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Correct Answer : C

The GMAT Mindset: General Inflation vs. Category-Specific Inflation
This is an Explain the Paradox / Resolve the Discrepancy question.
  • Action: Happy Meadows Elementary increased its lunch budget by 20% to purchase healthier food.
  • Surprising Result: Two years later, the nutritional quality of the lunches has not improved at all.
  • Eliminated Alternative Explanations (Premises):
    • Did the money get stolen or misallocated? No, the cafeteria received 100% of the funds
    • Did general inflation erode the budget increase? No, general inflation was below 4% per year (totaling less than ~8.16% over two years, well under the 20% raise).

If general inflation (<4%) didn't consume the 20% budget boost, the cost of the specific items needed to improve nutrition (healthy ingredients) must have skyrocketed past 20%.

Step-by-Step Option Analysis
  • Option A (Incorrect): Whether the cafeteria receives outside funding or not does not explain why a 20% boost to its existing budget produced zero nutritional improvement.
  • Option B (Incorrect): Semester planning requires lead time, but two years is equivalent to four full semesters—more than enough time to change ordering habits.
  • Option C (CORRECT): If the prices of healthy ingredients grew much faster than general inflation, the cost of healthy foods may have jumped by 25% or 30%. In that case, a 20% budget increase would not even cover the extra cost of healthy ingredients, leaving the school unable to upgrade lunch quality.
  • Option D (Incorrect): Stating that nutritional quality was at an all-time low two years ago does not explain why 20% more money failed to raise it from that low baseline.
  • Option E (Incorrect): The historical frequency of budget increases over eight years has no bearing on why this specific 20% raise yielded no results.
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Bunuel
­Plan: As part of its Healthy Students Initiative, Happy Meadows Elementary School decided two years ago to raise its school lunch budget by 20 percent in order to serve healthier food to its students. Result The nutritional quality of Happy Meadows' school lunches is no better now than it was two years ago. Further information: the annual rate of inflation since the budget change has been below 4 percent, and all of the money budgeted for lunches has been received by the school cafeteria.

In light of the further information, which of the following, if true, would best explain the result that followed from the implementation of the plan?

A. The school cafeteria does not receive any outside funding.

B. The cafeteria's ordering process requires that all meals for a semester be planned before the semester starts.

C. The prices of healthy ingredients have increased at a rate much higher than the rate of inflation.

D. When the budget change occurred, the nutritional quality of Happy Meadows' school lunches was at an all-time low.

E. The most recent budget increase was only the second such increase in the last eight years


­
OFFICIAL EXPLANATION


This question is asking that we evaluate information that isn't given in the body of the question, so our best bet is to look at the answers and see if we can rid ourselves of any obvious wrong choices.

It doesn't matter whether the "cafeteria" gets any outside funding because the school specifically increased its budget to improve "nutritional quality."

Choice (A) is incorrect. The cafeteria has had two years to plan around the increased budget, so planning a "semester" in advance shouldn't be an obstacle.

Choice (B) is wrong. However, "healthy ingredients" increasing in price would make the budget less effective, so (C) is a plausible answer. If the quality of school lunches was "at an all-time low" when the budget increase went into effect, improvements should be even more evident, so (D) is a weak choice.

Choice (E) is irrelevant—we're not concerned with the number of budget increases but the effectiveness of the most recent one.

The correct answer is Choice (C). ­
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