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805+ Level|   Evaluate Argument|         
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Under the agricultural policies of Country R, farmers can sell any gra 09 Jun 2021, 18:30
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mukugmat
I had the most confusion between A and D. By going through OG solution the following is what I understand.

In choice A, we stop grain production on the land currently used and we start production on less profitable land. That is, replace currently used land with less profitable land. This causes the current profit to go down. If we retire part of this land when the regulation takes effect, then the profit can go further down (unless it is already 0).

In choice D, according to OG solution, we are adding the additional marginal land (although this ("adding" as opposed to switching) is not clear to me). This marginal land is also less profitable. If the profit is negative from marginal land, then the overall current profit could go down. But when the regulation is implemented, we would retire the marginal land and the profit would go back up (as we stop cultivating on land which is making losses).

So it makes sense that D is a better choice. My only issue is the following.

The key difference between A and D is that
--------------in A we are replacing existing land with less profitable land
--------------in D we are adding marginal land (is also less profitable)

Is this clear to anyone from the choices? If so, could that person please explain this to me here?
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I am walking through questions that I earlier did not get correct, and this is one of them. And I agree with your doubts here. It is not at all clear that A means we are switching land. What I do realise, though, is that if we are not switching land, we actually have to buy new land that is less profitable. And buying land where nothing grows just can't be a smart approach. Unless of course the less profitable land is already in the farmer's possession, and that is sort of what we are given in D - marginal land. So lets go with D.
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Under the agricultural policies of Country R, farmers can sell any gra 09 Aug 2021, 12:33
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I did not know that marginal land is extra land. xD
What I thought was that option D is asking us to put marginal (only a small piece) land and cultivate on it, that is, decrease the production.
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Under the agricultural policies of Country R, farmers can sell any gra 06 Oct 2021, 23:40
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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 quotas 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 predicted. 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?
Show more

A. Select in advance currently less profitable grain fields and retire them if the quota takes effect.
Withdrawing them right now will not guarantee profit to the farmer right now therefore out

B. Seek long-term contracts to sell grain at a fixed price.
if there are no entities other than government to take the grain at the guarateed price then the farmer will only incur losses

C. Replace obsolete tractors with more efficient new ones.
Absolutely irrelevant to the argument

D. Put marginal land under cultivation and grow grain on it.
This will maximises the profit since the government right now accepts the grains at a stipulated price therefore let us hang on to it

E. Agree with other farmers on voluntary cutbacks in grain production.
This definitely doesn't guarantee the nominal utilization of the land at present therefore out

Therefore IMO D
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Under the agricultural policies of Country R, farmers can sell any gra Updated on: 12 Jun 2022, 00:09
Originally posted by Namangupta1997 on 11 Jun 2022, 23:52.
Last edited by Namangupta1997 on 12 Jun 2022, 00:09, edited 2 times in total.
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Hi AndrewN

While adding more land to their cultivated land would definitely increase the profits, no where in option in says that we are adding anything. It just says " Put marginal land under cultivation". How do we deduce that this means we adding additional land? Dictionary defines marginal as "minor and not important". So, I guess the option is saying to put the minor land under cultivation and increase the land ?
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Under the agricultural policies of Country R, farmers can sell any gra 11 Jun 2022, 23:56
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D. Put marginal land under cultivation and grow grain on it. -- So if we have 4 plots cultivated, but we add 6 more, we get 10 total. And if we keep 50%, we get 5 acres instead of 2; this is perfect! We get to increase/keep our profits even with the quota.

nightblade354

Where does it say to add anything ?
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Under the agricultural policies of Country R, farmers can sell any gra 12 Jun 2022, 05:06
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Namangupta1997
D. Put marginal land under cultivation and grow grain on it. -- So if we have 4 plots cultivated, but we add 6 more, we get 10 total. And if we keep 50%, we get 5 acres instead of 2; this is perfect! We get to increase/keep our profits even with the quota.

nightblade354

Where does it say to add anything ?
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Option D is saying that we have more land to use and that we are making additional use of it. That is where I am adding from, per my statement.

