Economist: Although prices of most precious metals have greatly

Question

Economist: Although prices of most precious metals have greatly increased in nominal terms (i.e., before adjustment for inflation) over the past century, the inflation-adjusted prices have actually been falling. Since the price of a commodity generally decreases when supply grows relative to demand, and since demand for precious metals has been growing, the supply of these metals on the market must be currently growing.

Which of the following, if true, would most weaken the economist's argument?

A. Mining precious metals to put them on the market continuously lowers reserves in the earth.
B. Over the past century, the prices of some metals have risen dramatically after adjustment for inflation.
C. The prices of commodities, including precious metals, predictably increase when demand grows relative to supply.
D. Over the past decade, the prices of most precious metals have risen after adjustment for inflation.
E. Over the past century, inflation has made the prices of precious metals much higher in nominal terms than they would otherwise have been.

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MartyMurray · Accepted Answer

Economist: Although prices of most precious metals have greatly increased in nominal terms (i.e., before adjustment for inflation) over the past century, the inflation-adjusted prices have actually been falling. Since the price of a commodity generally decreases when supply grows relative to demand, and since demand for precious metals has been growing, the supply of these metals on the market must be currently growing.

The economist has concluded the following:

the supply of these (precious) metals on the market must be currently growing

The support for the conclusion is the following:

over the past century, the inflation-adjusted prices (of precious metals) have actually been falling

the price of a commodity generally decreases when supply grows relative to demand

demand for precious metals has been growing

We see that the economist has reasoned that, since prices are decreasing and demand is increasing, supply must be increasing.

One thing that we might notice in reading the passage (although we don't have to notice it on the first read to get this question correct) is the following important difference betweent the evidence and the conclusion: The evidence involves prices falling "over the past century" whereas the conclusion is that supply must be growing "currently."

Which of the following, if true, would most weaken the economist's argument?

The correct answer will weaken the support the evidence provides for the conclusion.

A) Mining precious metals to put them on the market continuously lowers reserves in the earth.

This choice may seem to explain why supply of precious metals would not be increasing. It could be that supply is not increasing because reserves of precious metals are decreasing because of continuous mining.

At the same time, we don't need  an explanation for why supply is decreasing  rather than, as the conclusion says, increasing. We need  a reason to believe that supply is not actually increasing .

This general fact about reserves doesn't mean that supply is not increasing. Rather, the fact that prices have decreased while demand has increased still appears to support the conclusion that supply is growing, even if reserves may be decreasing.

Eliminate.

B) Over the past century, the prices of some metals have risen dramatically after adjustment for inflation.

This choice tempts us by appearing to change the scenario. We might think it indicates that precious metals prices have actually increased rather than decreased and thus that supply is not increasing.

However, this choice doesn't actually change what we know. After all, the evidence is about "most precious metals." The fact stated by this choice, that the prices of "some metals" have increased doesn't change the fact that the prices of "most precious metals" have decreased.

Eliminate.

C) The prices of commodities, including precious metals, predictably increase when demand grows relative to supply.

This choice strengthens, rather than weakens, the argument. Here's how.

The passage says that  demand for precious metals is growing .

Now, this choice says that  prices increase when demands grows relative to supply .

However, the passage says that  prices are not increasing . So,  demand must not be growing relative to supply .

In that case,  if demand is growing, supply must be growing  as well.

So, the information provided by this choice  confirms the conclusion of the argument that supply is growing .

Eliminate.

D) Over the past decade, the prices of most precious metals have risen after adjustment for inflation.

We might think this choice can't be correct since it seems to conflict with a premise of the argument. After all, the passage says the following:

the inflation-adjusted prices (of most precious metals) have actually been falling

So, what this choice says about prices rising could seem to be the opposite of what the passage says.

However, if we haven't noticed a key diference between what the passage says and what this choice says, we can see that difference by going back to the passage and rereading. Doing so, we see that, actually, what the passage says is the following:

over the past century , the inflation-adjusted prices (of precious metals) have actually been falling

We see that  the statement in the passage and this choice are about different time periods . The statement in the passage is about "the past century" whereas this choice is about "the past decade."

Having seen that difference, we can also note that  the conclusion is that supply must be growing "currently."

So, now, we see a weakness in the argument and how this choice weakens the argument.

The evidence is about the past century, whereas the conclusion is about what's occurring "currently." So, information provided by this choice, that prices have risen "over the past decade," shows that the evidence about the past century doesn't support the conclusion about what's going on "currently."

