Partly because of bad weather, but also partly because some major pepp

Question

Partly because of bad weather, but also partly because some major pepper growers have switched to high-priced cocoa, world production of pepper has been running well below worldwide sales for three years. Pepper is consequently in relatively short supply. The price of pepper has soared in response: it now equals that of cocoa.

Which of the following can be inferred from the passage?

(A) Pepper is a profitable crop only if it is grown on a large scale.

(B) World consumption of pepper has been unusually high for three years.

(C) World production of pepper will return to previous levels once normal weather returns.

(D) Surplus stocks of pepper have been reduced in the past three years.

(E) The profits that the growers of pepper have made in the past three years have been unprecedented.

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I think D and E both have the potential to be th eanswer

D -- true as the passage says ... less production of pepper in last three years
E -- few people have grown pepper and price soared and they have made lot of profit for sure.

OA is D. Can somebody explain me pls.

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Official Answer

D

kinjiGC · Accepted Answer

Should be D) as It says Production < Demand . So the extra stocks should come from Stocks.

E cannot be as firstly nothing is said about the profit and it might happen that along with the price of pepper has shot up because of the less production, the price of pepper seeds used to plant pepper might have also increased - So not MUST BE TRUE.

Abhishek009 · Answer

Bad Weather + Shift from Pepper Plantation to Cocoa ====> Production of Pepper has decreased ==== > Short Supply ===== > Price Increase = Cocoa.

Which of the following can be inferred from the passage?

(A) Pepper is a profitable crop  only if it is grown on a large scale.

Out of scope , we don't have sufficient information to claim the same.

(B) World consumption of pepper  has been unusually high for three years.

Absolutely out of scope.

(C) World production of pepper  will return to previous levels once normal weather returns.

Do we have any information to claim the same ? Absolutely not.

(D) Surplus stocks of pepper have been reduced in the past three years.

Definitely True , if stock of pepper have been depleted then it is bound tot create a supply shortage , leading to Price hike. { Concept of Demand and Supply - Economics}

(E) The  profits that the growers of pepper have made in the past three years have been unprecedented.

The passage mentions that pepper production has been slow during the last three years , nowhere it mentions whether preceding years yielded unprecedented profits or not .

Hence IMO(D)

Madhavi1990 · Answer

Pretty straight. I wonder if the questions from OG in 2009-2010 were a little easier :/ Would that be true? Would love to hear expert opinion on this one!
Either way, it took less than a minute.

Partly because of bad weather, but also partly because some major pepper growers have switched to high-priced cocoa, world production of pepper has been running well below worldwide sales for three years. Pepper is consequently in relatively short supply. The price of pepper has soared in response: it now equals that of cocoa.
10. Which of the following can be inferred from the passage?
(A) Pepper is a profitable crop only if it is grown on a large scale. Scale is not the concern here
(B) World consumption of pepper has been unusually high for three years.Says who?

(C) World production of pepper will return to previous levels once normal weather returns.'key word' - "partly"
(D) Surplus stocks of pepper have been reduced in the past three years.- negate - price of pepper would remain the same.
So D.
(E) The profits that the growers of pepper have made in the past three years have been unprecedented.Ummm. Not mentioned anywhere

(C) World production of pepper will return to previous levels once normal weather returns. 'key word' - "partly" (D) Surplus stocks of pepper have been reduced in the past three years.- negate - price of pepper would remain the same. So D. (E) The profits that the growers of pepper have made in the past three years have been unprecedented. Ummm. Not mentioned anywhere

u1983 · Answer

(A) Pepper is a profitable crop only if it is grown on a large scale. -  Not mentioned or implied in the argument.  The argument is discussing about profitability vs weather

(B) World consumption of pepper has been unusually high for three years. -  Not mentioned or implied in the argument.  What if the world consumption is same - but during these years pepper was grown at such a small quantity that the previously surplus & stored pepper also got consumed. Thus the deficit in supply- increase in demand - price rise..... in line of option D.

(C) World production of pepper will return to previous levels once normal weather returns. -  may be , or may not be - only related to apartial cause

(D) Surplus stocks of pepper have been reduced in the past three years.
Production has been lower than consumption. That means we must have been tapping into reserves, aka surplus stocks. Keep it.
(E) The profits that the growers of pepper have made in the past three years have been unprecedented.
We have no idea about costs of production and therefore can't make any conclusions about profits. Eliminate

(E) The profits that the growers of pepper have made in the past three years have been unprecedented. -  Not mentioned or implied in the argument.

warrior1991 · Answer

IMO D.

Which of the following can be inferred from the passage?

Profit is no where mentioned in the passage. Since it is an inference question and we do not have anything on profit in the argument so for us this answer choice is out of scope.

Unusually high  is somewhat exaggerating here. Let us hold this for a while.

What if the pepper growers keep producing cocoa?? Normal weather is  NOT THE ONLY  reason. Incorrect.

Ok. This says that surplus stocks have been reduced in the past three years. If this is the case, the supply is less and hence demand will increase. Therefore the price will increase as well. As compared to B, this option is correct.

Again we are not concerned with Profit. Reasoning mentioned in option A.Incorrect.

ArjunJag1328 · Answer

Bad Weather - Pepper growers - High-priced cocoa. 
Thus, WP of pepper - ruling low - past 3yrs - short supply
Price of pepper - Soared - Equal to Cocoa.

(A) Pepper is a profitable crop only if it is grown on a large scale.
 Explanation: Irrelevant. When supply increases demand decreases and thus price will fall.
 
