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Complaints that milk bottlers take enormous markups on the bottled mil

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Complaints that milk bottlers take enormous markups on the bottled mil  [#permalink]

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New post Updated on: 23 Oct 2018, 02:32
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Complaints that milk bottlers take enormous markups on the bottled milk sold to consumers are most likely to arise when least warranted by the actual spread between the price that bottlers pay for raw milk and the price at which they sell bottled milk. The complaints occur when the bottled-milk price rises, yet these price increases most often merely reflect the rising price of the raw milk that bottlers buy from dairy farmers. When the raw-milk price is rising, the bottlers’ markups are actually smallest proportionate to the retail price. When the raw-milk price is falling, however, the markups are greatest.

If all of the statements above are true, which one of the following must also be true on the basis of them?


(A) Consumers pay more for bottled milk when raw-milk prices are falling than when these prices are rising.

(B) Increases in dairy farmers’ cost of producing milk are generally not passed on to consumers.

(C) Milk bottlers take substantially greater markups on bottled milk when its price is low for an extended period than when it is high for an extended period.

(D) Milk bottlers generally do not respond to a decrease in raw-milk prices by straightaway proportionately lowering the price of the bottled milk they sell.

(E) Consumers tend to complain more about the price they pay for bottled milk when dairy farmers are earning their smallest profits.

Originally posted by rohitgoel15 on 14 Jul 2010, 01:59.
Last edited by Bunuel on 23 Oct 2018, 02:32, edited 1 time in total.
Renamed the topic and edited the question.
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Re: Complaints that milk bottlers take enormous markups on the bottled mil  [#permalink]

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New post 14 Jul 2010, 02:37
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Complaints that milk bottlers take enormous markups on the bottled milk sold to consumers are most likely to arise when least warranted by the actual spread between the price that bottlers pay for raw milk and the price at which they sell bottled milk. The complaints occur when the bottled-milk price rises, yet these price increases most often merely reflect the rising price of the raw milk that bottlers buy from dairy farmers. When the raw-milk price is rising, the bottlers’ markups are actually smallest proportionate to the retail price. When the raw-milk price is falling, however, the markups are greatest.
If all of the statements above are true, which one of the following must also be true on the basis of them?
(A) Consumers pay more for bottled milk when raw-milk prices are falling than when these prices are rising. CAn be true. the argument talks about " propotionate to retail price " and not actual price.
(B) Increases in dairy farmers’ cost of producing milk are generally not passed on to consumers. Incorrect. It might be passed on but not propotionately.(C) Milk bottlers take substantially greater markups on bottled milk when its price is low for an extended period than when it is high for an extended period.In correct.Extended period is not being discussed.
(D) Milk bottlers generally do not respond to a decrease in raw-milk prices by straightaway proportionately lowering the price of the bottled milk they sell.Correct,the markups are greatest.
(E) Consumers tend to complain more about the price they pay for bottled milk when dairy farmers are earning their smallest profits. naah
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Re: Complaints that milk bottlers take enormous markups on the bottled mil  [#permalink]

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New post 23 Oct 2018, 02:21
rohitgoel15 wrote:
Complaints that milk bottlers take enormous markups on the bottled milk sold to consumers are most likely to arise when least warranted by the actual spread between the price that bottlers pay for raw milk and the price at which they sell bottled milk. The complaints occur when the bottled-milk price rises, yet these price increases most often merely reflect the rising price of the raw milk that bottlers buy from dairy farmers. When the raw-milk price is rising, the bottlers’ markups are actually smallest proportionate to the retail price. When the raw-milk price is falling, however, the markups are greatest.

If all of the statements above are true, which one of the following must also be true on the basis of them?

(C) Milk bottlers take substantially greater markups on bottled milk when its price is low for an extended period than when it is high for an extended period.

(D) Milk bottlers generally do not respond to a decrease in raw-milk prices by straightaway proportionately lowering the price of the bottled milk they sell.


Can anyone please explain why D, not C is the correct answer?

D-> The argument does not say that the price of bottled milk is NOT reduced when there is a decrease in the raw-milk price. It just says that the markup is greatest at that time. This greatest markup could also be attained by decreasing the price of the bottled milk.
Eq. If the price of bottle milk was $10 for every month in the last year. Every time the price of raw-milk falls from $3 to $1.5 , the price of bottled milk is reduced to $9.5. The highest markup is still achieved even after decreasing the price.
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Re: Complaints that milk bottlers take enormous markups on the bottled mil  [#permalink]

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New post 23 Oct 2018, 02:30
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PriyankaPalit7

C states that bottlers take substantially greater markups on bottled milk when its price (i.e. the price of the bottled milk) is low is low for long periods of time. That's wrong for two reasons:

1. The argument speaks about the relation between bottlers' markups and the price for raw milk, not bottled milk.

2. It doesn't make really make sense logically if bottlers enjoy the greatest markups when the price for their product (bottled milk) is the lowest.
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Re: Complaints that milk bottlers take enormous markups on the bottled mil  [#permalink]

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New post 23 Oct 2018, 08:11
alexkozhura wrote:
PriyankaPalit7

C states that bottlers take substantially greater markups on bottled milk when its price (i.e. the price of the bottled milk) is low is low for long periods of time. That's wrong for two reasons:

1. The argument speaks about the relation between bottlers' markups and the price for raw milk, not bottled milk.

2. It doesn't make really make sense logically if bottlers enjoy the greatest markups when the price for their product (bottled milk) is the lowest.


To further that..........

(C) mentions : markups on bottled milk when its price is low for an extended period than when it is high for an extended period.

Now the issue here is we must be least concerned about the duration of the Markup...

Rather , this is a must be True type question where our Primary focus must be finding out the Assumption and checking it....

We find (D) clearly is the assumption of the Arguement, if we negate this condition, the entire Arguement falls apart, check the condition using this option...

Hence (D) wins over (C)
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Re: Complaints that milk bottlers take enormous markups on the bottled mil &nbs [#permalink] 23 Oct 2018, 08:11
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