Pecan growers get a high price for their crop when pecans are

(A) each of the last two years produced recordbreaking pecan yields - Only when the farmers have abundant crop stored already from the past, would they think of storing this years yeild. - Correct
(B) the quality of this year's pecan crop is no worse than the quality of the pecan crops of the previous five years - No mention of quality of crop - Incorrect
(C) pecan prices have not been subject to sharp fluctuations in recent years - Does not help in concluding whether the part of current crop would be stored - Incorrect
(D) for some pecan growers, this year's crop was no smaller than last year's - We are talking about pecan growers as a whole not mentioning about a select few - Incorrect
(E) the practice of holding back part of one year's crop had not yet become widespread the last time the pecan crop was as small as it was this year - Practises followed by the farmers - Irrelevant - Incorrect

Should be A.

Situation here - Portion of this year's crop will be held back - Why???
Now, When will the portion be likely held back, acc. to the stimulus - Hoping for high prices...
Also, if the last two years produce was very high - again acc. to stimulus, the price of these crops would've gone down.
And if this year's produce is less, it is "possible" to hold back these crops in order to set the prices high...

C may not work here, since it talks about some general "fluctuation" - high/low-not given.

Thanks many ,
Kudos if clarified!

A) Each of the last two years produced record breaking pecan yields
the last year pecan will be disseminated slowly for sale and this year's fresh peacan wil be stored to stabilize the price as well.correct
B) The Quality of this year's pecan crop is no more worse than the quality of the pecan crops of the previous five years
quality is not into consideration
C) pecan prices have not been to sharp fluctuation in recent years
even then, the low yield will make the growers to hold it back.
D) For some pecan growers , this year's crop was no smaller than last year's.
then they will definitely hold the crops in order to sudden drop of price.
E) the practice of olding back part one year's crop had not yet become widespread the last time the pecan crop was as small as it was this year.
this condition is not mentioned

@thevenus - your explanation for answer A doesn't make much sense because pecan should be sold when the pecans crop are comparatively scarce to obtain higher prices. I'm not sure why pecan growers will not sell all the pecans (including this year's pecons) when prices are high despite of saving it for next year? Also, Passage doesn't suggests anything about stabilizing the pecan's price.

Can you explain? Thx.

Premise excerpt ;
"...... in high yield years, growers often hold back part of their crop in refrigerated warehouses for one or two years, hoping for higher prices in future"

This year's pecan crop was the smallest in five years. It is nonetheless quite possible that a portion of this year's crop will be held back,since ...?

If each of the last two years produced record breaking pecan yields then,this year with low production growers will first sell the grains already flooded in cold storage and hold the fresh grains in cold storage.

(A) wins.

A) each of the last two years produced record breaking pecan yields --- This must be the cause of holding on

B) The Quality of this year's pecan crop is no more worse than the quality of the pecan crops of the previous five years ---let us forget quality, it has nothing to do with scarcity or abundance

C) pecan prices have not been to sharp fluctuation in recent years --- If this did not happen, the stimulus itself is wrong. The fluctuations must have been there.
.
D) For some pecan growers, this year's crop was no smaller than last year's. --- A small group cannot make a dent.

E) the practice of holding back part one year's crop had not yet become widespread the last time the pecan crop was as small as it was this year. The criterion is the product abundance; for some reason, if the price rules high, why will any grower hold the product. A habit is not the criterion for holding

Given:
More Yield -> Less Demand -> Prices fall
Less Yield -> More Demand -> Prices rise

In years of high yield, growers store part of their crop in the hope to sell at higher prices later.

