Country L used to import wheat from Country S because Country S's pric

Question

Country L used to import wheat from Country S because Country S's price per bale was the cheapest available. When Country S raised its price by 25 percent, however. Country L decided to transfer its business to Country D. which now boasted the best deal available.

Which of the following, if true, would be best supported by the assertions above?

A) The cost to harvest a bale of wheat in Country S increased by 25 percent.

B) If Country S were to lower its price below Country D's price, then Country L would resume its import relationship with Country S.

C) If Country L could somehow reduce the cost of producing domestic wheat by 25 percent. it wouldn't need to rely on any wheat imports.

D) Country S and Country D do not import or export any wheat from each other.

E) If Country D were to increase its price per bale of wheat by 25 percent, then a bale of wheat from Country S would once again be less expensive.

AdityaHongunti · Accepted Answer

Country L used to import wheat from Country S because Country S's price per bale was the cheapest available. When Country S raised its price by 25 percent, however. Country L decided to transfer its business to Country D. which now boasted the best deal available.

Understand :
- L used to import from S . why? price per barrel in S  was least  
- S raised price by 25%.
- L took D now . why? D is  now  the cheapest

Which of the following, if true, would be best supported by the assertions above?
- Inference

Think: Consider - S= 100$ . D= 110 (assuming that there are no other countries)
S was cheapest . Now S =125 .>> D is cheapest now.
If D increases by 25% = 137.5 >> S is cheapest now .

- cost of harvest is not mentioned

- We dont know for sure if L would resume. All we can say is S would be cheaper than D

-Out of scope. L production is not mentioned

-They may import or export. In the end the final markup solely depends on the respective countries.

- Current situation :S= 125 D=110 . >> D increased by 25%= 137.5 .>> S is cheaper now.

why E over B ? B suggests that the trade would once again resume. We cannot say for sure how the relations between L and D would turn out. SO B is a tad stretched to be true.

KarishmaB · Answer

Country S had cheapest wheat so L used to import. Say S charged $100/bale. 
When S raised it by 25% to $125/bale, country D became the best option (so D must be charging more than $100 but less than $125). So L starting buying from D.

A) The cost to harvest a bale of wheat in Country S increased by 25 percent.

We don't know anything about cost to harvest. We know that final price of a bale increased by 25%.

B) If Country S were to lower its price below Country D's price, then Country L would resume its import relationship with Country S.

We don't know. This is not supported by the argument and is just conjecture.

C) If Country L could somehow reduce the cost of producing domestic wheat by 25 percent. it wouldn't need to rely on any wheat imports.

We don't know why L relies on imported wheat. It may have nothing to do with cost. Perhaps it doesn't have infra to produce enough wheat.

D) Country S and Country D do not import or export any wheat from each other.

No idea about this. We only know from where L imports wheat. 
D could have been importing from S previously and S could be importing from D now. Also, price may not be the only factor to be considered for S and D imports/exports.

E) If Country D were to increase its price per bale of wheat by 25 percent, then a bale of wheat from Country S would once again be less expensive.

Correct. Country S's price now is $125/bale.
Country D's price is more than $100 but less than $125. So if it increases its price by 25%, its price will certainly become more than $125/bale (Even if D's price is $101, a 25% increase will make it $126.25/bale). So country S's wheat will become cheaper again.

Answer (E)

Cbirole · Answer

I think it is D
My reasoning:
A- we are not concerned with the cost of harvest
B- it's a hypothetical situation which is in future and cannot be considered as Assumption
C- Same as B
D- Since we are assuming that there is no transaction between S and D, costs in D will not be affected by S's increase and hence L is having great deal from D. Negation of this affects the conclusion
E- Hypothetical

Please share OA and OE

Sid0403 · Answer

I think E is the Answer.

Use numbers to get the answer. Because we are dealing with percentage, we can use numbers. Let us assume that price in country S is 100 and it has risen to 125 now. Hypothetically the price in country D must be between 100 and 125 as it has the best deal now. Now,if we reduce the country S's price by 25% then it will again have the best deal available for county L.

hope this helps.

rahul6019 · Answer

E over B as B is hypothetical and cannot be proven to be ALWAYS TRUE but E will definitely be true.

sv9 · Answer

Hello  VeritasKarishma ,

Why is D incorrect? As, if the both countries had trades with each other, price increase in S would affect D and thereby affecting L.

And how is E correct?

Thank you

chaitnya10 · Answer

E is the answer. As the contract goes back , it has to be the cheapest.

SatvikVedala · Answer

As per the Question Statement, Initially S<D

But, 1.25*S>D

if D is also multiplied by 1.25

Then Obviously 1.25*S<1.25*D

ArchitS25 · Answer

The prompt only says that after S increased its price by 25% D was the cheapest. Why do we assume that price in D remained the same? I thought it might be possible that D reduced its price by 25% and so E may not be inferable. Is there a flaw in my reasoning?

KarishmaB · Answer

The stimulus says that S increased its price by 25% and that is why D became more affordable. This means that D's price before the 25% increase of S was more than the price of S. After S increased its price by 25%, D's price was lower than S's new price. There is no mention of D changing its price. The implication is clearly that after S increased its price, D's price turned out to be lowest.

So if S's cost was $5, D's was say $6. When S increased its cost by 25% and made it $6.25, D's $6 became cheaper.

ArchitS25 · Answer

Thank you so much for the reply! Does this mean that for CR if nothing is said then it is to be assumed that nothing has changed? I approached such problems thinking if nothing has said in the prompt then it means that anything may have happened

Country L used to import wheat from Country S because Country S's pric

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