souvik101990 wrote:
The exchange rate between the currency of Country X and that of Country Y has historically favored the currency of Country Y. Because of this, citizens of Country Y often take their vacations in Country X, where the exchange rate makes hotels and restaurants more affordable. Yet, citizens of Country Y rarely purchase clothing or electronics in Country X, despite the fact that those items are more expensive in their home country, even when sales taxes are taken into account.
Which of the following, if true, would best explain the buying habits of the citizens of Country Y?
A. Citizens of Country Y prefer the fashions available in their own country.
B. Stores in Country X receive the latest fashions and technology several months after they are available in Country Y.
C. The citizens of Country X resent the buying power of the currency of Country Y.
D. The government of Country Y imposes tariffs on imported goods.
E. The currencies of Country X and Country Y are both weak compared to the currency of Country Z.
This question is part of the GMAT Club Critical Reasoning : Paradox Revision Project. Paradox:
Citizens of Y often take vacations in Country X, where the exchange rate makes hotels and restaurants more affordable.
Yet, they don't purchase clothing or electronics in Country X even though it is cheaper there.
How do we explain this:
A. Citizens of Country Y prefer the fashions available in their own country.
Two problems - it doesn't explain anything about electronics and other goods, just clothes; also, we don't know what is given priority, fashion preferences or cost. I may prefer the clothes from my hometown but I may also prefer cheaper clothes available somewhere else so what wins - price or fashion preference - we don't know. This option needed to mention "... prefer the fashions available in their own country irrespective of cost" to resolve the clothes paradox.
B. Stores in Country X receive the latest fashions and technology several months after they are available in Country Y.
Again, what wins - cost or current trends - we are not sure.
Note that the argument discusses just the monetary factor. People of Y take vacations in X because it is cheaper. But they don't buy the cheaper products of X. I would really like if this paradox is resolved in monetary terms itself. Some unknown piece of monetary information that would resolve the paradox would be best, though not necessary.
If (B) also said that people of Y prefer latest fashions irrespective of cost, then that would resolve my paradox.
I will move ahead hoping to see a better option.
C. The citizens of Country X resent the buying power of the currency of Country Y.
The choices of citizens of X is irrelevant.
D. The government of Country Y imposes tariffs on imported goods.
"import" just means to buy or bring in products from another country. When individual travellers buy products from another country and come back home, they are importing those products. This option tells us that the cost of cheaper goods of X is actually higher since they need to pay import tariffs in their own country. How much is the tariff we don't know but perhaps it makes buying from X unattractive.
E. The currencies of Country X and Country Y are both weak compared to the currency of Country Z.
Country Z is irrelevant.
Answer (D)