Kernland imposes a high tariff on the export of unprocessed cashew nut

Yes, I agree jabhatta2. An answer choice claiming that the total number of jobs won't change after tariff removal does weaken the argument.

Hi GMATNinja
I have a couple of things that ı couldn't fully comprehend

#1


How do we know that world market prices are higher than current domestic prices? I know that passage says if tariffs are removed farmers will profit more, however making more profits doesn't necessarily mean an increase in profitability. What ı mean is even if the prices at the world market do not differ from the domestic prices, farmers can still gain more profit because they may find a far larger customer base out there to sell their goods and this may in turn increase their total profit.

#2


Also is it safe to assume that farmers migrating from farmlands to suburbs will necessarily increase unemployment? we don't really have any data regarding to that

Thank you for your answers:)

That's a good question about world market prices vs. domestic prices.

The passage tells us that a tariff is imposed on cashews to "ensure" the nuts are sold domestically. We also know that if the tariff were lifted and "cashews were sold at world market prices, more farmers could profit by growing cashews." So why could more "more farmers" profit by selling cashews at world market prices than selling them domestically? The simplest explanation is that world market prices are higher than domestic prices.

Could we imagine an alternative explanation, where world market prices are the same as domestic prices, but the effect is the same? Well, we'd need to assume the current demand for unprocessed cashews in Kernland could not absorb increased production of cashews. In other words, we'd need to assume that the factor holding back domestic cashew profitability is the size of the domestic market, not the domestic price.

Since this may or may not be the case, it's not the best explanation. However, we know for sure that an increase in the selling price of cashews will increase profitability. So the idea that world market prices are higher than domestic prices is a better explanation.

Regarding your second question: it is safe to assume that if small farmers are driven off their land into cities, this could increase unemployment. We have no idea how long it will take these farmers to get jobs in the city. Maybe it will happen quickly, or maybe it will take a long time. But we do know for sure they lost their jobs as farmers and need new ones.

So either way, an influx of small farmers into cities creates a risk of unemployment. And if (E) reduces this risk, it weakens the argument.

I hope that helps!

Understanding the argument -
The conclusion says that removing tariffs would hamper government unemployment reduction efforts.
So, Cause - removing tariffs
Effect - would hamper government unemployment reduction efforts.

If we have to weaken it, what will happen? The cause is still there, but the effect is not. Right? Yes. How can that happen? If the people can get employment somewhere, unemployment will not increase. Right? Yes. That is what option E does.
Let's unpack option E - It says because of no profitable crop, farmers move to cities to gain employment. Say 80 farmers were in villages earlier, and 20 people live in urban areas. Out of 20, 10 in cities are unemployed. Now, because of the lack of crop profits, the 70 farmers from villages have moved to cities and are still trying to find jobs, so the number of unemployed has soared to 80. Right? Yes. And the government is taking steps to reduce it. The argument is if we remove the restrictions, not only will the people employed lose jobs, but also the remaining 70 can't find jobs, which will make the situation worse. But if we remove the restrictions, these 70 can go back to villages and still make healthy profits, and even if people lose jobs, the employment will reduce from (10+70 =80) to 20 at max. Then, it's easing government efforts and not worsening it. This E is our answer.

Let's still eliminate others -

A. Some of the by-products of processing cashews are used for manufacturing paints and plastics. - It's good, but do we know where these plants are located (we know all cashew processing plants are in urban areas, but does the argument state that paint and plastic plants are in cities?) More importantly, does it even deal with the scope of the argument, which is the connection between removing tariffs on unprocessed cashews and employment reduction? No. Out of scope.

B. Other countries in which cashews are processed subsidize their processing plants. I can be a strengthener, but we must assume quite a bit. If others subsidize, they are more competitive in the export market, and if they export more to Kernland, then it'll negatively affect the job market. Again, there is a lot to assume here, so it is out of scope at best.

C. More people in Kernland are engaged in farming cashews than in processing them. - our scope is limited to "X, not Y." We remove restrictions, but somehow, the unemployment doesn't rise. Does it deal with scope in any way? No. Distortion. Keep scope in mind as to what we are trying to do and not boil the ocean.

D. Buying unprocessed cashews at lower than world market prices enables cashew processors in Kernland to sell processed nuts at competitive prices. - It's a strengthener.

E. A lack of profitable crops is driving an increasing number of small farmers in Kernland off their land and into the cities. - ok.