A) Each of the last two years produced record breaking pecan yields - Since the previous two years yield was good, part of the yield would already have been stored. Present yield though smallest in five years cumulatively become a huge amount. Hence a portion of years yield would be stored - Correct
B) The Quality of this year's pecan crop is no more worse than the quality of the pecan crops of the previous five years - Quality of crop is out of scope - Incorrect
C) pecan prices have not been to sharp fluctuation in recent years - Fluctuation of price is directly dependent on the yield - Proves no point - Incorrect
D) For some pecan growers , this year's crop was no smaller than last year's. - We are talking about pecan growers in general, not some pecan growers. - Incorrect
E) the practice of holding back part one year's crop had not yet become widespread the last time the pecan crop was as small as it was this year. - Irrelevant information - Incorrect

Its A.
Reason: 1) This year's crop was smallest in 5 years 2) Each of the last two years produced record breaking pecan yields. 3) The price drops sharply when pecans are abundant. Based on these 3 statements, it can be implied that old crops from warehouses might be released into market which would create abundancy and result in an eventual drop in the price. Hence, its quite possible that a portion of this year's crop will be held back.

Argument

Let us analyse 'Logic Flow' :

Premise 1: Pecan Volume increases ==> Price decreases [negative correlation]
Premise 2: High Volume of Pecan ==> Tendency to store for future selling (when price will be high) [Causal Relation]
Conclusion: This year, there was lowest addition in Volume of Pecan ==> Tendency to store still valid for this year.

Hmm... note the 'flawed Logic leap' existing between Premise 2 and Conclusion.
Logically, Volume =/= (is not equal to) Addition in Volume
But the 'flawed Logic leap' has assumed that Existing Volume of Pecans (from Premise 2) is same as Addition in Existing Volume of Pecan (as in Conclusion)

Now let us search for the options

A) Each of the last two years produced record breaking pecan yields
It says that the Volume of Pecan available is huge. So using Premise 2, the tendency to store will still persist.

B) The Quality of this year's pecan crop is no more worse than the quality of the pecan crops of the previous five years.
At the most, this information can say that OK, we have good quality crop this year. But, quality cannot decide selling pattern. (it will be far-fetched if we try to establish a relation between quality and selling)

C) pecan prices have not been subject to sharp fluctuation in recent years.
So, if prices help us decide whether to store or sell, the 'stable price' pattern just tells us- do as you have been doing recently. (Also, the option provides no info regarding Existing Volume of Pecan which is used to make 'selling/storing' decisions)

D) For some pecan growers , this year's crop was no smaller than last year's.
Those SOME people are not the representative of the whole lot of farmers. Immediately eliminate such options.

E) the practice of holding back part one year's crop had not yet become widespread the last time the pecan crop was as small as it was this year.
Still no info regarding Existing Volume of Pecans. How can I decide- either to sell or store. This option is useless for me.

That is how, the OA is A

Cheers
Jai

Hi E-GMAT,

Could you please explain the correct answer?

My analysis is as follows , 1. Price falls down as the crop's yield is in abandance or vice versa.
2.growers often hold back part of their crop in refrigerated warehouses for one or two years, hoping for higher prices in the future
3. This year the crop yield is smallest.

So based on the above 3 premise my query is How come the reason for them to hold back this year crop yield is related to the last 2 year yield.As i suppose,once this year yield is smallest then growers should sells instead of holding back as i assume that this year the price will shoots up and even if the last 2 year yields were recordbreaking,they would be selling even previous stored pecans.

Could you please clarify what i'm missing?

Thanks

Hi Nitinaka19,

Let me use some numbers here:

Let's suppose that the market demand is 100 units. So, if you sell more than 100 units, the price falls (as the argument says).

Suppose last year, the farmers/growers produced 150 units of pecans. Now, this means that probably, they would not have sold 50 units last year.

Since this year, the produce was very low. Let's say it is 60 units.

Now, my question is: how many units of pecans do farmers have for selling this year? Is it 60 or 110?

If it is 110 units, would farmers want to hold back some of the produce this year too, given above explanation?

Let me know your thoughts.

Thanks,
Chiranjeev

Hi Chiranjeev,

My answer is If the market demands remains 150unit for this year and the farmer produce 60 units this year.As in total he has 110units and assuming the price will go up. He should sell all(110unit).

My thought process is after a abundant production in last 2 years. The price was came so low that now farmer want the price to go higher. So keeping the price constraint in mind.The farmer will hold some of the production.

Please correct me if I'm wrong?

Thanks
Nitin

Hi Nitin,

In our example, the demand was 100 units, not 150 units.

