Industry Analyst: This summer is expected to be particularly hot and

Question

Industry Analyst: This summer is expected to be particularly hot and dry in the major orange-growing regions of Florida, the state accounting for the largest share of orange production in the United States. While hot and dry weather usually leads to a substantial drop in the yield of oranges, my projections indicate that the revenues of Florida orange producers will not be substantially affected by these unfavorable conditions.

Which of the following statements, if true, would support the claim of the Industry Analyst?

Which of the following statements, if true, would support the claim of the Industry Analyst?

a) This summer, Florida orange producers will employ a large number of migrant workers, a strategy that will substantially decrease their labor costs.
 
b) Because of the hot and dry weather, the costs of irrigation for Florida orange growers will be nearly 30% higher this summer. 
 
c) The decline in the supply of oranges caused by the unfavorable weather will result in a substantial increase in their market price.
 
d) The hot weather is likely to increase the revenues of companies engaged in tourism and recreation that comprise the largest portion of the state economy. 
 
e) The weather in Georgia, the second-largest producer of oranges after Florida, is expected to be mild, resulting in higher yields of all fruit.

tuanquang269 · Answer

manalq8 · Answer

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evdo · Answer

the weather leads to oranges crops drop, but less suplly will make the price increase. Therefore the revenue from orange will stay the same.

newdawn · Answer

Question: because of dry weather, oranges production will drop,  but  still producers will be in profit ? how ?

first B-> It increase the cost of production -> decrease profit
D-> tourism company -- out of context
E-> weather in Georgia -- out of context

I think only fight is between A and C

A -> employing migrant workers decrease their labor costs, thus increase profit
C-> orange costs increase, thus increase profit

I feel C is more relevant here as we are not sure whether migrant workers costs less or they are cheap. So, I will go with A.

IMO, if there is no C option, I think then A can be an answer.

BDSunDevil · Answer

Strengthen Q. 
A and C are the contenders. A is talking about cost. not as relevant as C, which is talking about price. C.

KarishmaB · Answer

Responding to a pm:

Premises:
This summer will be particularly hot and dry in Florida, largest US producer of oranges. 
Hot and dry weather usually leads to a substantial drop in the yield of oranges.

Analyst Projection: My projections indicate that the revenues of Florida orange producers will not be substantially affected.

Revenue = Yield * Price (assuming all produced is sold)

If yield drops, we expect the revenue to drop too. If the analyst is expecting the revenues to not get affected, then he must be expecting the price to increase. So (C) supports the claim of the analyst. Note that we don't have to prove that the analyst is right. We just have to make him more likely to be right.

All other options are irrelevant because revenue has nothing to do with costs, other companies and other regions.

Shiv2016 · Answer

Premise: This summer is expected to be particularly hot and dry in the major orange-growing regions of Florida, the state accounting for the largest share of orange production in the United States. 
Conclusion: While hot and dry weather usually leads to a substantial drop in the yield of oranges, my projections indicate that the revenues of Florida orange producers will not be substantially affected by these unfavorable conditions. 
The analyst concludes that revenue of FLORIDA ORANGE PRODUCERS will not be affected.
This is only possible if:
1) The producers increase prices to fill the gap
2) The weather is soon expected to change that would be preferable for the orange production
3) They have sufficient inventory 
Let’s take a look at the choices:
A. This summer, Florida orange producers will employ a large number of migrant workers, a strategy that will substantially decrease their labor costs.
This can be a contender but LABOR COSTS does not seem to be in context because we do not how this decrease in their costs would help the revenue. How much does these costs constitute to the total revenue?
INCORRECT

B. Because of the hot and dry weather, the costs of irrigation for Florida orange growers will be nearly 30% higher this summer. 
Costs of irrigation would be higher……This would impact the revenue further. INCORRECT.

C. The decline in the supply of oranges caused by the unfavorable weather will result in a substantial increase in their market price.
This choice matches our pre-thinking. CORRECT.

D. The hot weather is likely to increase the revenues of companies engaged in tourism and recreation that comprise the largest portion of the state economy. 
Tourism and recreation……..OUT OF SCOPE.

E. The weather in Georgia, the second-largest producer of oranges after Florida, is expected to be mild, resulting in higher yields of all fruit.
We are just concerned about FLORIDA AND NOT GEORGIA. OUT OF SCOPE.

dabaobao · Answer

Premise:  Bad weather will decrease the quantity of oranges.
 Conclusion:  Revenue will remain unaffected.

Reasoning: 
Revenue = Price/Item * Items
Hence, quantity (i.e. items) decreases, then price/item should increase in order for revenue to be constant. A choice that talks about price is the correct one. All others talking about other city or costs are irrelevant.

a) This summer, Florida orange producers will employ a large number of migrant workers, a strategy that will substantially decrease their labor costs.  Wrong: Irrelevant  
 
b) Because of the hot and dry weather, the costs of irrigation for Florida orange growers will be nearly 30% higher this summer.  Wrong: Opposite  
 - 
c) The decline in the supply of oranges caused by the unfavorable weather will result in a substantial increase in their market price.  - Correct 
 
d) The hot weather is likely to increase the revenues of companies engaged in tourism and recreation that comprise the largest portion of the state economy.  Wrong: Irrelevant  
 
e) The weather in Georgia, the second-largest producer of oranges after Florida, is expected to be mild, resulting in higher yields of all fruit.  Wrong: Irrelevant

Sajjad1994 · Answer

Official Explanation

The argument above provides evidence that dry and hot weather typically results in a dramatic drop in the yield of oranges. Yet the industry analyst concludes that the revenues of orange growers in Florida are unlikely to be seriously affected. In order to strengthen this argument, we need to find other factors that would justify the same level of revenues despite the lower yield.

(A)  While a reduction in labor costs will increase the growers’ profits, it is not directly related to their revenues. Remember, the focus of the argument is on revenues rather than profits.

(B)  Since the projections of the industry analyst refer to revenues rather than costs, this answer choice is outside the scope of the argument.

(C)  CORRECT.   This answer choice states that the unfavorable weather will result in a lower supply of oranges which will in turn result in a significantly increase in their market price. The increase in revenues from the higher price will offset the decrease in revenues due to the lower supply, thus justifying the projection that the overall level of revenues will not be dramatically affected.

(D)  Since the projections of the industry analyst concern only orange growers rather than the entire state economy, the effects on companies engaged in tourism are outside the scope of the argument.

(E)  Since the analyst’s projections are focused on orange producers in Florida, the weather in Georgia and its effects on the fruit yield are outside the scope of the argument.

Answer: C

VerbalBot · Answer

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Industry Analyst: This summer is expected to be particularly hot and

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Industry Analyst: This summer is expected to be particularly hot and

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