36
OA D. I think it's discutable.
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22 Nov 2006, 18:15
A is wrong as global consumption is low so that assumes that industries are already using it.
C and E are wrong as comparisons are always wrong on GMAT.
B is irrelevant.
D is the answer- I believe.

Wheat that is not processed for consumption can be used for certain industrial applications.
Non-governmental buyers of wheat and wheat products are able to predict how much wheat they will need several years in advance.
The United States government offers similar subsidies to soybean farmers, though the global price of soybeans is significantly higher than that of wheat.
Other countries, such as Canada and Russia, are likely to produce more wheat if the United States were to reduce its output.
The price of sorghum, a crop for which the United States government offers no subsidies, is lower than that of wheat.
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Re: Farmers in developing countries claim that the United States [#permalink]

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22 Nov 2006, 23:46
D 2.
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Re: Farmers in developing countries claim that the United States [#permalink]

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01 Sep 2013, 09:36
Farmers in developing countries claim that the global price of wheat is low
because American farmers produce too much of the grain. They also claim that
American farmers produce too much wheat because they have no incentive to
manage their crops, since the U.S. government will buy whatever wheat
American farmers cannot sell on the open market. We are asked to find a choice
that weakens the claims of the farmers in developing countries that removing the
American subsidy would cause the price of wheat to rise.
(A) That there are uses for wheat that is not eaten is irrelevant here. This does
not address any aspect of the farmers' claims.
(B) The fact that buyers of wheat can predict their needs in advance is irrelevant
here, because the text indicates that American farmers do not pay attention to
actual demand for wheat.
(C) In this argument, the global market for soybeans is irrelevant to the global
market for wheat, which is a different commodity with different demand, supply,
and pricing structures.
(D) CORRECT. The farmers assume that the sole cause of the wheat surplus is
the United States. This answer choice suggests that other countries would
modify their output to counterbalance any reduction on the part of the United
States, keeping prices constant instead of allowing them to rise.
(E) The price of another crop is largely irrelevant. Moreover, the fact that the
price of sorghum, a non-subsidized crop, is lower tends to support, rather than
weaken, the claims of the farmers.
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Re: Farmers in developing countries claim that the United States [#permalink]

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09 Aug 2014, 18:38
Confirmed that the OA is indeed D.
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Re: Farmers in developing countries claim that the United States [#permalink]

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09 Aug 2014, 21:04
karlfurt wrote:
Farmers in developing countries claim that the United States government, through farm subsidies, is responsible for the artificially low global price of wheat. Because the U.S. government buys whatever wheat American farmers are unable to sell on the open market, American farmers have no incentive to modulate the size of their crops according to the needs of the global market. As a result, American farmers routinely produce more wheat than the global market can absorb and the global price of wheat is kept low. Without these subsidies, the farmers in developing economies claim, American farmers would produce only the amount of wheat that they could sell on the open market and the global price of wheat would rise.

Which of the following, if true, most weakens the claims of the farmers in developing countries regarding the price of wheat?

Wheat that is not processed for consumption can be used for certain industrial applications.
Non-governmental buyers of wheat and wheat products are able to predict how much wheat they will need several years in advance.
The United States government offers similar subsidies to soybean farmers, though the global price of soybeans is significantly higher than that of wheat.
Other countries, such as Canada and Russia, are likely to produce more wheat if the United States were to reduce its output.
The price of sorghum, a crop for which the United States government offers no subsidies, is lower than that of wheat.

Claim- American farmers are subsidized for xtra production....Hence more supply less demand..prices low..if not..farmers wont be able to sell in open market..supply reduced..same demand..prices increase..

A- No where has supply or demand been associated with just food consumption..
B- If they are..it does not matter as they will anyways not consume more than or less than required..So it does not conclude to anything
C- What if it does..it does not falter the claim that wheat prices wont rice..there might be other genuine reasons such as Floods in soyabean field etc..
D- If supply by american farmers is reduced-->supply reduced-->this chain is now broken as supply gap would be taken care of by china & russia..so prices wont increase now
E- Similar case as in C..
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Re: Farmers in developing countries claim that the United States [#permalink]

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04 Aug 2015, 18:08
How come "D" is an answer?
D says: Other countries, such as Canada and Russia, are likely to produce more wheat if the United States were to reduce its output.

We do not know how much the current production stats of Canada and Russia. It might be possible, United States is currently producing 80 pc of global market and combined Canada and Russia is 2 pc. Even if Canada and Russia would doubled the wheat production (4 pc) wouldn't suffice the criteria and need.
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Re: Farmers in developing countries claim that the United States [#permalink]

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15 Sep 2016, 05:20
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