A. See explanation next to each answer...

I know this has been discussed a million times. Even I got this correct. But M just a little skeptical that are we not being asked to infer too much here. Are we not required to limit our answer selection in inference question only to the information in the premises presented in the passage ?

choice A gives the reason / hidden assumption behind the cost going up due to the ban posed on the import of such products.

A it is.

answer to the question 1

I would go for A.

the question tells that in order to protect the domestic industries . the govt banned imports. which implies that import products were cheaper than domestic products, otherwise why will be the goverment try to protect the fledgling industries. . thus once these imports are stopped naturally the cost to the buyer/expoters will be high in the doemstic market.

A clearly brings this out.

now Question no 2 from the same passage
Which of the following conclusions about country Z’s adversely affected export-dependent industries is best supported by the passage?

(A) Profit margins in those industries were not high enough to absorb the rise in costs mentioned above.

(B) Those industries had to contend with the fact that other countries banned imports from country Z.

(C) Those industries succeeded in expanding the domestic market for their products.

(D) Steps to offset rising materials costs by decreasing labor costs were taken in those industries.

(E) Those industries started to move into export markets that they had previously judged unprofitable.

please post your replies........

So this question basically talks about two types of industries.

1)Local Fledgling Industries
2)Export Dependent Industries,who are being forced to buy products from local industries now.

Government puts a ban on importing products which are being made by the local fledgling industries -->Cost of the those products increases as the competition decreases.Hence the (2)Export dependent industries have a problem competing as now they have to buy the same product at an inflated cost, which makes them less profitable.

Ans is A

For the 2nd line, shouldn't the 2nd coma be "and" ?
Which industries is referred to by "those"?

"As a direct result, the cost of those products to the buyers, several export-dependent industries in Z, went up, sharply limiting the ability of those industries to compete effectively in their export markets."

To protect certain fledgling industries, the government of country Z banned imports of the types of products those (FLEDGLING INDUSTRIES) industries were starting to make. As a direct result, the cost of those products to the buyers, several export-dependent industries in Z, went up, sharply limiting the ability of those (export-dependent industries in Z) industries to compete effectively in their export markets.

CAUSE
Purpose of government of country Z: To protect certain fledgling industries
Action taken by the government to achieve their purpose: the government of country Z banned imports of the types of products those (FLEDGLING INDUSTRIES) industries were starting to make.

EFFECT

Result: the cost of those products to the buyers, several export-dependent industries in Z, went up, sharply limiting the ability of those (export-dependent industries in Z) industries to compete effectively in their export markets.

Suppose you are building a product that costs 10$ and you import the same product that costs 7$ Now, if imports are not stopped, then your product becomes hard to sell.
But what has happened now that the customers are forced to buy the 10$ product. Now this product has to be exported and since the cost has gone up, the duty added in the buyer country will even hurt the buyer more.And they will not prefer the more costly product. So, in a way the argument says that if the imported products were allowed that would have been better rather than making the product in Z's fledgling industries.

Option A becomes the answer.


(A) Those products had been cheaper to import than they were to make within country Z's fledgling industries.



This is a far fetched inference. Eliminated


We do not get any idea from the argument of such exchange. Eliminated


Trade deficit is bringing in outside knowledge. Do you know which country are they talking about? NO. Eliminated


Again, how do we know that they were essential to Z's economy. Eliminated

To protect certain fledgling industries, the government of country Z banned imports of the types of products those industries were starting to make. As a direct result, the cost of those products to the buyers, several export-dependent industries in Z, went up, sharply limiting the ability of those industries to compete effectively in their export markets.

Which of the following can be most properly inferred from the passage about the products whose importation was banned?


(A) Those products had been cheaper to import than they were to make within country Z's fledgling industries.

Since it is banned to import these products, buyers in export-dependent industries have to buy these products within the country Z. We know from the passage that these buyers are paying more for the products. Therefore, we can infer that the products made in country Z is more expensive than the imports which buyers used to purchase for a lower price.

(B) Those products were ones that country Z was hoping to export in its turn, once the fledgling industries matured.

We know Z has been relied on imports on these products before. But we do not know whether country Z is going to export these products or not in the future.

(C) Those products used to be imported from just those countries to which country Z's exports went.

This is a minor detail of the export : where the export came from or went. This is the detail we do not know, or in other words, cannot be inferred from the passage.

(D) Those products had become more and more expensive to import, which resulted in a foreign trade deficit just before the ban.

We do not know whether these products will become more expensive, nor it can be inferred. In addition, we can infer that the import should be cheap, but D is saying that it is expensive.

(E) Those products used to be imported in very small quantities, but they were essential to country Z's economy.

We do not know if it was essential to the economy nor inferred this from the passage.
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Hi IanStewart

Could you please help with this question?


We are only told that "several export-dependent industries" are paying higher prices for products made in country Z than those for imported ones.

Let's say that fledgling industries spend $50 to make some product and sell it for $100, whereas an imported product costs $80.
Export-dependent industries are paying higher prices for the products made in country Z. If my reasoning is correct, then A cannot be correct.

So, How can we conclude (A) ?

I think (A) should say that
Those products had been cheaper to import than they were to buy from country Z's fledgling industries.

Could you please explain Why (A) is correct?

Thank you very much beforehand!

Yes, you make a good point -- all we can infer is that the cost to buy these products became higher within country Z after their import was banned. So the sales price of those products is higher when the products are made domestically than when they are imported. Answer A bizarrely seems to compare the sales price of an imported product with the cost to manufacture the product domestically, but that manufacturing cost isn't what matters here -- what matters is how much the product sells for.

So answer A really should be better-worded. I'd still choose it, since answers B through E are clearly not valid inferences, and A could perhaps be valid if you interpret "to make within" in a very liberal way. Still, this is a very old question, written by the previous test developer, and I find the newer questions are generally higher-quality (both in Quant and in Verbal), so you hopefully won't see any current questions with similarly problematic "correct" answers.
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