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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, 09:56
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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, 09:34
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, 21:57
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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Re: Pecan growers get a high price for their crop when pecans are   [#permalink] 10 Oct 2017, 21:57

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