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

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Re: The cotton farms of Country Q became so productive that the market cou [#permalink]

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New post 17 May 2017, 02:09
vivek123 wrote:
'A' makes sense.

(A) Depressed cotton prices meant operating losses for cotton farms, and the government lost revenue from taxes on farm profits.



A seemed like the best choice, but I still feel like it requires an additional assumption, which is the tax on profits would be enough to cover direct support spending. On some other GMAT questions, I feel like taking this additional logical leap could be a way to trick the reader into the wrong answer. There isn't a better answer among the choices, so that is why I went with A, but the answer choices seem flawed to me. A better answer choice, though I guess would make this a much easier problem, is to directly state that tax on profits would be as much as if not greater than dollars spent on support.
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Re: The cotton farms of Country Q became so productive that the market cou [#permalink]

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New post 08 Jun 2017, 00:26
down to A or E, but A is correct because E does not address the issue that the government is free from the financial burden when the government implements the program.

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Re: The cotton farms of Country Q became so productive that the market cou [#permalink]

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New post 09 Jun 2017, 07:07
The cotton farms of Country Q became so productive that that market could not absorb all that they produced. Consequently, cotton prices fell. The government tried to boost cotton prices by offering farmers who took 25 percent of their cotton acreage out of production direct support payments up to a specified maximum per farm.

The government's program, if successful, will not be a net burden on the budget. Which of the following, if true, is the basis for an explanation how this could be so?

(A) Depressed cotton prices meant operating losses for cotton farms, and the government lost revenue from taxes on farm profits.


My 2 cents:
given info: since the government will need to pay to the farmers, it implies that its budget is affected (i.e. "net burden on the budget)
question asks: how can paying to farmers NOT be a burden on the budget?
looking for: something which says that even though we will pay to the farmers, we can compensate that cost somehow or avoid losing money in some other way
option A: if there are operating losses because of reduced price of cotton and tax revenue becomes lower, budget of govt is affected. Therefore by paying to the farmers to reduce production by 25%, prices are maintained and therefore operating losses are avoided. The money paid to the farmers is compensated by the money that would have been lost if govt did not implement their plan.

wow difficult to explain, also..
_________________

NOTE: I am not an expert, therefore my analysis answering the questions may be incorrect and may not be relied upon. However I will appreciate if you can correct the mistakes I may have made in my analysis.

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Re: The cotton farms of Country Q became so productive that the market cou [#permalink]

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New post 22 Dec 2017, 08:17
TeHCM wrote:
Official Guide for GMAT Verbal Review 2015

Practice Question
Question No.: CR 73
Page: 146

The cotton farms of Country Q became so productive that the market could not absorb all that they produced. Consequently, cotton prices fell. The government tried to boost cotton prices by offering farmers who took 25 percent of their cotton acreage out of production direct support payments up to a specified maximum per farm.

The government's program, if successful, will not be a net burden on the budget. Which of the following, if true, is the basis for an explanation how this could be so?

(A) Depressed cotton prices meant operating losses for cotton farms, and the government lost revenue from taxes on farm profits.

(B) Cotton production in several countries other than Q declined slightly the year that support-payment program went into effect in Q.

(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.

(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.

(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


The easiest way to tackle this question is to understand the overall tone of the argument and the question.
The argument says the cotton prices fell ---> meant the loss to farmers ----> so they planned to reward the farmers---> farmers happy ---> and no loss to govt also ---> means govt is also getting something in return---> everyone is happy

In short, the question is looking for something which is a "Happy" option, with no ifs and buts :)

A is the only one out of 5 for this.

============Hope this approach helped. Press +1 kudos if you liked ========================
Re: The cotton farms of Country Q became so productive that the market cou   [#permalink] 22 Dec 2017, 08:17

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