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Periods of recession, such as the one prevailing the entire world for

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eka9045
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Periods of recession, such as the one prevailing the entire world for [#permalink] New post   29 Jan 2020, 06:47
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Periods of recession, such as the one prevailing the entire world for the past one year, are typically characterized by a severe shortage of demand for goods and services.When demand decreases, prices usually plummet.However in the past one year prices of food grains have shot through the roof in countries like India.

Which of the following, if true, can adequately offer an explanation for the above paradox?

(A) The prices of food grains have nor risen in other parts of the world.
(B) The prices of a majority of goods and services have actually shown a downward trend.
(C) The demand for essential commodities such as, food grains is recession-proof.
(D) Adequate steps have not been taken by such countries to control prices of food grains.
(E) Production of food grains has suffered a serious set back the world over due to some unexpected natural causes.


Source:- TIME INSTITUTE
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E
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Re: Periods of recession, such as the one prevailing the entire world for [#permalink] New post   31 Jan 2020, 14:08
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eka9045 wrote:
Periods of recession, such as the one prevailing the entire world for the past one year, are typically characterized by a severe shortage of demand for goods and services.When demand decreases, prices usually plummet.However in the past one year prices of food grains have shot through the roof in countries like India.

Which of the following, if true, can adequately offer an explanation for the above paradox?

(A) The prices of food grains have not risen in other parts of the world.
(B) The prices of a majority of goods and services have actually shown a downward trend.
(C) The demand for essential commodities such as, food grains is recession-proof.
(D) Adequate steps have not been taken by such countries to control prices of food grains.
(E) Production of food grains has suffered a serious set back the world over due to some unexpected natural causes.


Source:- TIME INSTITUTE
KUDOS Please, if you like the question!


Correct answer: E

(A): Incorrect. The fact that food grains have not risen in other regions does not explain why they would have risen in regions like India, given that the conventional wisdom is that they would decrease.
(B): Incorrect. The prices of other goods declining is what is expected; those prices falling does not explain why the prices of food grains would increase.
(C): Incorrect. Demand decrease --> price decrease. Therefore, if demand for food grains is resistant to a recession, then a recession will likely cause no decrease in food grain prices. However, (C) does not explain why prices might have "shot through the roof."
(D): Incorrect. "Adequate steps" assumes that governments would work to counteract an expected change in prices, which in most cases in a decline in prices. Failure to take adequate steps might explain why prices have fallen farther but not why they increased.
(E): Correct. (E) is the only answer choice that provides an explanation for why prices might have risen. If supply has fallen sharply, then prices could rise even in the presence of a decrease in demand.
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Re: Periods of recession, such as the one prevailing the entire world for [#permalink] New post   03 Jul 2020, 00:50
This is definitely not a 700 level question. The correct and only relevant answer choice is (E). Also, a better option would've been:
- For non-essential goods, the price decreases while for the essential goods, inflation increases, and which is why grain prices are increasing.
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Re: Periods of recession, such as the one prevailing the entire world for [#permalink] New post   04 Jul 2020, 12:22
ajaygaur319 wrote:
This is definitely not a 700 level question. The correct and only relevant answer choice is (E). Also, a better option would've been:
- For non-essential goods, the price decreases while for the essential goods, inflation increases, and which is why grain prices are increasing.


The difficulty level is set automatically. Higher the number of people who gave wrong answer, higher the difficulty! :)
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Re: Periods of recession, such as the one prevailing the entire world for [#permalink] New post   31 Jul 2020, 23:20
eka9045 wrote:
Periods of recession, such as the one prevailing the entire world for the past one year, are typically characterized by a severe shortage of demand for goods and services.When demand decreases, prices usually plummet.However in the past one year prices of food grains have shot through the roof in countries like India.

Which of the following, if true, can adequately offer an explanation for the above paradox?

(A) The prices of food grains have nor risen in other parts of the world.
(B) The prices of a majority of goods and services have actually shown a downward trend.
(C) The demand for essential commodities such as, food grains is recession-proof.
(D) Adequate steps have not been taken by such countries to control prices of food grains.
(E) Production of food grains has suffered a serious set back the world over due to some unexpected natural causes.


Source:- TIME INSTITUTE
KUDOS Please, if you like the question!


Here's how I tackle CR questions:
Read the question stem FIRST before reading the answer choices or the argument. That puts you in the mindset of what type of CR question type you're dealing with as you read the prompt/answer choices.
So we have a paradox related question.

As we read the stem, break down the argument into their key parts or into terms that you can understand the flow of the argument and make mental notes:
Sentence 1: Periods of Recession => Typically shortage of demand for goods and serves.
Sentence 2: Demand Decrease => Prices Drop (Ok makes sense)
Sentence 3: HOWEVER (this is a transition word, so one should expect a change in the argument!) price of grain increased in countries such as India (should be "such as" and not "like" Lol)

We need to find a reason or explanation that could contribute to the price increase.
FYI: You need to know about supply and demand on the GMAT
So pre-thinking, if Demand is down, one should expect for prices to drop (stated in the question stem). But if supply is also down, prices might actually rise. So find an answer choice that directly associates with supply.

Only Answer Choice E deals with a supply issue!
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Re: Periods of recession, such as the one prevailing the entire world for [#permalink] New post   05 Apr 2024, 21:55
TestPrepUnlimited wrote:
eka9045 wrote:
Periods of recession, such as the one prevailing the entire world for the past one year, are typically characterized by a severe shortage of demand for goods and services.When demand decreases, prices usually plummet.However in the past one year prices of food grains have shot through the roof in countries like India.

Which of the following, if true, can adequately offer an explanation for the above paradox?

(A) The prices of food grains have not risen in other parts of the world.
(B) The prices of a majority of goods and services have actually shown a downward trend.
(C) The demand for essential commodities such as, food grains is recession-proof.
(D) Adequate steps have not been taken by such countries to control prices of food grains.
(E) Production of food grains has suffered a serious set back the world over due to some unexpected natural causes.


Source:- TIME INSTITUTE
KUDOS Please, if you like the question!

Correct answer: E

(A): Incorrect. The fact that food grains have not risen in other regions does not explain why they would have risen in regions like India, given that the conventional wisdom is that they would decrease.
(B): Incorrect. The prices of other goods declining is what is expected; those prices falling does not explain why the prices of food grains would increase.
(C): Incorrect. Demand decrease --> price decrease. Therefore, if demand for food grains is resistant to a recession, then a recession will likely cause no decrease in food grain prices. However, (C) does not explain why prices might have "shot through the roof."
(D): Incorrect. "Adequate steps" assumes that governments would work to counteract an expected change in prices, which in most cases in a decline in prices. Failure to take adequate steps might explain why prices have fallen farther but not why they increased.
(E): Correct. (E) is the only answer choice that provides an explanation for why prices might have risen. If supply has fallen sharply, then prices could rise even in the presence of a decrease in demand.

­Why does D have to be decline in prices? Couldnt adequate price control also apply to preventing dramatic price increases for several essential goods?
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Re: Periods of recession, such as the one prevailing the entire world for [#permalink]
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