This choice tells us that what occurred "over the past century" does not support the conclusion about supply growing "currently" because what's has occurred "over the past decade" is different. Over the past decade prices did increase, so supply may not be growing currently.

Keep

E) Over the past century, inflation has made the prices of precious metals much higher in nominal terms than they would otherwise have been.

This choice does not materially change what we know. It just qualifies it.

We already know from the passage that "prices of most precious metals have greatly increased in nominal terms." Now this choice tells us that the prices have increased a lot in nominal terms.

All the same, that information doesn't mean that prices have increased in real terms. So, the scenerio remains the same: prices have decreased in real terms, a fact that supports the conclusion that supply has increased.

Eliminate.

Correct answer:  D

bronaugust · Answer

To solve this question, let us deploy    IMS's four-step technique   .

STEP #1  ->   IDENTIFY THE QUESTION TYPE

Let us read the question stem to identify the question type. The stem states, 'Which of the following, if true, would most weaken the economist's argument?' What we have is a  weakening  question.

Now that the question type is identified, let us proceed to the second step.

STEP #2  ->   DECONSTRUCT THE ARGUMENT

In a weakening question, it is a must to deconstruct the argument by figuring out the conclusion and the premise(s).

CONCLUSION:   The supply of most precious metals on the market must be currently growing.
  PREMISES:     ->  The price of a commodity generally decreases when supply grows relative to demand.
                     -> The demand for precious metals has been growing
                     -> Although prices of most precious metals have greatly increased before adjustment for inflation over the past century, the inflation-adjusted prices have actually been falling.

Now that the argument is deconstructed, let us proceed to the third step.

STEP #3  ->   FRAME A SHADOW ANSWER

To frame a shadow answer, we need to know what the right answer should do. In this question, the right answer must simply cast doubt on the conclusion that the supply of most precious metals on the market must be currently growing. An excellent way to weaken an argument is to challenge its premise.

SHADOW ANSWER:   Any situation that leads us to believe that the supply of most precious metals on the market must not be growing currently.

Now that we have a shadow answer, let us proceed to the final step.

STEP #4  ->   PROCESS OF ELIMINATION

Let us eliminate all answer options that deviate from the shadow answer.

A. Mining precious metals to put them on the market continuously lowers reserves in the earth. -   NOT A MATCH   -  If mining precious metals to put them on the market continuously lowers reserves in the earth, we do not have any reason to believe that the supply of most precious metals on the market must not be currently growing. We do not know if the reserves have been lowered to such an extent as to impact the supply.  -   ELIMINATE

B. Over the past century, the prices of some metals have risen dramatically after adjustment for inflation. -   NOT A MATCH   -  Not worried about some metals; the argument concerns itself with precious metals.  -   ELIMINATE

C. The prices of commodities, including precious metals, predictably increase when demand grows relative to supply. -   NOT A MATCH   -  One of the premises already states that the price of a commodity generally decreases when supply grows relative to demand. Of course, this option simply restates what is stated in the argument, albeit in a different form. If anything, it strengthens.  -   ELIMINATE

D. Over the past decade, the prices of most precious metals have risen after adjustment for inflation. -   MATCHES THE SHADOW ANSWER   -  If the prices of most precious metals have risen after adjustment for inflation over the past decade, the author's premise that the inflation-adjusted prices have actually been falling over the past century is challenged (remember, this is one the premises the author bases his conclusion on, by the way), and since the price of a commodity generally decreases when supply grows relative to demand, we have a reason to believe that the supply of most precious metals on the market must not be currently growing.  -   KEEP

E. Over the past century, inflation has made the prices of precious metals much higher in nominal terms than they would otherwise have been. -   NOT A MATCH   -  What inflation has done to the prices of precious metals will not impact the argument in any way.  -   ELIMINATE

Hence, (D) is the right answer.

