Reporter: Country A and Country B both grow and export bananas.

Question

Reporter: Country A and Country B both grow and export bananas. Last year, Country A lowered the cost of their bananas to a rate substantially less than that charged by Country B, and this led to Country A outselling Country B for the first time. Some observers were surprised by this, since Country B grew more bananas than Country A last year and there was no change made to the trade policies of either country.

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

A. Country A exports about 40% more goods to Country B than the other way around.
B. Last year, both countries exported more bananas than at any time in the past.
C. Country B lowered the cost of many of their exports last year in response to a nationwide recession.
D. The government of Country A provided subsidies to banana growers last year as a way to promote exports of all produce grown there.
E. The biggest importer of bananas from Country A bought about 20% more bananas last year than the year before.

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Question 86: Banana Growers
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chillbrorelax · Answer

Country A reduced its price of bananas. However, more than did country A, country B increased its supply of banana, probably with the expectation of more demand for bananas. Nevertheless country A outsold country B. This is likely because of more demand that country A must found.

A. Country A exports about 40% more goods to Country B than the other way around.  
This does not explain banana exports. Incorrect.

B. Last year, both countries exported more bananas than at any time in the past. 
This does not explain how A outsold B. Incorrect.

C. Country B lowered the cost of many of their exports last year in response to a nationwide recession. 
But what about bananas! Incorrect.

D. The government of Country A provided subsidies to banana growers last year as a way to promote exports of all produce grown there. 
This explains how country A encouraged farmers to grow more bananas while they sell them at lower prices. This can be a reason country A outsold country B because even though country B had more bananas to sell, it could not reduce its price. So, more buyers went to country A than to country B.

E. The biggest importer of bananas from Country A bought about 20% more bananas last year than the year before. 
This does not gives us a clear picture of all the importers of bananas from country A. Incorrect.

Hence, D is my answer.

winterschool · Answer

Reporter: Country A and Country B both grow and export bananas. Last year, Country A lowered the cost of their bananas to a rate substantially less than that charged by Country B, and this led to Country A outselling Country B for the first time. Some observers were surprised by this, since Country B grew more bananas than Country A last year and there was no change made to the trade policies of either country.

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

A. Country A exports about 40% more goods to Country B than the other way around.  Incorrect

these can be other goods except bananas

B. Last year, both countries exported more bananas than at any time in the past.  Incorrect

cant explain the discrepancy because both countries perform same

C. Country B lowered the cost of many of their exports last year in response to a nationwide recession.  Incorrect

other products cost irrelevant

D.  The government of Country A provided subsidies to banana growers last year as a way to promote exports of all produce grown there .  Correct

this can be an explanation; country A exports all their bananas as a result it overselling country B

E. The biggest importer of bananas from Country A bought about 20% more bananas last year than the year before.  Incorrect

but others importers can decrease theirs import

EMPOWERgmatVerbal · Answer

Official Explanation:

Reporter: Country A and Country B both grow and export bananas. Last year, Country A lowered the cost of their bananas to a rate substantially less than that charged by Country B, and this led to Country A outselling Country B for the first time. Some observers were surprised by this, since Country B grew more bananas than Country A last year and there was no change made to the trade policies of either country.
 
 Which of the following, if true, most helps explain the discrepancy in the relationships described by the reporter? 
 
 A. Country A exports about 40% more goods to Country B than the other way around. 
 B. Last year, both countries exported more bananas than at any time in the past. 
 C. Country B lowered the cost of many of their exports last year in response to a nationwide recession. 
 D. The government of Country A provided subsidies to banana growers last year as a way to promote exports of all produce grown there. 
 E. The biggest importer of bananas from Country A bought about 20% more bananas last year than the year before.

Question Type:   Resolve Paradox
  Boil It Down:   After Country A dropped the price of their bananas last year, they outsold Country B for the first time ever. This was surprising, given that Country B grew more bananas than Country A last year. 
  Goal:    Find the option that best explains how/why Country A was able to outsell Country B, even if they had fewer bananas to sell.

Analysis:

General comments about discrepancy/puzzling fact questions:  
 
Resolving a discrepancy/puzzle/paradox type questions involve trying to resolve a surprising fact or to reconcile two statements that seem to be incompatible. Your first task in answering these question types is to identify the puzzling fact or paradox. The correct answer choice will show the surprising fact is not so surprising after all or will show how it is possible that both statements that are seemingly at odds can be simultaneously true. In order to explain a puzzling fact or paradox, the correct answer choice must work on the first statement and show that it is compatible with the second, work on the second statement and show that it is compatible with the first, or introduce a piece of information that shows how the two statements are compatible. Answer choices that deal with neither of the two statements will be irrelevant.
 
 Identify the Discrepancy/Puzzling Fact: 
 
Statement 1: Country A lowered their prices of bananas and outsold Country B
 
Statement 2: Country B grew more bananas that Country A, despite unchanging trade policies
 
The discrepancy/puzzling fact: 
We are left to wonder, why or how did Country A outsell Country B, despite Country B growing more bananas? One would think that the more bananas a country grows, the lower they can sell the bananas. However, in this case, Country A, who grew fewer bananas, sold their bananas at a lower price.

