Platinum is a relatively rare metal vital to a wide variety of industr

The argument is that a major producer of platinum has a plant in a country that will impose tax, so the price in the world will rise. To support this argument, we need to show that the tax will cause an increase in price, that there is no way to move the plant, or that there is no alternative source of platinum. Since we know what to look for, we can look for it, ignoring irrelevant data. This is a Precise approach.

Going over the options, (C) is the only option which does this (by showing that there is no alternative source) so must be our answer. Note that quite a few of the other options have the opposite effect -- they weaken, and not strengthen, the conclusion. Watch out for these!

As per argument Xagor Corporation is a major producer of platinum and it has its production plant in a country that will soon begin imposing an export tax on platinum sold and shipped to customers abroad. Thus, the price of platinum on the world market is going to rise.
Few things that can be the reasons behind such price rise:
- Xagor Corp. controls a large enough market to impact prices of platinum at international level.
- No other platinum producer is there or other producers together contribute a small share of platinum production to have a minimal impact in driving prices low.
- Xagor Corp. that plant is single largest platinum producer in the world that it impacts the platinum prices at international level.

There can be more reasons.
If we look at C it is the only options that directly relates to our 2nd reason.
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Understanding the passage


Platinum is a relatively rare metal vital to a wide variety of industries.

• Platinum is a rare metal.
• It is a crucial component in a wide range of industries.

Xagor Corporation, a major producer of platinum, has its production plant in a country that will soon begin imposing an export tax on platinum sold and shipped to customers abroad.

• Xagor Corporation is a significant producer of platinum.
• Xagor Corporation has production plants in a country that exports platinum to customers abroad.
• The country will soon begin imposing an export tax on platinum sold and shipped.
As a consequence, the price of platinum on the world market is bound to rise.

• Therefore, the price of platinum will increase on the world market.

Conclusion: The price of platinum on the world market is bound to rise.

Pre-thinking


Strengthen Framework

What information will help us believe more in the conclusion?
Conclusion:The price of platinum on the world market is bound to rise.
Given that:
(i) Platinum is a rare metal used in a wide variety of industries.
(ii) Xagor Corporation is a significant producer of platinum.
(iii) Xagor Corporation has production plants in a country that will soon impose exportation tax.

Thought Process

Xagor Corporation produces platinum, a rare metal vital to many industries. Xagor's plant is in a country that will soon impose an export tax on platinum. The world market price of platinum is predicted to rise. We can understand the imposing export taxes will result in an increase in platinum prices on the world market.
But what if those industries could get platinum from countries that did not tax platinum exports? Then the world market price might not rise if exports from those countries could adequately fulfill market demand.

Strengthener

A statement which indicates that producers of platinum in other countries will be unable to fulfill the demand for platinum required in industries and platinum will have to be exported from Xagor corporation with the imposed tax will help us believe more in the author’s conclusion.

Answer Choice Analysis

A. An inexpensive substitute for platinum has been developed and will be available to industry for the first time this month. INCORRECT
• The information from this option tends to undermine the reasoning weaken the conclusion. If a less expensive platinum-substitute were to be developed, the world market price of platinum would tend to decline. Thus, this is not the correct choice.

B. The largest of the industries that depend on platinum reported a drop in sales last month. INCORRECT
• This information weakens the support for the conclusion to some extent. It suggests that the overall demand for platinum might decline, which would tend to lower the world market price of platinum. Thus, this is not the correct choice.

C. The producers of platinum in other countries taken together cannot supply enough platinum to meet worldwide demand. CORRECT
• The information in this statement is directly in line with our pre-thinking strengthener. It indicates that some platinum subjected to the export tax will be exported and will cost importers more than before. This would tend to cause the world market price of platinum to rise. Therefore, this is the correct choice.


D. Xagor produced more platinum last month than in any previous month. INCORRECT
• This statement only tells us that the production of platinum witnessed an upswing in the last month compared to the previous month. This could mean that the supply of platinum in the world market has increased. And an increased supply could result in a decline in the price of platinum. Thus, this is not the correct choice.

E. New deposits of platinum have been found in the country in which Xagor has its production plant. INCORRECT
• This information suggests a possible increase in the world market supply of platinum, which would tend to reduce the world market price, provided world demand for platinum did not also increase at least proportionately. Thus, this is not the correct choice.

The answer option should provide a reason to confirm that the prices may rise.It should also tell about the leverage that country has over others or may be any other reason that tells tells the demands would not stop.

C."The producers of platinum in other countries taken together cannot supply enough platinum to meet worldwide demand."
Option C tells that the demand would rise and hence, prices also.

nightblade354 GMATNinjaTwo: Looks like this is incorrectly tagged. Should be a "strengthen" question.

Conclusion: the price of platinum on the world market is bound to rise (b/c big produce of platinum has an export tax on its platinum)

Which of the following, if true, tends to confirm the conclusion above?

