Economist: Paying extra for fair-trade coffeecoffee labeled with the

Question

Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helps. By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.

To evaluate the strength of the economist's argument, it would be the most helpful to know which of the following?

(A) Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers' profits

(B) What proportion of coffee farmers in developing nations produce fair-trade coffee

(C) Whether many coffee farmers in developing nations also derive income from other kinds of farming

(D) Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmers

(E) How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmers

ID: 500322

SarahPurewal · Accepted Answer

OK. The argument that the economist is making here is that the practice of paying more for fair-trade coffee *could*  hurt  more farmers in developing nations than it  helps . We want to determine if this is a good argument -- is what the economist is saying true? Could this practice hurt more farmers than it helps? What do we need to know in order to figure out if that's the case?

Well, we need to figure out how many people are actually making fair-trade coffee -- if only 10% of farmers are making fair-trade coffee, then the inevitable price rise that the economist has detailed will, in fact, hurt more farmers (90%) than it helps (10%). But if 85% of farmers are making fair-trade coffee, the practice helps more farmers (85%) than it hurts (15%). Don't get me wrong, it still hurts the 15% of farmers who aren't making fair-trade coffee, but they're a minority.

(A) isn't really relevant to the argument, which is that "the practice of paying more for fair-trade coffee could hurt more farmers in developing nations than it helps." (A) is a great question to ask if you already know the argument is strong, but we don't -- we're trying to evaluate the strength of the argument.

LeoGT · Answer

In my opinion, A is wrong because it does not focus on the central argument of the conclusion: Conclusion is that : Paying extra for fair-trade coffee lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers. choice A : Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers' profits. this choices focus on the way to decrease the impact of Paying extra for fair-trade coffee. It accept the impacts of Paying extra for fair-trade coffee and does not help us to determine whether Paying extra for fair-trade coffee will lower the profits or not. Analogy for this : children who watch so much television reduce extracurricular activities. evaluate this: -choice A same as: are there any way to reduce the impact of watching too much television. Happy to share my idea :-D

CrackverbalGMAT · Answer

Premises- Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow.

Economist’s conclusion -  But this practice may hurt more farmers in developing nations than it helps.

Why?- By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.

We need to find an option that helps us evaluate the economist’s argument that the practice of paying extra for fair-trade coffee will harm rather than help the farmers.

(A) Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers' profits
A talks about what happens later. We need to evaluate whether the conclusion is sound or not.  Eliminate

(B) What proportion of coffee farmers in developing nations produce fair-trade coffee
This helps us determine the strength of the economist’s conclusion. If the proportion of coffee farmers in developing nations who produce fair-trade coffee is low then the conclusion is strong because it will affect the larger majority who do not produce fair-trade coffee. But if the proportion is high, then the argument is not strong because more farmers will benefit. Option B helps us evaluate the strength of the argument.  Correct .

(C) Whether many coffee farmers in developing nations also derive income from other kinds of farming
Whether farmers also derive income from other kinds of farming is irrelevant to determine the strength of the argument.  Eliminate .

(D) Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmers
Irrelevant.  Eliminate .

(E) How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmers
We need to determine whether paying extra for fair-trade coffee will harm the farmers. Option E does not help us determine that.  Eliminate .

Vishnupriya
GMAT Verbal SME

Skywalker18 · Answer

Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helpes. By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.

Type- evaluate
Boil it down – Fair trade benefits farmers as they receive higher prices, but it does hurt non-fair trade farmers .
Pre-thinking – Proportion of farmers in developing countries who produce fair- trade coffee to non-fair trade

(B) What proportion of coffee farmers in developing nations produce fair-trade coffee - Correct

katelyntanglu · Answer

the same question, why A is wrong. At first, I chose B and then I was thinking that A seemed reasonable. And I changed my idea...

Tan2017 · Answer

If you deconstruct the argument into its premises (P), counter premise (CP) and conclusion (C) you get the following 
 CP : Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. 
 C (Author's Main Conclusion) :   But this practice may hurt more farmers in developing nations than it helps.   
 P : By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. 
 P : This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.

To evaluate the strength of the economist's argument, We need to verify the conclusion i.e. whether this practices hurts  more  farmers in developing countries than it helps

This is indicated in the correct answer B
(B)  What proportion of coffee farmers in developing nations produce fair-trade coffee -  If fewer farmers produce fair trade coffee, then it does not hurt "more" farmers than it helps

The other choices do not focus on the "How Many" (More or Less) aspect from this practice  
(A) Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers' profits-  Even if there was no way to help them, it does not address the conclusion "whether more farmers are affected or not" 
(C) Whether many coffee farmers in developing nations also derive income from other kinds of farming-  does not focus on the practice in question, while other options might alleviate any negative impact on their income but it does not evaluate the how many are affected by this practice.  
(D) Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmers-  again does not address the conclusion 
(E) How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmers-  focusing on how they could be helped otherwise does not evaluate whether the practice is helpful or not

Hope this helps!

rulingbear · Answer

Of all the options, only B says something related to both fair trade and non-fair trade production. Notice the prompt mentions that one group of farmers may be hurt by the action of the other group of farmers. In order to evaluate the strength of this argument, one simply needs the proportion of one group to another.

