Economist: In 2015, the average per-person amount paid for goods and

Question

Economist: In 2015, the average per-person amount paid for goods and services purchased by consumers in Country X was the equivalent of $17,570 in United States dollars, just 30 percent of the corresponding figure of $58,566 for Country Y. Yet in 2015, there was already a substantial middle class in Country X that had discretionary income for middle-class consumer goods such as new vehicles, computers, or major household appliances, while a significant portion of the middle class in Country Y did not have sufficient income to purchase such items.

Which of the following, if true, most helps explain the discrepancy in the relationships described by the economist?

A. There are many consumer goods, such as household appliances, that are produced in Country X to be sold in the Country Y market.
B. The volume of trade between Country X and Country Y is increasing rapidly in both directions.
C. The economy of Country Y is recovering from a downturn that affected both Country Y and Country X.
D. Country X residents pay much less than their Country Y counterparts for housing, transportation, and child care.
E. In Country Y as well as in Country X, there are few assembly-line jobs in factories that pay a middle-class wage.

CR33061.01
OG2020 NEW QUESTION

VeritasPrepBrian · Accepted Answer

To me what's really important here is the precision in language as to what the two countries spend more/less on (in the first sentence):  goods and services . The seemingly-contradcitory fact is that Country X has a larger middle class to afford  middle-class consumer goods  ("middle-class consumer goods such as new vehicles, computers, or major household appliances") but note that that fact does not say anything about services and only talks about a certain subset of goods! So while the thought is that people in Country X, where there's more of a middle class, should spend more on consumer goods, we don't have anything to say that specifically about services or the full set of goods.

Fact 1: Country Y spends more on average than Country X on  goods and service s
Fact 2: People in Country X have the ability to spend more on  consumer goods

What's missing? How much do they spend on services? On goods that don't fall within "middle-class consumer goods"? Choice D shows that Country Y spends more on services (transportation, childcare) and on housing (which I'm not sure counts as a good or a service, but at the very least helps demonstrate the narrowness of what Country X spends more on).

Importantly: the two facts here are very related but don't talk about the same thing! This kind of precision-in-language is huge: whenever you can note that two parts of a "paradox" are talking about slightly different things, the primary thing you're looking for in the answer choice is a way to explain or bridge that slight gap between those different things.

KarishmaB · Answer

Country X per person amount spent for goods and services was 17k. For country Y, this figure was 58k. (looks like country X is a poor country and country Y is a rich country) Country X middle class had income for consumer goods. Country Y middle class did not have sufficient funds. (then this is unexpected) What can explain this? We can explain it in many ways. 1. The 17k and 58k figures are amount spent per person in the country. The demographic could be different such as equitable distribution of wealth in X but widely varying in country Y (so that very rich spend a lot increasing the national average) 2. Country X middle class earning the same as country Y middle class but leading a very frugal life. 3. Cost of living in country Y could be very high leading to no money left for discretionary spending. Let's look at the options: A. There are many consumer goods, such as household appliances, that are produced in Country X to be sold in the Country Y market. From where the consumer goods come is irrelevant. It is too much of a stretch of imagination to think that country Y will charge very high import duties and hence the cost of these goods will be very high and hence country Y people will not have enough money for them. Besides, country Y middle class has no money for all such consumer goods. Not all goods come from country X. B. The volume of trade between Country X and Country Y is increasing rapidly in both directions. Irrelevant. We need something that distinguishes X from Y. C. The economy of Country Y is recovering from a downturn that affected both Country Y and Country X. Irrelevant. We need something that distinguishes X from Y. D. Country X residents pay much less than their Country Y counterparts for housing, transportation, and child care. This makes sense. It is our cost of living logic. If housing, transportation, and child care costs are much lower in country X, they will have money leftover. E. In Country Y as well as in Country X, there are few assembly-line jobs in factories that pay a middle-class wage. Irrelevant. We need something that distinguishes X from Y. Answer (D) Weaken questions are discussed here: https://youtu.be/EhZ8FKkfy0k

DavidTutorexamPAL · Answer

The comparison is between X, where there is less money paid for goods but the middle class has enough income to pay for the goods, and Y, where more money is paid but the middle class's income is insufficient. Instead of trying to guess a reason (as we have no information on surrounding circumstances), we'll look directly to the answer choices. This is an Alternative approach.

A. this does not explain the relation of income to money paid for goods
B. similarly to (A), this is irrelevant to the argument
C. this could imply that Y is in better shape, but we are told that X is in better shape
D. This directly explains why X residents have sufficient income to buy things. Good choice, let's keep going.
E. again, this does not give a separation between the two countries.

