Last visit was: 21 Jul 2024, 09:15 It is currently 21 Jul 2024, 09:15
Toolkit
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

# Economist: Paying extra for fair-trade coffee—coffee labeled with the

SORT BY:
Tags:
Show Tags
Hide Tags
Current Student
Joined: 14 Nov 2016
Posts: 1171
Own Kudos [?]: 20977 [287]
Given Kudos: 926
Location: Malaysia
Concentration: General Management, Strategy
GMAT 1: 750 Q51 V40 (Online)
GPA: 3.53
Tutor
Joined: 21 Jun 2017
Posts: 21
Own Kudos [?]: 101 [50]
Given Kudos: 4
Manager
Joined: 21 Dec 2014
Posts: 58
Own Kudos [?]: 272 [18]
Given Kudos: 51
Concentration: Entrepreneurship, General Management
Schools: Olin '21 (A\$)
GMAT 1: 710 Q49 V37
GPA: 3.8
WE:Supply Chain Management (Retail)
GMAT Club Legend
Joined: 03 Oct 2013
Affiliations: CrackVerbal
Posts: 4918
Own Kudos [?]: 7807 [8]
Given Kudos: 221
Location: India
Re: Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
4
Kudos
4
Bookmarks
Top Contributor
Premises- Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow.

Economist’s conclusion- But this practice may hurt more farmers in developing nations than it helps.

Why?- By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.

We need to find an option that helps us evaluate the economist’s argument that the practice of paying extra for fair-trade coffee will harm rather than help the farmers.

(A) Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers' profits
A talks about what happens later. We need to evaluate whether the conclusion is sound or not. Eliminate

(B) What proportion of coffee farmers in developing nations produce fair-trade coffee
This helps us determine the strength of the economist’s conclusion. If the proportion of coffee farmers in developing nations who produce fair-trade coffee is low then the conclusion is strong because it will affect the larger majority who do not produce fair-trade coffee. But if the proportion is high, then the argument is not strong because more farmers will benefit. Option B helps us evaluate the strength of the argument. Correct.

(C) Whether many coffee farmers in developing nations also derive income from other kinds of farming
Whether farmers also derive income from other kinds of farming is irrelevant to determine the strength of the argument. Eliminate.

(D) Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmers
Irrelevant. Eliminate.

(E) How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmers
We need to determine whether paying extra for fair-trade coffee will harm the farmers. Option E does not help us determine that. Eliminate.

Vishnupriya
GMAT Verbal SME
General Discussion
Current Student
Joined: 18 Aug 2016
Posts: 531
Own Kudos [?]: 587 [2]
Given Kudos: 198
Concentration: Strategy, Technology
GMAT 1: 630 Q47 V29
GMAT 2: 740 Q51 V38
Re: Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
2
Kudos
hazelnut wrote:
The Official Guide for GMAT Verbal Review 2018

Practice Question
Question No.: CR162
Page: 147

Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helpes. By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.

To evaluate the strength of the economist's argument, it would be the most helpful to know which of the following?

(A) Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers' profits
(B) What proportion of coffee farmers in developing nations produce fair-trade coffee
(C) Whether many coffee farmers in developing nations also derive income from other kinds of farming
(D) Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmers
(E) How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmers

Note : Official answer will be provided once GMAT Official Guide 2018 Verbal Review released.

(B) What proportion of coffee farmers in developing nations produce fair-trade coffee
If the non-fair-trade coffee farmers are 0.0001% of the other part (fair-trade coffee farmers)

Hence (B)
Retired Moderator
Joined: 08 Dec 2013
Status:Greatness begins beyond your comfort zone
Posts: 2093
Own Kudos [?]: 8988 [6]
Given Kudos: 171
Location: India
Concentration: General Management, Strategy
GPA: 3.2
WE:Information Technology (Consulting)
Re: Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
6
Kudos
Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helpes. By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.

Type- evaluate
Boil it down – Fair trade benefits farmers as they receive higher prices, but it does hurt non-fair trade farmers .
Pre-thinking – Proportion of farmers in developing countries who produce fair- trade coffee to non-fair trade

(B) What proportion of coffee farmers in developing nations produce fair-trade coffee - Correct
Manager
Joined: 21 Nov 2016
Posts: 77
Own Kudos [?]: 71 [2]
Given Kudos: 405
GMAT 1: 640 Q47 V31
Re: Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
1
Kudos
1
Bookmarks
A this otion asks the question which seems genaralised..
B the proportionate value of fair trade and non fairtrade coffee has to be known before arriving at the conclusion of the argument hence CORRECT.
C irrelavant as we are only concerned about faming of coffee and other kinds of farming is redundant here.
D A mere restatement of the question here... (disclaimer: if this question was of the EXCEPT kind.. then this will be the correct answer)
E Once again a generalised question similar to A ...
Hencce the correct answer is B
Intern
Joined: 18 Jul 2017
Posts: 11
Own Kudos [?]: 60 [4]
Given Kudos: 46
Re: Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
1
Kudos
2
Bookmarks
the same question, why A is wrong.

