Conclusion: Analysts have concluded that cocoa's price will continue to rise at least into the near future.

Which of the following would, if true, most strengthen the reasoning above?

A. Ground cocoa beans can be stored for long periods before they spoil.
Weakener to the conclusion; If ground cocoa beans can be stored, then the cocoa processing facilities might just store right now and use it later. Eliminate.
B. Several European and North American manufacturers that use cocoa have recently improved their processing capacity.
This explains how the grinding in EU and NA has increased, but it doesn't support the conclusion that the prices will continue to rise; Eliminate
C. It takes new cocoa trees five or six years before they start bearing fruit.
Seeing the demand, if new cocoa trees are planted, these trees will be able to bear cocoa beans only after 5-6 years so the prices will continue to increase in near future. Hold.
D. Governments in Europe and North America are likely to change current restrictions on cocoa imports.
This option doesn't mention change will result in decrease or increase of restrictions on cocoa imports. Doesn't help with the conclusion; Eliminate
E. Historically, cocoa production has varied widely from year to year.
Weakener, if the production has been less this year, it might pick up next year hence attacking the conclusion.

C is a clear winner.
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The stimulus states 2 things -

1. Fall in supply ( Due to poor weather )
2. Rise in Demand ( North Am. & Europe - Resulting in increase in Cocoa processing)

Result of the 2 situations above will result continuation of the same in near future.....

(B) Suggests improvement in production capacity but the problem at hand is Cocoa production is less ... There can be no justification for increasing productivity when there is scarcity of raw materials..[/quote][/quote]


I trade cocoa. With increase in processing capacity offices will increase. That's a very strong point. So is B, I don't deny, but this is a rare situation when 2 answers are really saying. However it might be that for a layman C sounds more concrete

Posted from my mobile device

Hey there,


Situation: There has been limited production of cocoa beans due to severe weather and also increased demand for cocoa; as a result, cocoa prices have risen.

Reasoning: What would help support the analysts' inference that cocoa prices will continue to rise at least into the near future? If the price of cocoa is to continue to rise, then the conditions that have led to the recent increase in price must not be ameliorated. They would be ameliorated if demand for cocoa beans declined, e.g., because price increases made people less likely to want ground cocoa; they would also be ameliorated if supply increased, e.g., because many new cocoa trees were planted and very quickly started bearing fruit. If we had reason to believe that one or more of these ameliorating factors is unlikely to happen, then we have more reason to think that prices might stay high, and possibly even rise further.

Option A - That ground cocoa beans can be stored for long periods without spoiling does not tell us whether supply and demand conditions will stay stable, improve, or get worse.

Option B - The fact that these manufacturers have recently improved their processing capacity might help explain why the grinding of cocoa beans has increased recently; but it does not indicate that this increased capacity will be fully utilized. Often, if end-product demand decreases, industrial capacity will become underutilized.

Option C - Correct. If it takes new cocoa trees several years to start bearing fruit, then it is less likely that supply can quickly be increased, which in turn makes it less likely that supply can quickly meet any increased demand and thereby relieve pricing pressures.

Option D - These governments may change current restrictions on cocoa imports, but for all we know they may make them more restrictive rather than less restrictive. If they made them more restrictive, demand might decrease, in which case prices might actually fall.

Option E - If cocoa production varies from year to year, it could be that next year cocoa production increases, in which case, as long as demand does not increase as well, prices might fall.

Hope this helps.
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Supply shortages and signs of growing demand are driving cocoa prices upward. Unusually severe weather in cocoa-producing regions—too much rain in Brazil and too little in West Africa—has limited production. Further, Europe and North America recently reported stronger demand for cocoa. In the first quarter, grinding of cocoa beans—the first stage in processing cocoa for chocolate—rose 8.1 percent in Europe and 16 percent in North America. Analysts have concluded that cocoa's price will continue to rise at least into the near future.

Cocoa supply shortages and higher demand driving cocoa prices up > Bad weather limiting production > Demand is growing > Cocoa prices will continue to rise

So here we have a classic case of a prediction – that cocoa’s prices WILL continue to rise.

Which of the following would, if true, most strengthen the reasoning above?

A. Ground cocoa beans can be stored for long periods before they spoil.
-this seems to weaken the conclusion for me…if people can store these things for a long time then they might not have any reason to buy more …demand drops so price could as well (and we know from the passage that supply/demand affects prices)
B. Several European and North American manufacturers that use cocoa have recently improved their processing capacity.
-I suppose this could weakens the argument somehow…countries are now able to manage (at least in part) part of the process so maybe demand might drop off? But they would still need to get cocoa from Brazil and West Africa…
C. It takes new cocoa trees five or six years before they start bearing fruit.
Correct. This is code for a supply shortage. Besides weather, another reason for the short supply would be the trees themselves don’t bear fruit at a fast rate. Short supply > increased demand > higher prices.
D. Governments in Europe and North America are likely to change current restrictions on cocoa imports.
-unclear what affect this is supposed to have …are they loosening or tightening restrictions?
E. Historically, cocoa production has varied widely from year to year.
-irrelevant
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