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# Under the agricultural policies of Country R, farmers can

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Manager
Joined: 30 Mar 2007
Posts: 179
Under the agricultural policies of Country R, farmers can [#permalink]

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11 Jun 2008, 06:58
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Under the agricultural policies of Country R, farmers can sell any grain not sold on the open market to a grain board at guaranteed prices. It seems inevitable that, in order to curb the resultant escalating overproduction, the grain board will in just a few years have to impose quaotas on grain production, limiting farmers to a certain flat percentage of the grain acreage they cultivated previously.
Suppose an individual farmer in country R wishes to minimize the impact on profits of the grain quota whose eventual imposition is being predidcted. If the farmer could do any of the following and wants to select the most effective course of action, which should the farmer do now?
(A) Select in advance currently less profitable grain fields and retire them if the quota takes effect.
(B) Seek long-term contracts to sell grain at a fixed price
(C) Replace obsolete tractors with more efficient new ones
(D) Put marginal land under cultivation and grow grain on it
(E) Agree with other farmers on voluntary cutbacks in grain production

help!
Manager
Joined: 24 Apr 2008
Posts: 161

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11 Jun 2008, 07:26
I think the choice to go is btw B & E:

I go with B: This will help farmers to avoid going to Govt and thus reduce impact on profits in the short term.
Director
Joined: 01 Jan 2008
Posts: 622

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11 Jun 2008, 07:50
D
Director
Joined: 05 Jan 2008
Posts: 687

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11 Jun 2008, 10:08
B for me

Between B & E

E comes close but E does not guarantee a profit because of the voluntary cutbacks. B does. If farmers are assured a fixed price for a long term then the impact on profits is minimized.
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SVP
Joined: 28 Dec 2005
Posts: 1559

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11 Jun 2008, 10:18
i went with B as well. With long term guaranteed contracts, your profits will be impacted less than the other options.
Manager
Joined: 19 Aug 2007
Posts: 202

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11 Jun 2008, 10:34
Jamesk486 wrote:
Under the agricultural policies of Country R, farmers can sell any grain not sold on the open market to a grain board at guaranteed prices. It seems inevitable that, in order to curb the resultant escalating overproduction, the grain board will in just a few years have to impose quaotas on grain production, limiting farmers to a certain flat percentage of the grain acreage they cultivated previously.
Suppose an individual farmer in country R wishes to minimize the impact on profits of the grain quota whose eventual imposition is being predidcted. If the farmer could do any of the following and wants to select the most effective course of action, which should the farmer do now?
(A) Select in advance currently less profitable grain fields and retire them if the quota takes effect.
(B) Seek long-term contracts to sell grain at a fixed price
(C) Replace obsolete tractors with more efficient new ones
(D) Put marginal land under cultivation and grow grain on it
(E) Agree with other farmers on voluntary cutbacks in grain production

help!

B. D and E give alternative options but they are both out of scope for this argument (as we do not know if these options will even work). The argument mentions that farmers can sell grains at guaranteed prices on the open market - so if they can seek long term contracts at that fixed price, this should minize the impact
Manager
Joined: 08 Jun 2008
Posts: 71

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11 Jun 2008, 11:14
Having a contract with fixed price guarantees only the price. It doens't mean all the produced grain will be bought by the board.
If the farmers agreed to cut back on prodction there will not be overprodction and the board doesn't need to limit the production by quota.

So, it is E for me.
Manager
Joined: 12 May 2006
Posts: 179

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11 Jun 2008, 12:07
E is the pest choice as y adopting this strategy farmers will not lose their lands also and will solve the problem of overproduction as well.

On following A they will loose land and following C will will not solve the problem of overproduction.
Director
Joined: 14 Oct 2007
Posts: 753
Location: Oxford
Schools: Oxford'10

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11 Jun 2008, 12:18
We are told that the government will limit production in the future by asking the farmer to cut back to a certan flat percentage the land they grow the grain on. Key word here is "acerage".

So lets say the flat percent is 80%. i.e govt says to each farmer from tomorrow you are only allowed to cultivate 80% of what you cultivate today.

So the question asks what can the farmer do today to mitigate this law. Cultivate more acreage today is the answer.

Only A and D come close. A is a better choice since it mention "retire it if quota takes effect"
D doesn't mention this retirement at all.

B,C,E are all out of scope and do not negate the govt's plan

so A for me
Manager
Joined: 01 May 2008
Posts: 110
Location: São Paulo

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11 Jun 2008, 15:50
I think it's A.

Same reason posted above. If the quota takes effect, the farmer would benefit the most cultivating only the most profitable fields.
Manager
Joined: 30 Mar 2007
Posts: 179

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11 Jun 2008, 19:10
sorry you guys the OA is D...
honestly i thought most of the choices could have been possible
Manager
Joined: 01 May 2008
Posts: 110
Location: São Paulo

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11 Jun 2008, 19:18
James, do you have the OE?
Senior Manager
Joined: 29 Aug 2005
Posts: 273

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11 Jun 2008, 23:35
i dont agree with the OA on this one

i think B should be the pick on this one

can we have one of the verbal gurus take this question

thanks
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The world is continuous, but the mind is discrete

Manager
Joined: 19 Aug 2007
Posts: 202

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12 Jun 2008, 10:18
maratikus wrote:
D

looks like you're the only one that got this right - what was your logic behind your answer?
Re: CR question   [#permalink] 12 Jun 2008, 10:18
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