Options A, D, E are wrong as they offer recommendations/solutions to solve the problem and not evaluations, leading words are whether and should/could. Option C, on the other hand, is simply out of scope.

Answer is obviously  B

aragonn · Answer

Most replies are really helpful, but here a helpful compilation for you. hope it will be helpful.

Premise: 
1. So there are two type of coffee in question - fair-trade(Brand name) and other. Fair trade coffee has higher price. The higher price goes in poor farmer's hands. Noble cause indeed.
2. But this practice may hurt more farmers in developing nations than it helps. How? By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.

Pre-think: 
We need to evaluate the argument of economist. So what option is on the lines of hurting farmers by lowering profit. Basically how this practice is hurting farmers ? Best thing is look into this process, How this process is really doing what it says to does. how it is hurting farmers. So price will rise when supply is too much then demand. many farmers are growing coffee.

To evaluate the strength of the economist's argument, it would be the most helpful to know which of the following?

(A) Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers' profits ---- Even if there is we are looking for this strategy and its impacts.

(B) What proportion of coffee farmers in developing nations produce fair-trade coffee  --- if high number of farmer are growing coffee it is going to impact supply and so does the price. but if few farmers are growing raising price will not impact supply and so does not hurt price. correct answer

(C) Whether many coffee farmers in developing nations also derive income from other kinds of farming --- even if he does will it impact price/supply. No

(D) Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmers --- that is a moral issue not significant for out price/supply situation.

(E) How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmers --- even if they can be helped it will not do much for our situation of supply/price.

B is best answer.

Leonaann · Answer

So, this is how I interpreted the question.
 the argument the practice of by paying extra for fair-trade coffee hurts farmers in general right. And we need to decide which is helpful to evaluate the economists argument by looking for reasons that would be helpful to determine whether paying extra for fair-trade coffee hurts farmers.

Hence I chose option A as the answer.
 I am not able to understand why option B helps in evaluating the argument. Please help to shed some light on this! thank you.

neha283 · Answer

Hi,

The last line of the passage suggests that this practice of paying more to fair-trade-marked coffee is hurting rather than helping to non-fair trade farmers.
So, in order to strengthen the economist's point i.e, the prices are lower for non-trade farmers, it is necessary to evaluate what is the percentage of non-fair to fair trade farmers in developing nations. 
Simple first thought that should ocme to your mind if, if price for non-trade is lowering +> the quantity for non-trade coffee is more => the number of non-fair trade coffee farmers is possibly high. 
Thus, we need to know the percentage of fair-trade and non-fair trade coffee farmers in developing nations. Choice (B) is correct.
Choice (A) focuses on ways to increase the price of non-fair trade coffee. It does not help in strengthen the conclusion of economist which is why is it hurting than helping the farmers.

Hope this helps.

Posted from my mobile device

rnn · Answer

not sure why a is incorrect - can i get some help please

GMATNinja · Answer

SarahPurewal said it succinctly here, but I'm happy to give this more of a deep dive!

Remember that the conclusion here is:

Heres how the argument breaks down:

Paying extra for fair-trade coffee raises average prices for coffee (including fair-trade and non-fair trade).
The rise in average prices for coffee encourages more coffee to be produced.
The increase in coffee production lowers prices for non-fair-trade coffee.
The lower prices for non-fair-trade coffee lowers profits for non-fair-trade coffee farmers.
Therefore, paying extra for fair-trade coffee may hurt more farmers in developing nations than it helps.

Notice that the author is making a logical leap between those last two steps. The author describes an impact on  non-fair-trade  farmers, then concludes that  more farmers, in general , may by hurt than helped.

So to evaluate the strength of this argument, it would be certainly help us to know what proportion of coffee farmers in developing nations produce fair-trade coffee (or could beneficially switch from producing non-fair-trade coffee to fair-trade coffee). This is why we keep choice (B); it would help us decide whether to accept the logical leap that the author is making from non-fair-trade farmers to farmers, in general.

Now, let's take a closer look at choice (A):

And for good measure, let's refresh on the conclusion we're trying to evaluate:

The information in choice (A) refers to action taking place  after  non-fair-trade farmers' profits have already been reduced by the practice of paying extra for fair-trade coffee. Is this what we're being asked to evaluate?

Nope. While it would be nice to know whether there's a way to help negatively impacted farmers, this information has absolutely nothing to do with the specific logical argument being made by the author: That paying extra for fair-trade coffee may cause harm to more coffee farmers in developing nations than it helps. Even worse, choice (A) remains focused on non-fair-trade farmers, which means we still have no information to evaluate impact on farmers overall.