A. An inexpensive substitute for platinum has been developed and will be available to industry for the first time this month.
This would weaken the conclusion. Substitute for platinum = prices for platinum would eventually fall.

B. The largest of the industries that depend on platinum reported a drop in sales last month.
Drop in sales = less demand. Less demand would push prices to go DOWN, not rise (as the conclusion states). If a restaurant is selling water for $5 and no one is buying, then it would logically reduce prices until some buys it; they clearly would not increase it.

C. The producers of platinum in other countries taken together cannot supply enough platinum to meet worldwide demand.
This is huge. World platinum prices would rise if it costs more for the biggest producer to get taxed AND all other countries COMBINES cannot supply the worldwide demand.

D. Xagor produced more platinum last month than in any previous month.
Doesn’t matter what happened last month. This is a story trap. Maybe they built up a huge, excess supply? No. The conclusion states the price is “bound to rise.” Eventually, it will rise. Eventually, the supply would run out and prices would rise.

E. New deposits of platinum have been found in the country in which Xagor has its production plant.
This might lessen the blow, but it would still increase the price. Or maybe the new deposits would run out and then prices would rise regardless.

Platinum is a relatively rare metal vital to a wide variety of industries. Xagor Corporation, a major producer of platinum, has its production plant in a country that will soon begin imposing an export tax on platinum sold and shipped to customers abroad. As a consequence, the price of platinum on the world market is bound to rise.

P : Country, major producer of platinum, is imposing an export tax on platinum sold.
C : The price of platinum will rise.

Which of the following, if true, tends to confirm the conclusion above?

A. An inexpensive substitute for platinum has been developed and will be available to industry for the first time this month.
-> Weaken

B. The largest of the industries that depend on platinum reported a drop in sales last month.
-> Weaken.

C. The producers of platinum in other countries taken together cannot supply enough platinum to meet worldwide demand.
-> Correct

D. Xagor produced more platinum last month than in any previous month.
-> Irrelevant.

E. New deposits of platinum have been found in the country in which Xagor has its production plant.
-> Weaken

SOLUTION
Passage Analysis
Platinum is a relatively rare metal vital to a wide variety of industries.
• Platinum is a metal that is relatively rare.
• It is very important for a lot of industries.
Xagor Corporation, a major producer of platinum,
• Xagor Corporation is a producer of large amount of platinum.
has its production plant in a country that will soon begin imposing an export tax on platinum sold and shipped to customers abroad.
• Xagor’s production plant is in a country that will soon begin to impose an export tax on platinum.
• The export tax will be imposed on platinum sold and shipped to customers outside that country.
As a consequence, the price of platinum on the world market is bound to rise.
• As a result of this, the cost of platinum overall in the world is expected to increase.

Conclusion: the price of platinum on the world market is bound to rise.

Question stem Analysis

Which of the following, if true, tends to confirm the conclusion above?
This question stems asks to confirm the conclusion. Essentially it asks for a strengthener.

Prethinking

Strengthener Framework:
What new information will make us more believe in the conclusion that increase in export tax in the mentioned country will increase the price of Platinum in the world market, given that
• Platinum is a relatively rare metal vital to a wide variety of industries.
• Xagor Corporation, a major producer of platinum, has its production plant in that country which is about to add an export tax.

Strengthener 1- The country has most of the platinum deposits in the world. This increases our belief in the conclusion. Because it indicates that other countries which may not have such an export tax do not have enough platinum production to counteract the increased price from this country. So, overall price can be expected to increase.

Strengthener 2-All the major producers have their large production plants in this country. In such a case, again, even other companies will sell their Platinum at an increased price on the world market. It increases belief in the conclusion that the export tax will lead to a price increase.

Strengthener 3- Other platinum-producing countries will also follow suit in exerting a tax on exported platinum. In such a case, the price is only going to increase, given other countries also follow suit.

Option Analysis

A. An inexpensive substitute for platinum has been developed and will be available to industry for the first time this month.
This option is a weakener as it reduces the demand for platinum from this month. Hence it cannot be the right answer.

B. The largest of the industries that depend on platinum reported a drop in sales last month.
The drop in sales of industries cannot tell us anything about the price of platinum in the world market. Hence this is an irrelevant option.

C. The producers of platinum in other countries taken together cannot supply enough platinum to meet worldwide demand.
This option is in line with our Prethinking strengthener 1. Hence this is the correct answer.

D. Xagor produced more platinum last month than in any previous month.
The increase in production last month has nothing to do with the increase in price in the world market due to the export tax. Hence this option is also irrelevant.

E. New deposits of platinum have been found in the country in which Xagor has its production plant.
We do not know how large or small the new deposits are or how much impact they can have on the supply to the world market. Hence this option is also not the right strengthener.
The correct answer is C
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