(D) is the only relevant option and is our answer.

Skywalker18 · Answer

Economist: In 2015, the average per-person amount paid for goods and services purchased by consumers in Country X was the equivalent of $17,570 in United States dollars, just 30 percent of the corresponding figure of $58,566 for Country Y. Yet in 2015, there was already a substantial middle class in Country X that had discretionary income for middle-class consumer goods such as new vehicles, computers, or major household appliances, while a significant portion of the middle class in Country Y did not have sufficient income to purchase such items.

Type- paradox
Boil it down-
total salary= amount spent for good and services + discretionary income for middle-class consumer goods + savings

A. There are many consumer goods, such as household appliances, that are produced in Country X to be sold in the Country Y market.- irrelevant
B. The volume of trade between Country X and Country Y is increasing rapidly in both directions.- irrelevant
C. The economy of Country Y is recovering from a downturn that affected both Country Y and Country X.- irrelevant
D. Country X residents pay much less than their Country Y counterparts for housing, transportation, and child care. - Correct, since the amount spent on basics is less in Country X than in Y, so folks in Country X have more $ for middle-class goods
E. In Country Y as well as in Country X, there are few assembly-line jobs in factories that pay a middle-class wage. -irrelevant

Answer D

dcummins · Answer

Not sure if i'm overanalysing this here but I certainly found this tougher than most.

Weird I typically find the questions flagged as hard/ very hard easier than these types of questions...

sayan640 · Answer

Option D states that "Country X residents pay much less than their Country Y counterparts for housing, transportation, and child care."
This explains this fact -> "In 2015, the average per-person amount paid for goods and services purchased by consumers in Country X was the equivalent of $17,570 in United States dollars, just 30 percent of the corresponding figure of $58,566 for Country Y."
 "housing, transportation, and child care" means "goods and services".

Even though people from country X have the ability to spend more , they spend less and that's why the average per-person amount paid for goods and services purchased by consumers in Country X is lesser .
That's why option D is correct.

VeritasKarishma   GMATNinja

unraveled · Answer

This is how i understood the question. Pre-thinking helped me in POE. Initially, I thought the question is somewhat similar(just to understand the argument) to a question which asks about resolving the paradox where per-capita income is discussed. That straight led me to think the question is about, may be, weighted average where top 5% earn too much relative to 95% remaining although this was not helpful. Later i looked for following parameters, chronologically, that might have caused such a paradox: 1. Both Country X and Y have population and per-person amount related inversely(though this was least of help rather it made situation more complex) 2. Cost of living(general expenditure) of Country x is significantly less than Country Y Looking at the options, A, B and E can be eliminated immediately for the reason that they all talk about either irrelevant things(A and B) or things that are going in same direction for both Countries(E). C suggests that possibly Y, because of its path towards economic recovery, has more per-person expenditure but that is not enough to mark it since it does not talk about Country X. E, on the other hand, compares(use of THAN) the two countries. But i was not sure about it. However, i marked it as correct answer . Retrospectively, i think since all four incorrect options were using THAN, looking for comparison or precisely THAN shall help one to decide much faster.

I agree with dcummins since certainly the question is tough and it took me a lot of time to understand.

MHIKER · Answer

Quesiton is Why does the the people of country Y pay more than people of country X pay in 2015, even though the people of country Y less capacity than the people of country X for middle-class consumer goods such as new vehicles, computers, or major household appliances?

The stimulus gives an option that payment may be not only for goods but also for services. 
Option D Says that the people of country Y pay much higher for housing, child care, and transportation than that of country X.

So, D is answer.

A. is out of scope, 
B. Nothing is said about trading between the two countries. 
C. Is related with the cost of services cost. 
E. This also not related with the premise.

MoPouyan · Answer

The key to resolving the discrepancy lies in understanding how the costs of nondiscretionary expenses (essential living expenses) affect the amount of disposable income. If the middle class in Country X spends less on essential expenses, they may have more financial freedom for discretionary spending (non-essential expenses) compared to their counterparts in Country Y, who might be burdened by higher basic living costs.

This would explain why, despite lower overall average spending in Country X, its middle class is still capable of purchasing more discretionary items than the middle class in Country Y.

This would explain why, despite lower overall average spending in Country X, its middle class is still capable of purchasing more discretionary items than the middle class in Country Y.

Economist: In 2015, the average per-person amount paid for goods and

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards

GMAT Critical Reasoning (CR) Questions

Economist: In 2015, the average per-person amount paid for goods and

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards