Exporters in Country X are facing lower revenues due to a shortage of

Question

Exporters in Country X are facing lower revenues due to a shortage of the large metal shipping containers in which they send their goods by sea to other countries. Fewer containers arrive in Country X due to reductions in imports. This has meant lost orders, costly delays, and a scramble for alternatives, such as air freight, all of which are costlier. Moreover, the revenues of exporters in Country X will probably continue to decline in the near future. This is because other countries are likely to find it increasingly unprofitable to export their goods to Country X, and because __________.

Which of the following would most logically complete the passage?

A. production of shipping containers in Country X is growing rapidly as a response to the shortage
B. shipping companies are willing to move containers from country to country only when the containers are full
C. the cost of shipping alternatives such as air freight is likely to stabilize in the near future
D. consumers in Country X are purchasing more products than ever before
E. the worldwide demand for goods made in Country X has only recently begun to rise after a long decline

CR49551.01
OG2020 NEW QUESTION

jawele · Accepted Answer

I couldn't come up with a reason why would B strengthen the argument until I read the passage slowly once again: " <...> This has meant lost orders, costly delays, and a scramble for alternatives, such as air freight, all of which are costlier. <...>". This small portion provides a subtle little fact that B capitalizes on. If containers can't leave until they're full and if you can't fill the container quickly, the container won't move for an extended time. Thus the turnover of the containers drop and so do the exporter's revenues.

Hope this helps

DavidTutorexamPAL · Answer

Simplifying the passage gives 'there is a shortage of containers in the country and fewer containers arrive in the country, which causes problems and loss of revenue. Revenue loss (of exporters) will continue because shipping to X is unprofitable and ___.' So we need an additional reason that the revenue will continue to drop. As there are many potential reasons, instead of trying to infer one on our own we'll go through the options. This is an Alternative approach

A. this would have an opposite effect as it creates more business
B. if other countries do not ship containers to X, then shipping companies do not arrive at X and so cannot take containers from it. This works, let's check the others.
C. if the air freight stabilizes it would have the opposite effect by providing an alternative to containers
D. this could indicate that there is less of a need to export and therefore exporters revenues are falling, so is an option. As (B) directly continues the statement before it, and as (D) requires us to assume that the increased consumption comes at the expense of products for export, it is weaker.
E. if demand is increasing, why would revenues fall?

(B) is our strongest choice.

adkikani · Answer

DavidTutorexamPAL   chetan2u   generis   VeritasKarishma

Am I correct in below PoE?

Exporters of X are facing issues of lower revenues and SHALL CONTINUE to
face this problem since all alternatives to address the issue are costlier.

We need a reason that will say that this decline in revenue will continue 
in future because:
1. Countries that ship containers to X are not able to EXPORT more
ie REVENUE of X will remain lower in future 
and 
2...

Correct cycle is: Revenue-> Sales (Internal) -> Export remaining containers
We need to address Step 1 (i.e. loss of revenue by suggesting loss of revenue) and hence this option is incorrect
since it addresses step 2.

DavidTutorexamPAL · Answer

Hey  adkikani ,

As I see it, the POE for (D) is a bit more towards:

The last sentence of the passage can be broken down to:
The revenues of *exporters of X* will continue to decline because:
1. other countries will not export to X
2. __

The first 'reason' given is not a reason at all: without making all sorts of assumptions about how other countries' exports to X affect the revenues of exporters in X, we cannot fill in the logic. Put differently, why would 'other countries don't ship X stuff' prevent 'companies in X can't ship stuff'?
Even if the model you suggest above works, it is not based on anything in the passage (as far as I can see). In general, adding our own assumptions and models to the given data is very dangerous (but very tempting!) and should be avoided whenever possible.

This is one reason to go for (B), as it directly fills in the missing logic between the 'first reason' and the given claim. ( (B) requires making assumptions too, but these are much smaller. e.g. the chain of logic 'less companies want to export to X' causes 'less full shipping containers' is not actually stated but is almost immediate and is therefore a less dangerous assumption to make).

Additionally, when we analyze (D), we have the same 'missing information' problem:
What is the link between 'consumers are purchasing more' to 'exporters are shipping less'? We can of course invent a model, such as that an increase in local sales means there is less left over to export, but this requires assumptions such as 'items exported are also sold internally' or 'only leftovers are exported' or somesuch which are entirely non-trivial.

So (D) is overall a weaker answer than (B): (D) leaves the link between 'other countries will not export to X' and the conclusion hanging, and it requires we make additional (non-trivial) assumptions.

Makes sense?

apple0073603 · Answer

I passed B because B says "only when containers are full", and nowhere in the passage tells whether the containers are full. I am stucked here. pls help me with it. Thanks!

DavidTutorexamPAL · Answer

Hey  apple0073603 ,

You are right that this isn't an extremely 'clean' GMAT question. In other words, the correct answer is a bit problematic, mainly for the reason that you state.
However, of the available answers it is strongest and so is the correct choice.
See above for a discussion of why (B) is better than (D). (All other options are much easier to eliminate)

nuroahdfj567 · Answer

GMATNinja  I am not able to understand how B completes the passage logically. Please help.

Shipping companies must be moving containers only when full in the already existing shortage situation as well. How does this fact help support the conclusion that revenues will  decline further  in future?

khan0210 · Answer

It is not a strengthening question. It's a complete the passage type of question. If you look at the answers all answer how the country will gain revenue, except for B. The passage states, less shipping containers are coming to Country X and thus there are costly delays. The only answer that most directly addresses the shipping delay is containers waiting to set sail till they are full.This would exacerbate the lower revenue situation, because less countries would be willing to wait on full containers, to send goods to Country X.

GMATNinja · Answer

Great analysis,  khan0210 ! You're right -- using POE, none of the other answer choices explain why revenues of exporters in Country X will "probably continue to decline."

The question asks which answer choice would " most  logically complete the passage." So, we are not searching for an air-tight solution that absolutely WILL cause the revenue of Country X exporters to decline. It is enough to show that (B) completes the passage more logically than the other answer choices.

I hope that helps!

KarishmaB · Answer

Exporters facing lower revenues due to shortage of containers. 
This leads to lost orders, costly delays, air freight, all of which are costlier.
Future:
Other countries are likely to find it increasingly unprofitable to export their goods to Country X
and ....

Conclusion: The revenues of exporters in Country X will probably continue to decline in the near future.

We need another reason why we think the exporters will continue to see trouble in future.

A. production of shipping containers in Country X is growing rapidly as a response to the shortage

This is good for the exporters. Not the answer.

B. shipping companies are willing to move containers from country to country only when the containers are full

This is a hassle for exporters and importers. If there are restrictions on when the containers will be moved from country to country, it will decrease the availability of containers. So exporters will face problems. Hence this can be the second reason why revenue of exporters could be expected to decrease in future.

C. the cost of shipping alternatives such as air freight is likely to stabilize in the near future

Good for exporters. Not the answer.

D. consumers in Country X are purchasing more products than ever before

Irrelevant.

E. the worldwide demand for goods made in Country X has only recently begun to rise after a long decline

Good for exporters. Not the answer.

Answer (B)

gmatconqueror2018 · Answer

I have an issue with this question particularly choice C. If the cost of other shipping alternatives stabilizes, it implies the higher cost shipping alternatives will NOT decrease in price and therefore shows why Country X's revenues would decrease further since the passage implies these other methods are costlier. I really do not understand the logic of choice B. Nowhere does the passage mention anything about the capacity of containers and shipment. Thoughts would be appreciated.

khan0210 · Answer

I am no expert, but I think the "complete the passage" is looking for a weakener and C is a strengthening statement.

Premise: 
Limited availability of "large" shipping containers is slowing down/decreasing revenue for sellers (exporters) in Country X.

Cause:
Country X is not importing as much as before. Ships carry goods from Country X to other countries on the same shipping containers that bring goods from other countries to country X. Because fewer ships are bringing in goods to Country X, fewer ships are transporting out goods from Country X.

Effect: 
Country X has been losing customers that buy its goods; therefore lower revenue. Due to the lack of shipping containers, exporters in country X have lost orders (from customers); exporters probably had to compensate their customers for shipment delays; exporters had to use costlier alternatives, like air freight to fulfill customer orders (this increases operational costs that will lower revenue).

Part 2

Effect: 
Country X will receive fewer imports from other countries leading to further decline in revenue.

Why will other countries sell less goods to Country X?