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Under the agricultural policies of Country R, farmers can sell any gra 12 Jun 2022, 14:36
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Namangupta1997
Hi AndrewN

While adding more land to their cultivated land would definitely increase the profits, no where in option in says that we are adding anything. It just says " Put marginal land under cultivation". How do we deduce that this means we adding additional land? Dictionary defines marginal as "minor and not important". So, I guess the option is saying to put the minor land under cultivation and increase the land ?
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Hello, Namangupta1997. I think we can reasonably infer that marginal land is uncultivated land, based on the surrounding frame put _____ under cultivation. If previously uncultivated land were now put to agricultural use (growing grain), then once the quota hit, the flat percentage of the grain acreage they cultivated previously would affect a greater number of acres than if the marginal land had been left uncultivated, and the farmer would have a greater earning potential.

Dictionary definitions can be helpful, but remember not to overlook context. If you were a detective looking to piece together the meaning of a completely unknown word, you would be forced to work with the words around the one in question. A dictionary cannot possibly capture all the subtle contextual shifts in a word that occur regularly within a language.

Thank you for thinking to ask.

- Andrew
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Under the agricultural policies of Country R, farmers can sell any gra 29 Jun 2022, 08:00
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gmatt1476
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 quotas 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 predicted. 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? CR97561.01
Show more

The key to this question is understanding that in the future, to curb overproduction, the grain board will impose quotas on the grain acreage “they cultivated previously”
So what option will help them minimize impact on profits?

Quote:
A. Select in advance currently less profitable grain fields and retire them if the quota takes effect.
Show more

They will have to do this anyways, but what’s the advantage of doing it now? What if the fields that are less profitable today, are the most profitable for some reason
when the quota takes effect.

Quote:
B. Seek long-term contracts to sell grain at a fixed price.
Show more

The fixed price would not be helpful because the quota will reduce the amount produced regardless, so profits will take a hit on a fixed price.

Quote:
C. Replace obsolete tractors with more efficient new ones.
Show more

What will replacing tractors do? We have no information to suggest that tractor efficiency will improve profits and/or counter balance the impact from quotas limiting production. Seems like a stretch choice!


Quote:
D. Put marginal land under cultivation and grow grain on it.
Show more
This could be helpful because if there is marginal land currently that is not being used, the farmers could likely use it to grow grain and increase the amount currently being produced. This way the % limited by a possible quota in the future will be from this total increased cultivation and the farmers might be able to continue to produce the amount they are currently producing. Hang on to D.

Quote:
E. Agree with other farmers on voluntary cutbacks in grain production.
Show more
Voluntary cutbacks will impact profits now and most likely even when the quota takes effect. This would be the worst option.

D is the best option!
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Under the agricultural policies of Country R, farmers can sell any gra 19 Jul 2023, 13:20
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I am not sure how does one understand that marginal land means extra land here. Other than that question is not very difficult.
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Under the agricultural policies of Country R, farmers can sell any gra 28 Jul 2023, 02:44
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gmatt1476
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 quotas 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 predicted. 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.


CR97561.01
Show more

Suppose a farmer produces 100 kg of grain.

He sells 80 kg on the open market and the remaining 20 kg to a grain board at a guaranteed (fixed) price.

But farmers are overproducing, which the grain board does not appreciate. Hence, the grain board decides to impose a quota on the production by farmers. (old: 100 kg, new quota: 80 kg).

After the implementation of the quota, a farmer can cultivate a flat percentage of the grain acreage they cultivated previously.

For example, currently, a farmer has 100 acreage of land that he uses to produce grain. He can use 100 percent of the acreage.

After the implementation of the quota, the farmer will not be able to use the entire 100 acreage of land to cultivate grains.

Suppose, the new quota says that farmers can now use only 75 percent of the grain acreage they cultivated previously.

In such a situation, what's the most effective course of action that a farmer can take?

The farmer should try to increase his previously cultivated acreage as much as possible because after the implementation of the quota, he will be able to cultivate only a flat percentage (75%) of the previously cultivated acreage.
For example, 75 percent of 200 acreage is greater than 75 percent of 100 acreage.

A is eliminated because there is no reason for farmers to select less profitable land. Plus, it's clearly given that farmer in Country R wishes to minimize the impact on profits of the grain quota.