(B) World consumption of pepper has been unusually high for three years.
 Explanation: Incorrect. consumption may not have increased but pepper production has decreased

(C) World production of pepper will return to previous levels once normal weather returns.
 Explanation: Irrelevant

(D) Surplus stocks of pepper have been reduced in the past three years.
 Explanation: This is the best choice. Surplus stocks have reduced in the past 3 years and that's why there is a short supply. {Supply reduced - Demand increased & price of pepper has become equal to Cocoa}
 
(E) The profits that the growers of pepper have made in the past three years have been unprecedented.
 Explanation: Irrelevant

Answer IMO  D

gvij2017 · Answer

Here is my 2 cents for such supply-demand-price problems.

Price can increase normally if supply side is less than demand.
Now see what comes under supply side. 
Production+stocked finished material

Demand side include consumption or use of commodity.

Now in this CR problem we have 2 options close to my understanding. Production is already reduced. 
B and D.

B says demand is very high, Ok. but what about stocked material. No where mentioned about that. That's why B is out. 
D says surplus stock has been reduced. - Now, if consumption is same or increasing, price will definitely will go up.

Now I think if option D were not in options, answer would be B. But in presence of D, B is out, D wins.

David nguyen · Answer

"Pepper is consequently in relatively short supply" Isn't this explain that there is no surplus stock? Short in supply also means less stock. Along with unusually high demand, the price should rise accordingly. Please advise.

Hoozan · Answer

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krittapat · Answer

@emgat  GMATNinja   KarishmaB   mikemcgarry   MartyTargetTestPrep 
Could you please help explain this question and why (E) is incorrect?

ThatDudeKnows · Answer

Inference question so we don't need to do the typical conclusion; premise(s) analysis. Just for practice:
bad weather + switch to cocoa --> lower pepper production relative to consumption --> lower pepper supply --> higher pepper price

(A) Pepper is a profitable crop only if it is grown on a large scale.
 We never hear anything about profitability. Eliminate. 
(B) World consumption of pepper has been unusually high for three years.
 We know consumption has been higher than production, but no idea compared to historical consumption. Eliminate. 
(C) World production of pepper will return to previous levels once normal weather returns.
 Predicts the future. Eliminate immediately and only come back to it if we need to. Eliminate. 
(D) Surplus stocks of pepper have been reduced in the past three years.
 Production has been lower than consumption. That means we must have been tapping into reserves, aka surplus stocks. Keep it. 
(E) The profits that the growers of pepper have made in the past three years have been unprecedented.
 We have no idea about costs of production and therefore can't make any conclusions about profits. Eliminate.

Answer choice D.

GMATNinja · Answer

The passage sets up a series of events.

Two things happened at the beginning: there was bad weather, and some major pepper growers have switched to high-priced cocoa. 
 These two things caused the next event: production of pepper fell below sales of pepper for the last three years. 
 This caused pepper to be in short supply. 
 Finally, this supply shortage caused the price of pepper to soar, and even to reach the price of cocoa.

Based on these events, what can we infer? Here's (E):
 
"Unprecedented is a  really  strong word. Does it seem likely that growers of pepper have been doing well recently? Sure! But are they making  unprecedented  profits? In other words, have they never, in the history of mankind, made more profit than they make now?

There is simply no way to know. We have no information about pepper-growers' profits from other eras in time, so we can't infer that the current profits are unprecedented.

Eliminate (E).

Here's (D):
 
We know that production of pepper fell below sales of pepper for the last three years. That means that more pepper is getting removed from the pool than is being added. So, we can infer that surplus stocks of pepper have been reduced in the past three years.

(D) is the correct answer.

I hope that helps!

Anupama_1090 · Answer

Hi,
I have doubts regarding option D and E.
Wont D be correct if it had mentioned only" stocks" of pepper have been reduced in the past three years? Use of SURPLUS which means EXCESS confused me. no where has it been mentioned in the passage or can be inferred that pepper supply was surplus before this shortage happened? IT could also be that the demand was just met right?

so i feel E is relatively correct? Please confirm
Thank you
Anupama

GMATNinja · Answer

Let's start with a concrete example. Imagine that 100,000 Sega Genesis consoles were sold and shipped in 1991, but Sega only manufactured 90,000 units that year. The most plausible way those additional 10,000 units could have been shipped is if there was surplus inventory from a previous year, right?

It's reasonable to infer this even if I don't tell you explicitly that there was excess inventory, because those units had to come from  somewhere . That's the logic in (D). They're selling more pepper than they're producing, so they have to tap into an old surplus. Otherwise, we'd just be told that there was more demand than supply, and you'd have a lot of unhappy pepper customers!

In (E), we get a much bolder, less supported claim. How can we possibly know anything about whether profits the last three years are  unprecedented ? We know nothing about expenses during this time period. And we know nothing about either revenues or expenses for previous periods. (Maybe profits were amazing 20 years ago!)

So (D) might not be perfect, but it follows logically from the passage in a way (E) does not, so it's better. Simple as that.

I hope that helps!

thedarkwolf · Answer

(D) Surplus stocks of pepper have been reduced in the past three years.
Production has been lower than consumption. That means we must have been tapping into reserves, aka surplus stocks. Keep it.
(E) The profits that the growers of pepper have made in the past three years have been unprecedented.
We have no idea about costs of production and therefore can't make any conclusions about profits. Eliminate

HarpreetSingh12 · Answer

loved your way of explaining madhavi  
 thank you:blushing: 
   Madhavi1990

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