Cause:
Other countries are finding that selling goods to Country X is not profitable. A lack of frequent shipping containers is increasing operational costs, so more sellers in other countries are perhaps resorting to air freight to transport their goods to country X. Due to a lack of shipping containers, Country X now will have trouble exporting cost effectively, so operational costs will increase through alternatives like air freight, or exporters may not sell goods to other countries as the cost of transportation will not make the trade profitable (thus, lower revenue).

Given the above, the passage wants a reason that will support why country X will "lose revenue".

Option C states that the cost of shipping alternatives "may" stabilize in the future. This means shipping alternatives will become cost effective. If air freight becomes as affordable as shipping, then country X will NOT lose revenue as exporters can ship products more frequently.

This is a strengthener, not a weakener.

Option B states that shipping companies will move containers only when full. Remember, the first sentence of the premise states "shortage of large metal containers". Therefore, if sellers in other countries will be affected by the delay of the shipping companies waiting to fill containers, either they will not want to sell to Country X or they will use a shipping alternative. This will result in these large shipping containers arriving less frequently to Country X. If fewer ships are arriving to Country X, then fewer exports are departing Country X by large metal containers. And, if exporters in country X have to wait for full containers to depart then they will face lost orders, costly delays or costlier alternatives. The outcome of this chain reaction, is lower revenue.

Hope this helps.

GMATNinja · Answer

Currently, exporters in Country X are resorting to the "costlier" alternative of air freight, causing lower revenues.

The correct answer choice should provide a reason that revenues will "probably  continue to decline  in the near future." For (C) to fill this role, we would need to assume that prices for air freight stabilize at cost  higher  than the current cost, causing exporters' revenues to decline further. There is simply no evidence on which we could base this assumption -- if anything, the passage implies that air freight is currently at a high price, so if prices were to "stabilize" they would likely be at a  lower  rate.

We cannot say that the "stabilized" costs would be higher than they currently are, so (C) does not provide a good reason that exporters' revenue will continue to decline.

For an explanation of why B logically completes the passage please see  this  post by  VeritasKarishma , and for a closer examination of the question please see  this  post.

I hope that helps!

IloveMBA123 · Answer

Economic theory said that when import > export, the value of that currency will appreciate, making it export goods expensive. WHen the export foods become more expensive then the revenue will drop. WHy is B a correct answer? I can move the containers from country A to BCDEFGHIJK when full but that doesnt explain the expected decline in revenue, i can even more the full containers to Mars

egmat · Answer

Situation:

Exporters in Country X are finding that there is an insufficient number of shipping containers for them to use for their exports, because the number of such containers arriving in Country X has declined because of reduced imports. Also, alternative methods of shipping are relatively costly. Furthermore, other countries will likely find shipping goods to Country X to be less and less profitable.

Reasoning:

What would most support the prediction that Country X's exporters' revenues will likely see further declines in revenue in the near future? If the number of shipping containers available to exporters is likely to decrease, then the prediction would have further support. We know that other countries exporting to Country X will find it increasingly unprofitable, so there is reason to believe their exports will decline further—meaning there will be fewer imports into Country X, which means fewer shipping containers arriving in Country X carrying imported goods, unless the shipping containers shipped in the future are less full than when they are shipped now. If shipping companies are willing to move such containers to another country only when the containers are full, then that will not occur.

Option A -  If production of shipping containers in Country X were rapidly increasing, then the reason given for the decline in revenue for exporters in Country X—that there is an insufficient number of shipping containers—would be undermined, and so therefore would be the conclusion.

Option B -  If shipping companies are unwilling to move containers from country to country unless the containers are full, then, given Country X's decline in imports, there will likely be fewer shipping containers available to Country X's exporters, which provides support for the claim that their revenues will likely decline.

Option C -  If the cost of shipping alternatives such as air freight is likely to stabilize, then those alternative methods of shipping might become economically viable, which would undermine rather than support the conclusion

Option D -  The fact that consumers in Country X are purchasing more goods than ever before does not affect how much revenue is generated by exporting goods from Country X.

Option E -  If there is increased demand for goods from Country X, then the price of such goods might increase sufficiently to make alternative methods of shipping economically viable, which would undermine rather than support the conclusion.

