In the United States profits from sales of Grainco’s biggest selling p

C should be the answer.
Profits from sales of Grainco oatmeal, which account for a large part of Grainco’s total sales and profits, increased dramatically in both the foreign and domestic markets.

It says that the value of a share of Grainco stock rose by over 20 percent because of the sales of the oatmeal.

In the United States profits from sales of Grainco’s biggest selling product, cornflakes, have dropped by 30 percent over the last 3 years. During this same time the value of a share of Grainco stock rose by over 20 percent. This is puzzling because the value of a stock usually decreases when a company’s sales decrease.

Type - explain
Boil it down - Maybe GrainCo's profit from other products increase significantly . Maybe the overall sales of the cornflakes might have increased but the profit margin decreased

(A) Severe drought in the Midwest destroyed a large percentage of the corn crop, forcing Grainco to buy less corn. - Irrelevant
(B) Grainco closed a food processing plant in a locality that offered cheap labor and low taxes. - Incorrect - This only explains why profit might have dropped
(C) Profits from sales of Grainco oatmeal, which account for a large part of Grainco’s total sales and profits, increased dramatically in both the foreign and domestic markets. - Correct
(D) Grainco employees formed a union that helped them get higher salaries and increased medical benefits. - Irrelevant - employee benefits does not explain correlation between profits and stock market price fluctuations
(E) Several articles in prominent business publications listed Grainco as a company that has poor management. - Irrelevant

Answer C

Hi, first, I can understand how C is the answer. The question is all about the basic knowledge in finance: value vs stock price.
Nevertheless, if the question is from Magoosh, the question should not be posted on GMAC paper test category.

GMATNinjaTwo, gmat1393, GMATNinja, nightblade354

I see serious problems with this question.

1) the profits of its biggest selling product has gone down.
2) Share price went up(it goes down when sales go down).

Since share price went up, we can say sales went up(or atleast didnt go down). B offers a compelling reason as to why, eve though shares were same, profits went down. Cost went up.

How to decide between B & C?

I am not saying that C isnt right. Its transparent and supports the argument, but B is compelling too.

Option C seems right. Trying to figure out the correct reasoning though.