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

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Re: Pecan growers get a high price for their crop when pecans are [#permalink]

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New post 06 Apr 2016, 08:56
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Re: Pecan growers get a high price for their crop when pecans are [#permalink]

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New post 24 Feb 2017, 08:34
egmat wrote:
Nitinaka19 wrote:
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



60->Because profit matters.
if it is 110 and farmers want to hold back some then the amount that would be held back needs to be 10 or more depending on how much profit farmers want to make.
Thus the decision is at farmer's discretion and not bound by some hard logic. If 10 or more are held back, they might as well hold back a much larger proportion than that making 60 a fair contender.
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Re: Pecan growers get a high price for their crop when pecans are [#permalink]

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New post 10 Oct 2017, 20:57
This is a find the assumption question in disguise. Knowing this, which of the answer choices is necessary for the author's argument to hold.
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Pecan growers get a high price for their crop when pecans are [#permalink]

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New post 16 Feb 2018, 05:53
Hi GMATNinja VeritasPrepKarishma GMATNinjaTwo

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

My understanding of argument:

Quote:
Pecan growers get a high price for their crop when pecans are comparatively scarce, but the price drops sharply when pecans are abundant.


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.

Quote:
Thus, 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 the future.


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.
Quote:
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


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:


Quote:
(A) each of the last two years produced record breaking pecan yields

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?

Quote:
(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 argument

Quote:
(C) pecan prices have not been subject to sharp fluctuations in recent years

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

Quote:
(D) for some pecan growers, this year's crop was no smaller than last year's

This increases the mystery further
Quote:
(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

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.
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Re: Pecan growers get a high price for their crop when pecans are [#permalink]

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New post 17 Feb 2018, 20:19
egmat wrote:
Nitinaka19 wrote:
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





Hello Egmat

What if we assume market demand as 200
Last two year yield as 250
current year yield as 50.

Then as per the math we did above, farmers don't need to save any crop at all to meet the demand of the market.
Please explain where am I wrong?
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Re: Pecan growers get a high price for their crop when pecans are [#permalink]

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New post 19 Feb 2018, 03:16
betterscore wrote:
Which of the following most logically completes the passage?

Pecan growers get a high price for their crop when pecans are comparatively scarce, but the price drops sharply when pecans are abundant. Thus, 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 the 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 _____________ .

(A) each of the last two years produced record breaking pecan yields

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

(C) pecan prices have not been subject to sharp fluctuations in recent years

(D) for some pecan growers, this year's crop was no smaller than last year's

(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


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.
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Re: Pecan growers get a high price for their crop when pecans are   [#permalink] 19 Feb 2018, 03:16

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