We're not being asked to evaluate how the impact of increased average prices could be alleviated, and we're not being asked to evaluate an argument that's only about non-fair-trade farmers. That's why we eliminate (A) and stick with (B).

I hope this helps!

warrior1991 · Answer

AndrewN   VeritasKarishma   GMATNinja   generis

I marked C. Please help

1. If   many   farmers are deriving incomes from other kinds of farming, the lower profit from coffee will  NOT HURT  them.
2. If   not many   farmers are deriving incomes from other kinds of farming, the lower profit from coffee will  HURT  them.

We get a YES/NO and keeping this in mind I marked C.

AndrewN · Answer

Hello,  warrior1991 . This question just clicked for me, and I felt sure about (B) in about 1:40. The problem with (C) is that it shifts the focus to other types of income, and the argument we are interested in evaluating is based on  poor farmers... in developing nations  who grow  fair-trade coffee . Anything else such farmers may grow is beside the point, not to mention that we have no idea  how much  income may derive from these  other kinds of farming . It could be the case that 90 percent of their income is still generated from selling fair-trade coffee, and if that were true, the lower profit from coffee might very well hurt them. Meanwhile, choice (B) has us consider just what the passage directs us to,  coffee farmers in developing nations   produce fair-trade coffee . If we knew this proportion, then we could better evaluate the argument, and that is all we are looking to do.

I hope that clarifies your doubts. Thank you for calling my attention to the question.

- Andrew

KarishmaB · Answer

warrior1991 :

We need to evaluate the strength of the economist's conclusion.

What is the economist's conclusion? This practice may hurt more farmers in developing nations than it helps.

This is what we have to evaluate - will this practice hurt more farmers or help more farmers?

If 90% farmers grow fair trade coffee - this practice helps them - then it helps more farmers.
If 90% farmers grow non fair trade coffee - this practice hurts them - then it hurts more farmers.

That is the only scope of our argument. Most options are absolutely irrelevant to our argument. Scope of CR arguments is very limited. Focus on just that.

egmat · Answer

Hi,
The question stem asks us to evaluate the strength of the economist's argument, i.e., how strong is his argument.

The argument is basically a causal relationship- Paying extra for fir-trade-coffee may hurt (Cause) more farmers in developing nations than it helps (Effect).
We need to evaluate the strength of this causal relationship.

Choice A:
There may or may not be a way to alleviate the impact on non-fair trade coffee farmer's product, but in any case the economist's argument and the causal relationship in it will not be impacted.

Choice B:
Let us run it through the variance test

Yes- The proportion of coffee farmers in developing nations that produce fair-trade coffee IS significantly high.
“Significantly” means enough to cause a noticeable impact. Let’s say around 95 of the 100 farmers are fair-trade coffee farmers. In this case paying extra for fair trade coffee will hurt more farmers than it helps.

No- The proportion of coffee farmers in developing nations that produce fair-trade coffee IS NOT significantly high.
This extreme, on the other hand weakens our conclusion as in this case paying extra for fair trade coffee will not hurt more farmers than it helps.

Hope that helps,
Regards

abhimehrotra · Answer

GMATNinja  Can you provide your insights over the argument. I want to understand if average prices rise and thereby result in greater supply than demand, then cost would reduce. In that case, the prices of FT coffee will reduce as well right?

GMATNinja · Answer

From the argument, we know that poor farmers receive a "higher price" for fair trade coffee than they do for non-fair-trade coffee.

However, we don't know how  much  higher the price is. So, even if the price is reduced when supply outstrips demand, it is quite possible that poor farmers are still paid more for fair trade coffee than they would be for non-fair-trade coffee in a "normal" market. We simply do not have enough information to answer that question.

If the oversupply issue DOES hurt fair trade farmers as well as non-fair-trade farmers, that would certainly strengthen the argument that fair trade coffee "may hurt more farmers in developing nations than it helps." Sadly, though, none of the answer choices give us insight to help us evaluate this issue.

(B), on the other hand, certainly helps us to evaluate the argument from a different angle. The author argues specifically that fair trade coffee "lowers profits for  non-fair-trade  coffee farmers." Does this mean that fair trade coffee hurts MORE farmers than it helps? Only if there are MORE non-fair-trade coffee farmers than there are fair trade coffee farmers.

I hope that helps!

mustafaturhan · Answer

I couldn't get the point. Even if we know the proportion, the result will be the same.
Let's say 40% Non fair coffee trade and 60% fair coffee trade. What if we change their place? I don't see any convincing logic here in question...

Economist: Paying extra for fair-trade coffeecoffee labeled with the

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Economist: Paying extra for fair-trade coffeecoffee labeled with the

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