KarishmaB · Answer

Premises: Over the past century, prices of most precious metals have greatly increased in nominal terms (i.e., before adjustment for inflation) But the inflation-adjusted prices have actually been falling. Price of a commodity generally decreases when supply grows relative to demand, Demand for precious metals has been growing, Conclusion: the supply of these metals on the market must be currently growing. So premises tell us that over the past 100 years, real prices of precious metals are falling. Price falls when supply grows relative to demand i.e. when supply grows more than demand. The demand is rising. This means that the supply must be rising too (in fact, it must be rising more than demand). That is why prices are falling. How can we weaken it? It all seems fair. Look at the options. A. Mining precious metals to put them on the market continuously lowers reserves in the earth. Irrelevant. Our scope is what is happening in the market. The prices are falling even though demand is rising. This indicates that supply must be increasing too at least right now. What will happen in the future if supply fails, we don't care. The market is not adjusting to that. If the prices were rising in spite of increased supply then we could have considered that perhaps people are worried that supply will finally fail after some time. But, the prices are actually falling. This means supply mu.st be increasing. Our scope is just the supply demand price relation in the market currently B. Over the past century, the prices of some metals have risen dramatically after adjustment for inflation. Some metals is irrelevant. We are only discussing precious metals. C. The prices of commodities, including precious metals, predictably increase when demand grows relative to supply. Understandable. When demand grows relative to supply, prices increase. When supply grows relative to demand, then prices reduce. Currently prices are reducing. So we are concluding that supply must be growing relative to demand. Makes sense. Nothing is conflicting with anything else. D. Over the past decade, the prices of most precious metals have risen after adjustment for inflation. The prices being talked about in the premises are "over the past century." The trend is of decreasing prices. But this option tells us that in the short term in the past (relatively speaking) i.e. in the last decade, real prices have actually increased. Then can we say that supply must be increasing right now? No. We don't know. Demand is increasing and prices are increasing right now. Now depending on the rates of increases, the supply may be decreasing, staying steady or increasing right now. We cannot say that supply must be increasing. Hence it weakens our conclusion. E. Over the past century, inflation has made the prices of precious metals much higher in nominal terms than they would otherwise have been. Nominal prices are irrelevant. Answer (D) GMAT-Club-Forum-d2mvspzp.png

PeachSnapple1 · Answer

In D, does   NOT already include  ? Or does it mean that the OVERALL trend in the past century has been a decline, but in the last decade there has been an increase (but still a decrease throughout the century)? I bet it's the second thought. 
In this kinda question, I always eliminate all 5 answer choices with confidence lol.

MartyMurray · Answer

Indeed, the point of (D) is your second idea, that, while the trend over the past century has been a decline, prices have increased over the past decade, meaning that the supply of these metals may not be growing "currently."

PurvaG · Answer

MartyMurray

I was confused between option A and D , What's something can make me confidently eliminate A , cause  Mining precious metals to put them on the market continuously lowers reserves in the earth does give an explanation that can weaken

MartyMurray · Answer

The correct answer must weaken the case for the following conclusion:

the supply of these metals on the market must be currently growing

What we can notice is that the conclusion is about "the supply of these metals  on the market ."

The fact that, as (A) says, "mining precious metals ... lowers reserves  in the earth " does not mean that the supply of these metals "on the market" is not growing.

Takeaway:  To get Critical Reasoning questions correct consistently, we have to pay careful attention to the exact details of the conclusions of arguments.

eaat · Answer

MartyMurray  - I was only able to eliminate B and C confidently.

For A ) wouldn't this weaken? it's saying at some point, the supply must not be growing ?

For D) I understand that over the past decade (instead of the last century) most of precious metals have risen. So this means that in the prvious 90 years, maybe they had fallen, but recently in the last 10 years it has actually risen? Doesn't this sort of contradict what is said in the passage?

For e) this one sounded right because it's using the "past century" but I have no idea what it means that " inflation has made the prices of precious metals much higher in nominal terms than they would otherwise have been." can you give an example of what this means?

MartyMurray · Answer

(A) indicates that, at some point, the supply may stop growing. At the same time, the fact that reserves are decreasing doesn't mean that the supply on the market "currently" is not growing.
 
(D) does sort of contradict "prices have actually been falling."

I guess we're supposed to understand that the prices fell over the past century, but it's true that the passage doesn't make that clear.

This question isn't optimally constructed.
 
All (E) means is that, because of inflation, the nominal prices of metals are higher than than they would have been without inflation.

The nominal price is the actual price in the market, as opposed to the inflation adjusted price, which, according to the passage, decreased rather than increased.

So, (E) basically just restates what the first sentence of the passage says.

For an example, let's consider the price of gold. It could remain the same in inflation-adjusted terms but increase in nominal terms as a result of general price inflation, which causes the value of the dollar to decrease. Devaluation of currency causes the prices of everything to increase in nominal terms but not relative to each other.

Economist: Although prices of most precious metals have greatly

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Economist: Although prices of most precious metals have greatly