Near Chicago a newly built hydroponic spinach “factory,” a completely controlled environment for growing spinach, produces on 1 acre of floor space what it takes 100 acres of fields to produce. Expenses, especially for electricity, are high, however, and the spinach produced costs about four times as much as washed California field spinach, the spinach commonly sold throughout the United States. Which of the following, if true, best supports a projection that the spinach-growing facility near Chicago will be profitable? (A) Once the operators of the facility are experienced, they will be able to cut operating expenses by about 25 percent. (B) There is virtually no scope for any further reduction in the cost per pound for California field spinach. (C) Unlike washed field spinach, the hydroponically grown spinach is untainted by any pesticides or herbicides and thus will sell at exceptionally high prices to such customers as health food restaurants. (D) Since spinach is a crop that ships relatively well, the market for the hydroponically grown spinach is no more limited to the Chicago area than the market for California field spinach is to California. (E) A second hydroponic facility is being built in Canada, taking advantage of inexpensive electricity and high vegetable prices. The spinach that went to The moon. The Economist (London, England), Saturday, February 18, 1989; pg. 100; Issue 7590. (608 words) Category: Science and technology The Mind Body Interaction in Disease.pdf

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Near Chicago a newly built hydroponic spinach “factory,” a completely

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IanStewart

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agrasan

Hi GMATNinja egmat KarishmaB IanStewart

Can you please explain why option D is wrong?
My understanding is option D says that "hydroponic" spinach has large market unlike factory spinach which increases my confidence that sales will be large for hydroponic spinach, thus, much higher revenues and ultimately profitability. Where am I thinking wrong here?

I think you may have misinterpreted answer D. Rephrasing it, it says: spinach ships well. The market for Chicago-grown spinach is not limited to Chicago, and the market for California-grown spinach is not limited to California.

Sometimes in GMAT CR the answer will be exactly what you think it should be. Someone is making really expensive spinach. How can they make a profit? If they can sell it at astronomical prices. That's what answer C says (it "will sell at exceptionally high prices").

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agrasan - A VC once told me - it is very easy to build a billion-dollar company. Just start selling a dollar for 90 cents. Bottom line - unless stated or implied, do not assume correlation between revenue and profits.

Regarding choice D - Can you re-read the choice and explain what choice D is saying. Hint: there is a comparison in that choice.

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