CEdward · Answer

Exporters in Country X are facing lower revenues due to a shortage of the large metal shipping containers in which they send their goods by sea to other countries. Fewer containers arrive in Country X due to reductions in imports. This has meant lost orders, costly delays, and a scramble for alternatives, such as air freight, all of which are costlier. Moreover, the revenues of exporters in Country X will probably continue to decline in the near future. This is because other countries are likely to find it increasingly unprofitable to export their goods to Country X, and because __________.

Which of the following would most logically complete the passage?

A. production of shipping containers in Country X is growing rapidly as a response to the shortage X
-goes in the opposite direction of the passage…the prediction is that revenues of exporters will continue to DECLINE…so if more shipping containers are being produced then that gives us more reason to believe that revenues will INCREASE

B. shipping companies are willing to move containers from country to country only when the containers are full 
-Correct…imagine the associated delays…this might disincentivize people from buying from Country X

C. the cost of shipping alternatives such as air freight is likely to stabilize in the near future X
-well this might mean cost savings…but in any case it does not explain why revenues will probably decline

D. consumers in Country X are purchasing more products than ever before X
-the thinking here is perhaps that if people are buying more products than ever before, then that potentially means the exporters are bringing in more goods…and hence their revenue would be higher. But that’s not the direction we are going for

E. the worldwide demand for goods made in Country X has only recently begun to rise after a long decline X
-again, this goes in the opposite direction

ArnauG · Answer

To complete the passage and logically explain why the revenues of exporters in Country X will likely continue to decline in the near future, we need to identify a factor that contributes to the unprofitability of exporting goods to Country X.

Option (B) provides the most logical completion. It states that shipping companies are willing to move containers from country to country only when the containers are full. This implies that if the demand for goods from Country X decreases, resulting in fewer goods to fill the containers, shipping companies will be less inclined to transport partially filled containers to Country X. As a result, exporters in Country X will face even greater challenges in obtaining the necessary shipping containers for their goods, leading to further revenue declines.

Option (A) is unrelated to the unprofitability of exporting goods to Country X and the decline in revenues. Option (C) suggests that the cost of shipping alternatives such as air freight may stabilize, but it does not directly address the decline in revenues. Option (D) mentions increased consumer purchases but does not explain why revenues will continue to decline. Option (E) discusses the worldwide demand for goods made in Country X, but it does not offer a direct explanation for the decline in revenues.

Therefore, option (B) is the most suitable choice as it provides a logical explanation for the unprofitability of exporting goods to Country X and the expected decline in revenues for exporters.

kpop1234567890 · Answer

MartyMurray  Honestly despite reading answers still lost why B is correct and D is not. Another streak breaker:( Any simpler way to understand?
Also what Q type will this be in filling the blanks?

MartyMurray · Answer

This is basically a Strengthen question since, as indicated partially by the presence of "because," the statement that fills the blank must provide support for the following conclusion:

the revenues of exporters in Country X will probably continue to decline in the near future

So, the correct answer will support that conclusion.

Let's consider (D) with that idea in mind.

D. consumers in Country X are purchasing more products than ever before

We can see that the fact that consumers in Country X are purchasing more products does not support the conclusion that the revenues of exporters in Country X will probably continue to decline. After all, consumers purchasing more would not cause revenues to decline.

If (D) included different information, such as that consumers in country X are purchasing a greater proportion of their purchases from companies that are not involved in importing or exporting, then it could support the conclusion. However, it includes no such information, only the simple fact that they are purchasing more.

So, we can eliminate (D).

Now, here's (B).

B. shipping companies are willing to move containers from country to country only when the containers are full

This does support the conclusion that "the revenues of exporters in Country X will probably continue to decline in the near future."

After all, the passage says, "Exporters in Country X are facing lower revenues due to a shortage of the large metal shipping containers in which they send their goods," and "Fewer containers arrive in Country X due to reductions in imports."

Then, it says in support of the conclusion, "This is because other countries are likely to find it increasingly unprofitable to export their goods to Country X."

So, there will be even fewer shipping containers arriving because other countries will not be exporting to Country X, and to lock in the conclusion, we can add the fact that, as choice (B) says, "shipping companies are willing to move containers from country to country only when the containers are full."

Thus, no containers are coming without imports.

So, (B) helps to confirm the conclusion and therefore correctly fills the blank.

Exporters in Country X are facing lower revenues due to a shortage of

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Exporters in Country X are facing lower revenues due to a shortage of

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