Bunuel wrote:
Many crops can be traded on futures markets before they are ever harvested. If a poor harvest of oranges is expected, the prices of orange juice futures rise. If a bountiful orange harvest is expected, then the prices of orange juice futures fall. Over the last month, two hurricanes have ravaged the orange growing region of Florida, destroying thousands of acres of orange trees. Despite this fact, experts indicate that the prices of orange juice futures will fall in the coming weeks.
Which of the following, if true, explains why the experts mentioned above are correct?
A. The two hurricanes took different paths across Florida, affecting separate orange growing regions.
B. Futures for orange juice are priced higher this year than they were last year.
C. The second hurricane that affected Florida also hit parts of Louisiana.
D. A new report came out this morning that shows harvests of California oranges will be more than double normal levels due to above average rainfall in that state.
E. Most people who trade orange juice futures do not ever take possession of the orange juice.
Generally when Quantity ↑ Price ↓,(FOR Orranges) BUT this time 2 hurricanes ravaged ravaged Florida and destroyed thousands of acres of orange trees YET Price (Orange Juice)↓, {When it is expected that production would fall and Price would have risen considerably.}
PRETHINK :
1. Oranges are not made from real fruits , may be some artificial edible flavours are used.
2. Oranges are not made from Florida Oranges.
3. May be there are surplus oranges from last year.
Now move to options.
(A) two hurricanes took different paths - out of scope , we are not concerned with course of hurricanes
(B) than they were last year - Last years price have no role to current /future years prices.
(C) The second hurricane that affected Florida also hit parts of Louisiana - Location of hurricanes is irrelevant.
(E) trade orange juice futures do not ever take possession of the orange juice - Plays no role for Orange and Price increase.
(D) harvests of California oranges will be more than double normal levels due to above-average rainfall in that state.
If there is surplus production in some other area then it will definitely reduce price, Answer must be (D)