At first, I chose B and then I was thinking that A seemed reasonable. And I changed my idea...
Senior Manager
Joined: 06 Jul 2016
Posts: 277
Own Kudos [?]: 378 [1]
Given Kudos: 99
Location: Singapore
Concentration: Strategy, Finance
Re: Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
1
Kudos
hazelnut wrote:
Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helps. Why would it only hurt farmers in developing nations? Is there an assumption that majority farmers in developing nations grow non-fair trade coffee?
By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.

The economist has basically assumed that most farmers in developing nations grow non-fair trade coffee, and increasing the price for fair trade coffee will hurt their profits. So we should figure out the split between farmers that grow fair-trade Vs. non-fair trade coffee.

To evaluate the strength of the economist's argument, it would be the most helpful to know which of the following?

Quote:
(A) Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers' profits
(C) Whether many coffee farmers in developing nations also derive income from other kinds of farming
(D) Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmers

These 3 are irrelevant to the the argument stated by the economist. For e.g. (D) is good as a debate in real life, but in the case of this argument, it makes little sense to evaluate if the consumer should pay extra or not, and it certainly doesn't tie in with the economist's assumption.
All 3 of them are OUT.

Quote:
(E) How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmers
In my opinion, this doesn't not help address the economist's argument in any way. This is actually stating we look for an alternative strategy to help fair-trader farmers without hurting non-fair trade farmers. And this seem to be edging a little out of bounds for this argument.

Quote:
(B) What proportion of coffee farmers in developing nations produce fair-trade coffee

This will exactly help us evaluate the economist's argument. If the majority of farmers produce fair-trade coffee in developing nations, then the price increase should help them.

B is the answer.
Intern
Joined: 11 Sep 2016
Posts: 3
Own Kudos [?]: 3 [0]
Given Kudos: 10
Re: Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
Even if the proportion is known, won't the profits of non-fair trade coffee farmers get affected?
Current Student
Joined: 18 Jan 2017
Posts: 66
Own Kudos [?]: 226 [7]
Given Kudos: 378
Location: India
Concentration: Finance, Economics
GMAT 1: 700 Q50 V34
Re: Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
7
Kudos
If you deconstruct the argument into its premises (P), counter premise (CP) and conclusion (C) you get the following
CP: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow.
C (Author's Main Conclusion): But this practice may hurt more farmers in developing nations than it helps.
P: By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy.
P: This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.

To evaluate the strength of the economist's argument, We need to verify the conclusion i.e. whether this practices hurts more farmers in developing countries than it helps

This is indicated in the correct answer B
(B) What proportion of coffee farmers in developing nations produce fair-trade coffee- If fewer farmers produce fair trade coffee, then it does not hurt "more" farmers than it helps

The other choices do not focus on the "How Many" (More or Less) aspect from this practice
(A) Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers' profits- Even if there was no way to help them, it does not address the conclusion "whether more farmers are affected or not"
(C) Whether many coffee farmers in developing nations also derive income from other kinds of farming- does not focus on the practice in question, while other options might alleviate any negative impact on their income but it does not evaluate the how many are affected by this practice.
(D) Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmers- again does not address the conclusion
(E) How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmers- focusing on how they could be helped otherwise does not evaluate whether the practice is helpful or not

Hope this helps!
Intern
Joined: 20 Sep 2015
Posts: 13
Own Kudos [?]: 11 [2]
Given Kudos: 46
Location: India
GMAT 1: 700 Q48 V37
Re: Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
2
Kudos
abhishekaqsais wrote:
Even if the proportion is known, won't the profits of non-fair trade coffee farmers get affected?

Not necessarily.

In Choice B we get to know the proportion of fair-trade and non fair-trade coffee. Let's take a few cases to understand.

CASE 1:
Fair Trade Coffee: 1%; Non Fair Trade Coffee: 99%
The higher priced Fair Trade Coffee has such low volume that it won't affect prices of Non Fair Trade Coffee. Hence profits for non-fair-trade coffee farmers aren't lowered and argument is weakened.