An answer choice that explains this discrepancy/puzzling fact will answer that question. The correct answer choice will have to explain why A sold more than B or why B sold less than A.
 
A. Country A exports about 40% more goods to Country B than the other way around.
 Incorrect. The discrepancy/puzzling fact deals with bananas, not exports in general. Therefore, answer choice A is irrelevant. 
 
B. Last year, both countries exported more bananas than at any time in the past.
 Incorrect. This answer choice fails to explain why A sold more bananas than B. Therefore, answer choice B is irrelevant. 
 
C. Country B lowered the cost of many of their exports last year in response to a nationwide recession.
 Incorrect. This answer choice fails to explain why A sold more bananas than B. Therefore, answer choice C is irrelevant. 
 
D. The government of Country A provided subsidies to banana growers last year as a way to promote exports of all produce grown there.
 Correct. This answer choice helps explain how A could sell more bananas at a lower price, despite B growing more bananas. The government of Country A was subsidizing the crop so that the growers could sell them at lower prices despite growing fewer bananas than B. 
 
E. The biggest importer of bananas from Country A bought about 20% more bananas last year than the year before.
 Incorrect. Even if this country helped increase Country A’s exports, it fails to explain how A was able to sell more bananas at a lower price compared to B, given that B grew more bananas. Therefore, answer choice E is irrelevant. 
 
 Key Takeaway: 
Distilling the discrepancy to a succinct question can help evaluate the answer choices. For this scenario, the key question was why did Country A sell more bananas at a lower price than B, despite B growing more bananas. By identifying the key question, evaluating the answer choices becomes much easier and quicker.

Don’t study for the GMAT. Train for it.

EMPOWERgmatVerbal · Answer

Well done chillbrorelax and winterschool ! You both did a great job answering this one - also like the detailed notes on your thoughts for each option. Kudos to you both!

sayan640 · Answer

Does option D work here ? I think E is really close.
Requesting your view.  MartyMurray   KarishmaB

Posted from my mobile device

EMPOWERgmatVerbal · Answer

Hi again, sayan640,

Sure, let's discuss why  Option D  is the correct option and why  Option E , while seemingly close, doesn't adequately resolve the discrepancy.

Understanding the Discrepancy: 
 
  Fact 1:  Last year,  Country A  lowered its banana prices significantly and outsold  Country B  for the first time. 
  Fact 2:  Observers are surprised because  Country B  grew more bananas, and there were no changes in trade policies.  
 
The Core Question:  How did Country A outsell Country B despite growing fewer bananas and no changes in trade policies?

Option D:   "The government of Country A provided subsidies to banana growers last year as a way to promote exports of all produce grown there." 
 
  Explanation: 
 
  Subsidies Reduce Costs:  Government subsidies lower the production costs for banana growers in Country A. 
  Enabling Lower Prices:  With reduced costs, growers can afford to sell bananas at significantly lower prices without sacrificing profit margins. 
  Competitive Advantage:  Lower prices attract more international buyers, allowing Country A to outsell Country B despite producing fewer bananas.

Why It Resolves the Discrepancy: 
 
  Direct Causation:  Explains how Country A could afford to lower prices dramatically. 
  Market Impact:  Justifies why buyers would prefer Country A's bananas over Country B's, leading to higher sales. 
  Addresses Both Facts:  Connects the lower prices to higher sales and acknowledges that production volume wasn't the limiting factor due to effective pricing strategies.

Option E:   "The biggest importer of bananas from Country A bought about 20% more bananas last year than the year before." 
 
  Explanation: 
 
  Increased Purchase:  One major importer bought more bananas from Country A.  
 
  Why It Doesn't Fully Resolve the Discrepancy: 
 
  Limited Scope:  Focuses on a single importer, not the overall market. 
  Insufficient Impact:  A 20% increase from one importer may not account for Country A outselling Country B entirely. 
  Doesn't Explain Price Influence:  Fails to connect how the lower prices led to outselling Country B, especially given that Country B grew more bananas. 
  Leaves Questions Unanswered:  Why did the importer buy more? Was it due to lower prices? What about other importers?

Why Option D is Superior: 
 
  Comprehensive Explanation:  Addresses the core issue by explaining how Country A could lower prices sustainably. 
  Market Dynamics:  Acknowledges that subsidies can affect international competitiveness, leading to higher exports. 
  Logical Flow:  Directly links government action to market outcome, satisfying both the surprise and the facts presented.

Option E falls short because it doesn't provide a mechanism that explains the overall shift in sales from Country B to Country A. It gives a piece of the puzzle but doesn't complete the picture.

Reporter: Country A and Country B both grow and export bananas.

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Reporter: Country A and Country B both grow and export bananas.

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