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The cotton farms of Country Q became so productive that the market cou

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Re: QOTD: The cotton farms of Country Q became so productive  [#permalink]

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New post 01 Feb 2018, 07:58
Argument - So the generous government decided to finally come to their senses and help some farmers by paying some cost in some so and so way. definitely this help is coming from the budget.

Question stem - let just say that government generosity worked and even after their help, it will not be net burden on budget. find an explaination for the same.

Pre thoughts - may be government is supplying this thing to some one. some revenue loss is connected to this situation.

(A) Depressed cotton prices meant operating losses for cotton farms, and the government lost revenue from taxes on farm profits. -- so if formers are at loss they will not pay tax. so gov is also at loss. if farmers able to sell some in market and some to gov then they might come at profit position which means tax for gov. but chances are that still farmers are at loss.

(B) Cotton production in several countries other than Q declined slightly the year that support-payment program went into effect in Q. --- other contry cotton production has nothing to do with this situation any ways.

(C) The first year that the support-payment program was in effect, cotton acreage in Q was 5% below its level in the base year for the program.
--- well this will be loss for all

(D) The specified maximum per farm meant that for very large cotton farms the support payments were less per acre for those acres that were withdrawn from production than they were for smaller farms. --- farm size has nothing to do with all this.

(E) Farmers who wished to qualify for support payments could not use the cotton acreage that was withdrawn from production to grow any other crop --- irrelevant.

A is probably the best answer.
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Re: QOTD: The cotton farms of Country Q became so productive &nbs [#permalink] 01 Feb 2018, 07:58

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