CASE 2:

Fair Trade Coffee: 60%; Non Fair Trade Coffee: 40%
The higher priced Fair Trade Coffee has decent volume and will affect prices of Non Fair Trade Coffee. Hence profits for non-fair-trade coffee farmers are lowered and argument is strengthened.
Manager
Joined: 03 May 2017
Posts: 61
Own Kudos [?]: 55 [3]
Given Kudos: 15
Re: Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
2
Kudos
1
Bookmarks
hazelnut wrote:
The Official Guide for GMAT Verbal Review 2018

Practice Question
Question No.: CR162
Page: 147

Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helps. By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.

To evaluate the strength of the economist's argument, it would be the most helpful to know which of the following?

(A) Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers' profits

(B) What proportion of coffee farmers in developing nations produce fair-trade coffee

(C) Whether many coffee farmers in developing nations also derive income from other kinds of farming

(D) Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmers

(E) How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmers

Of all the options, only B says something related to both fair trade and non-fair trade production. Notice the prompt mentions that one group of farmers may be hurt by the action of the other group of farmers. In order to evaluate the strength of this argument, one simply needs the proportion of one group to another.

Options A, D, E are wrong as they offer recommendations/solutions to solve the problem and not evaluations, leading words are whether and should/could. Option C, on the other hand, is simply out of scope.

Answer is obviously B
Intern
Joined: 09 Aug 2017
Posts: 17
Own Kudos [?]: 9 [2]
Given Kudos: 17
Location: India
GMAT 1: 700 Q49 V37
GPA: 3.71
Re: Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
2
Kudos
To those who are confused with A: Option A already assumes that the conclusion is valid. Whereas our purpose here is to evaluate the argument.
Retired Moderator
Joined: 23 Sep 2015
Posts: 1258
Own Kudos [?]: 5693 [3]
Given Kudos: 416
Re: Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
2
Kudos
1
Bookmarks
XYZABCABC - Most replies are really helpful, but here a helpful compilation for you. hope it will be helpful.

Premise:
1. So there are two type of coffee in question - fair-trade(Brand name) and other. Fair trade coffee has higher price. The higher price goes in poor farmer's hands. Noble cause indeed.
2. But this practice may hurt more farmers in developing nations than it helps. How? By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.

Pre-think:
We need to evaluate the argument of economist. So what option is on the lines of hurting farmers by lowering profit. Basically how this practice is hurting farmers ? Best thing is look into this process, How this process is really doing what it says to does. how it is hurting farmers. So price will rise when supply is too much then demand. many farmers are growing coffee.

To evaluate the strength of the economist's argument, it would be the most helpful to know which of the following?

(A) Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers' profits ---- Even if there is we are looking for this strategy and its impacts.

(B) What proportion of coffee farmers in developing nations produce fair-trade coffee --- if high number of farmer are growing coffee it is going to impact supply and so does the price. but if few farmers are growing raising price will not impact supply and so does not hurt price. correct answer

(C) Whether many coffee farmers in developing nations also derive income from other kinds of farming --- even if he does will it impact price/supply. No

(D) Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmers --- that is a moral issue not significant for out price/supply situation.

(E) How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmers --- even if they can be helped it will not do much for our situation of supply/price.

B is best answer.
Intern
Joined: 22 Sep 2018
Posts: 47
Own Kudos [?]: 47 [0]
Given Kudos: 44
Re: Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
So, this is how I interpreted the question.
the argument the practice of by paying extra for fair-trade coffee hurts farmers in general right. And we need to decide which is helpful to evaluate the economists argument by looking for reasons that would be helpful to determine whether paying extra for fair-trade coffee hurts farmers.

Hence I chose option A as the answer.
I am not able to understand why option B helps in evaluating the argument. Please help to shed some light on this! thank you.
Manager
Joined: 05 Oct 2017
Posts: 90
Own Kudos [?]: 41 [2]
Given Kudos: 103
Location: India
GMAT 1: 710 Q50 V35
Re: Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
2
Kudos
Leonaann wrote:
So, this is how I interpreted the question.
the argument the practice of by paying extra for fair-trade coffee hurts farmers in general right. And we need to decide which is helpful to evaluate the economists argument by looking for reasons that would be helpful to determine whether paying extra for fair-trade coffee hurts farmers.

Hence I chose option A as the answer.
I am not able to understand why option B helps in evaluating the argument. Please help to shed some light on this! thank you.

