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Statement of a United States copper mining company: Import [#permalink]
13 Sep 2005, 02:11
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Statement of a United States copper mining company: Import quotas should be imposed on the less expensive copper mined outside the country to maintain the price of copper in this country; otherwise, our companies will not be able to stay in business.
Response of a United States copper wire manufacturer: United States wire and cable manufacturers purchase about 70 percent of the copper mined in the United States. If the copper prices we pay are not at the international level, our sales will drop, and then the demand for United States copper will go down.
If the factual information presented by both companies is accurate, the best assessment of the logical relationship between the two arguments is that the wire manufacturerâ€™s argument
(A) is self-serving and irrelevant to the proposal of the mining company
(B) is circular, presupposing what it seeks to prove about the proposal of the mining company
(C) shows that the proposal of the mining company would have a negative effect on the mining companyâ€™s own business
(D) fails to give a reason why the proposal of the mining company should not be put into effect to alleviate the concern of the mining company for staying in business
(E) establishes that even the mining companyâ€™s business will prosper if the mining companyâ€™s proposal is rejected
Can someone explain how importing quota would be a negative effect? Doesn't that mean that the prices from other countries will be higher, thus, more people would purchase from US?
Not necessarily. It's the whole supply and demand thing. The mining company is proposing a quota on RAW copper.
If only a certain amount of copper is let into the country then US companies will have to buy more US copper at the US price (higher than international).
That increased cost will be passed on to consumers in the form of a higher price for US copper wire. Sales will go down because the US copper wire is more expensive than foreign made copper wire (at the lower foreign price.)
The copper mining company says import quotas should be imposed to protect interests of local mining companies (keep higher price than overseas miners). The copper wire manufacturers counters this by saying that keeping the price levels high will cause decline in sales and subsequently demand for U.S Copper (by the mere fact they purchase mainly U.S copper).
C shows the relationship between the two statements clearly. By imposing quotas, the mining companies will not lower prices to stay competitive. This will result in the manufacturers having to pass on the cost to consumers, which will in turn cause a drop in sales. Drop in sales will result in less demand from manufacturers for U.S copper. This hurts the mining company's buisness.
E is not so good as nothing from the two statements suggests that the mining company's business will prosper (key word here) even without imposing quotas.
The wire manufacturer makes it clear that without international level prices their sales will go down which will lead to a decreased demand in copper. And since their inventory is 70% cooper from US mines, a decreased demand will hamper the mining companies as well
clear C for me. After reading the second statement, its clear that the wire manufacturer is saying that if what the mining company wants actually happens, it will only end up hurting the mining company !!
(A) is self-serving and irrelevant to the proposal of the mining company [ not self-serving – clearly points out the affect on the Copper industry – eliminate it]
(B) is circular, presupposing what it seeks to prove about the proposal of the mining company [It is not presupposing – eliminate it]
(C) shows that the proposal of the mining company would have a negative effect on the mining company’s own business [hold it]
(D) fails to give a reason why the proposal of the mining company should not be put into effect to alleviate the concern of the mining company for staying in business [Has provided information and reason – eliminate it]
(E) establishes that even the mining company’s business will prosper if the mining company’s proposal is rejected [Hold it]
Between C and E: never mentions mining company business will prosper
Re: CR - US Copper
22 Feb 2008, 23:16