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Please rate my AWA Analysis of an argument - Country of Sach [#permalink]
11 Sep 2010, 18:36
Please rate my essat
The country of Sachaar can best solve its current trade deficit problem by lowering price of sugar, its primary export. Such an action, would make Sachaar better able to compete for markets with other sugar-exporting countries. The sale of Sachaar's sugar abroead would decrease, and this increase would substantially reduce Sachaar's trade deficit.
My essay ( I used chineseburned's monumental guide) -------------------------- The argument concludes that increasing the sale of sugar abroad will decrease trade deficit for Sacchar. Stated in this way, the argument fails to consider several key factors that are important in evaluating the argument. The argument relies on assumptions for which there is no clear evidence, hence the argument is rather weak and unconvincing.
First, the argument readily assumes that lowering the price of sugar will increase Sachhar's sugar export. This statement is a stretch and there is no evidence provided to support it. Of course, it is stated that sugar is the primary export for Sachhar, but it does not mean that simply reducing price will increase Sachhar's export. For example, reducing the price of sugar could be seen by other countries as a sign of desperation and assume that Sachaar's sugar quality has decreased. also what is if this decrease in sugar price will increase local demand for sugar? then Sachaar will not be able to export as much as it would like. Also the argument does not provide any information how much surplus sugar Sachaar has in it's inventory for export annually. The argument would have been clearer if it provided some information on how decreasing sugar price will increase exports.
Second, the argument claims that lowering the price of sugar will put Sachaar in a better position to compete with sugar-exporting countries. This claim has not legs to stand, as the argument does not provide any evidence For instance, what is if competing countries respond to Sachhar's action by even reducing the price of sugar, then the price of the sugar will decrease further and the sales will not rise. Hence this will decrease Sachaar's sugar export.. Also the argument does not provide any information Sachaar's currnet price advantage relative to other countries. Let us say that if Sachaar's price 5$/lb and other countries are already exporting sugar at 4$/lb, then it does not give any advbantage for Sachaar. If the argument provided data on what is the current global sugar demand and how is Sachaar's current sugar price compare to other sugar exporters, then it would have been a little more stronger
Third, the argument concludes that by increasing price of sugar, Sachaar's sugar export will increase and this in turn will reduce Sachaar's trade deficit. It does not provide any data on How much is Sachaar's current trade deficit and how much is the revenue generated by Sachaar's sugar exports? How is current Sachaar's sugar price fair when compared to other sugar-export countries prices. For instance, Let us say if trade deficits are in billions and sugar export revenues are in million, then even increasing sugar exports by 50% will not make much impact on trade deficit. Also reducing the price has impact on revenue, if Sachaar is not able to sufficiently improve it's export, then it revenue could actually be hurt and the trade deficit will increase. Let us consider that, if sachaan is exporting 1000 million lb at 5$ now, the revenue is $5000 million. and if it reduce the price to 4$/lb and the export has increased by 100 million lb then the revenue will be $4400 only. so there is a deficit in this case. Without convincing answers to all the questions raised above, one is left with the impression that this argument is more of a wishful thinking that the substantial claim.
In conclusion, the argument is weak and seriously flawed based on the above mentioned reasons. It would have been a lot more convincing if it provided all the relevant facts necessay to evaluate the argument. In order to asses the merits and demerits of a situation once has to fully consider all the premised before making any logical conclusion. hence the argument is very weak.