Hi,

The last line of the passage suggests that this practice of paying more to fair-trade-marked coffee is hurting rather than helping to non-fair trade farmers.
So, in order to strengthen the economist's point i.e, the prices are lower for non-trade farmers, it is necessary to evaluate what is the percentage of non-fair to fair trade farmers in developing nations.
Simple first thought that should ocme to your mind if, if price for non-trade is lowering +> the quantity for non-trade coffee is more => the number of non-fair trade coffee farmers is possibly high.
Thus, we need to know the percentage of fair-trade and non-fair trade coffee farmers in developing nations. Choice (B) is correct.
Choice (A) focuses on ways to increase the price of non-fair trade coffee. It does not help in strengthen the conclusion of economist which is why is it hurting than helping the farmers.

Hope this helps.

Posted from my mobile device
Manager
Joined: 27 Nov 2015
Posts: 87
Own Kudos [?]: 39 [0]
Given Kudos: 325
Re: Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
not sure why a is incorrect - can i get some help please
GMAT Club Verbal Expert
Joined: 13 Aug 2009
Status: GMAT/GRE/LSAT tutors
Posts: 6990
Own Kudos [?]: 64549 [15]
Given Kudos: 1823
Location: United States (CO)
GMAT 1: 780 Q51 V46
GMAT 2: 800 Q51 V51
GRE 1: Q170 V170

GRE 2: Q170 V170
Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
10
Kudos
5
Bookmarks
rnn wrote:
not sure why a is incorrect - can i get some help please

SarahPurewal said it succinctly here, but I'm happy to give this more of a deep dive!

Remember that the conclusion here is:

SarahPurewal wrote:
this practice (paying extra for fair-trade coffee) may hurt more farmers in developing nations than it helps.

Heres how the argument breaks down:

Paying extra for fair-trade coffee raises average prices for coffee (including fair-trade and non-fair trade).
The rise in average prices for coffee encourages more coffee to be produced.
The increase in coffee production lowers prices for non-fair-trade coffee.
The lower prices for non-fair-trade coffee lowers profits for non-fair-trade coffee farmers.
Therefore, paying extra for fair-trade coffee may hurt more farmers in developing nations than it helps.

Notice that the author is making a logical leap between those last two steps. The author describes an impact on non-fair-trade farmers, then concludes that more farmers, in general, may by hurt than helped.

So to evaluate the strength of this argument, it would be certainly help us to know what proportion of coffee farmers in developing nations produce fair-trade coffee (or could beneficially switch from producing non-fair-trade coffee to fair-trade coffee). This is why we keep choice (B); it would help us decide whether to accept the logical leap that the author is making from non-fair-trade farmers to farmers, in general.

Now, let's take a closer look at choice (A):

Quote:
(A) Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers' profits

And for good measure, let's refresh on the conclusion we're trying to evaluate:

Quote:
this practice (paying extra for fair-trade coffee) may hurt more farmers in developing nations than it helps.

The information in choice (A) refers to action taking place after non-fair-trade farmers' profits have already been reduced by the practice of paying extra for fair-trade coffee. Is this what we're being asked to evaluate?

Nope. While it would be nice to know whether there's a way to help negatively impacted farmers, this information has absolutely nothing to do with the specific logical argument being made by the author: That paying extra for fair-trade coffee may cause harm to more coffee farmers in developing nations than it helps. Even worse, choice (A) remains focused on non-fair-trade farmers, which means we still have no information to evaluate impact on farmers overall.

We're not being asked to evaluate how the impact of increased average prices could be alleviated, and we're not being asked to evaluate an argument that's only about non-fair-trade farmers. That's why we eliminate (A) and stick with (B).

I hope this helps!
Director
Joined: 03 Mar 2017
Posts: 583
Own Kudos [?]: 420 [0]
Given Kudos: 596
Location: India
Concentration: Operations, Technology
Re: Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
AndrewN VeritasKarishma GMATNinja generis

Quote:
(C) Whether many coffee farmers in developing nations also derive income from other kinds of farming

Quote:
I was left to choose between B and C at the end. When I saw MANY keyword in option C, I thought:--

1. If many farmers are deriving incomes from other kinds of farming, the lower profit from coffee will NOT HURT them.
2. If not many farmers are deriving incomes from other kinds of farming, the lower profit from coffee will HURT them.

We get a YES/NO and keeping this in mind I marked C.
Re: Economist: Paying extra for fair-trade coffee—coffee labeled with the [#permalink]
1   2   3
Moderators:
GMAT Club Verbal Expert
6990 posts
GMAT Club Verbal Expert
236 posts
CR Forum Moderator
824 posts