Think about it again.

Thanks,
Chiranjeev

Hi GMATNinja VeritasPrepKarishma GMATNinjaTwo

I am stumped by the answer choices and was not able to perform PoE correctly.

My understanding of argument:



A particular food grain farmers get high price when these grains are less in supply than demand. Obviously prices rises up to meet demand and vice versa.



When the food grains are cultivated in abundance, the farmers store some of them in cold storage for x duration so that they can sell them when prices are high.


What happened this year was: The yield was smallest in last five years, So I pause and think: Definitely storage is not possible due to lower yields.

The word - nonetheless - shows that I will be presented with a contrast. The contrast is that : farmers decide to NOT sell all of the food grains. This is surprising to me as well since if lower yields are there in current year, why would they not sell all it it? Ideally they should be getting higher price this year and not store / held back food grains.
The correct answer choice will resolve this mystery.

PoE:



So what? In current time, why do farmers need to store food grains in cold storage.
This option says that this year and last year each produced much more food grains
than ever produced in history. But how does this explain the farmers may want to SELL food grains
and STORE it?



Quality is irrelevant to argument


Seems close, if fluctuations itself are not guaranteed , the action of farmers to store shall be not be a reliable one


This increases the mystery further

I am not sure if widespread of a particular practice is relevant. But note the later part of choice: since this year also my yield was as low as last year the mystery gets deepened instead of resolving.

Argument:
Farmers get high price if pecans are scarce and low price if they are abundant.
So in high yield years, farmers hold back and refrigerate some crop (create artificial rarity) for 1-2 yrs. So they sell this crop in the next 1-2 years hoping for better price.
This year the crop was smallest in 5 years but farmers may still store away some for next 1-2 years.

Why?

Here is what comes to mind: Smallest in 5 years does not mean small. What if in the last 4 years, there was bumper crop? It could still be average or above average this year. Also, what if because of bumper crop of last 1-2 years, there is a lot refrigerated and needs to be sold this year? The argument says that it is held back for 1-2 years. So the last 2 years crop would need to be sold now. The current fresh crop can be partially sold and partially refrigerated for future. This is what option (A) says and is correct.

(B) the quality of this year's pecan crop is no worse than the quality of the pecan crops of the previous five years
Quality is irrelevant to the argument.

(C) pecan prices have not been subject to sharp fluctuations in recent years
Sharp fluctuations may not have been there but farmers could still "hope for better prices"

(D) for some pecan growers, this year's crop was no smaller than last year's
We are talking about the total yield. For some farmers it may have been the same, for some even more than last year but overall it is smallest in last 5 years.

(E) the practice of holding back part of one year's crop had not yet become widespread the last time the pecan crop was as small as it was this year
It doesn't help resolve why this year it may be held back.

adkikani, I thought your analysis of the argument was great, and I'm glad to see that you are using POE!

We know that "pecan growers get a high price for their crop when pecans are comparatively scarce." As a result, "in high-yield years, growers often hold back part of their crop in refrigerated warehouses for one or two years." That way, when pecans are comparatively scarce, they can pull those pecans out of storage and sell them at a higher price.

So when we have a low-yield year, we wouldn't expect the farmers to hold back pecans. This makes us inclined to eliminate (A).

But what if we have a low-yield year AFTER having two record-breaking years? During the two record-breaking years, the farmers would have put a lot of pecans in storage. This year, yields are low, so we can take those pecans OUT of storage and sell them. If the farmers sell all of the stored pecans AND all of the pecans from this years' crop, they might flood the market with pecans and actually drive prices down, despite this year's low yield.

So what do they do? They sell the stored pecans and hold some of this year's pecans back. That way, they avoid a market oversupply and still have some pecans in storage for next year in case yields are low again.

At first glance, (A) doesn't seem relevant. But if you think about the situation, (A) would indeed resolve the mystery.

I originally chose A because in my passage notes, I had written that a possible answer should point to "abundant crops within 2 years". What threw me off about choice A was the word "record-breaking". I felt it was too strong of a description for the answer to be right.