B is eliminated because farmers will be at a loss if their costs rise significantly and if they have to sell their produce at a fixed rate.

C is gone because tractors, irrespective of their obsolescence or newness, are out of scope.

Keep D because the farmer will try to maximize his previously cultivated acreage to reduce the limiting impact of the quota.
(Old: farmers can use 100 percent of the previously cultivated acreage, New quota: farmers can now use only 75 percent of the previously cultivated acreage).

E is eliminated because other farmers are out of scope. The question doesn't give us any information about the other farmers. Plus, it doesn't talk about the quota and the previously cultivated acreage, the two main points in the question.

I hope I'm crystal - clear 🙏

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Under the agricultural policies of Country R, farmers can sell any gra 30 Aug 2023, 09:18
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nightblade354
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 quotas 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 predicted. 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?

Unique set up; we are told that we have a fail-safe if we do not sell our grain on the open market, but that the government wants to limit our cultivation because we will abuse this. We want to protect ourselves. How? Well, the first thing that catches my eye is the last sentence in blue. If it is on an acreage basis, we should try to preserve or gain as much as we can. But this could go in a million directions, so let's see where it takes us.

A. Select in advance currently less profitable grain fields and retire them if the quota takes effect. -- Opposite of what we want. If we start with 4 acres and move to 3, and we are told that it is a fixed % basis, let's say 50%, well we just went from 2 acres to 1.5 acres to cultivate. Do not assume that just because it is less profitable we can get rid of it. Further, don't assume that we will meet the quota. Maybe this is too much land to give up? Wrong.

B. Seek long-term contracts to sell grain at a fixed price. -- OK, but who cares? Is this the open market or our board? And if it's our market, is the price more or less than what we currently receive? Do not assume that we are locking in our profits. We could be costing ourselves money by locking in lower rates compared to the free market. Out.

C. Replace obsolete tractors with more efficient new ones. -- Who cares? Efficiency and profits are not the same thing. Maybe this new tractor bankrupts us; maybe this new tractor is efficient, but uses more fuel and costs more money. We don't know what "efficient" means in this case. Do not make assumptions to justify this answer choice. Out.

D. Put marginal land under cultivation and grow grain on it. -- So if we have 4 plots cultivated, but we add 6 more, we get 10 total. And if we keep 50%, we get 5 acres instead of 2; this is perfect! We get to increase/keep our profits even with the quota.

E. Agree with other farmers on voluntary cutbacks in grain production. -- Two reasons why this is wrong: 1. Is "other farmers" all of them or just a few? It could be 10, 100, or 1,000,000; we don't know our populace. If this said "all", it could be better but still not perfect. 2. Do the cutbacks allow for the prevention of the quota system? We don't know what triggers this, so we could bargain with everyone and still need to cut out production and we are in the same place as we were before. Out.
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nightblade354
Hey Evan. Firstly congratulations on Darden. Wishing you all the best. I know this isn't thee right forum to congratulate you :D. Secondly i wanted to know what do you mean by -- Further, don't assume that we will meet the quota. Maybe this is too much land to give up? Wrong. in your explanation of option A.
Thanks!
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Under the agricultural policies of Country R, farmers can sell any gra 04 Oct 2023, 21:08
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KarishmaB can you pls give reasoning for A? Firs explanation isnt making sense
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Under the agricultural policies of Country R, farmers can sell any gra 04 Oct 2023, 22:20
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gmatt1476
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 quotas 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 predicted. 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.


CR97561.01
Show more

Farmers currently can sell anything left unsold to the Govt. So the farmers will keep growing grain even if there is no market for it for profits. So the GOvt is likely to come up with quotas, limiting farmers to a certain flat percentage of the grain acreage they cultivated previously.

"acreage" means the amount of land on which they cultivated before. The point is that more land under cultivation would lead to more production of grains.
So the Govt would limit the land each farmer can cultivate on to a percentage of his previous acreage.
Say a farmer cultivated on 100 acres of land. He will be allowed to cultivate on only 80 acres if this quota comes into effect (assuming the flat percentage set by the Govt is 80%)

Aim: Minimize the impact on profits

A. Select in advance currently less profitable grain fields and retire them if the quota takes effect.

Not very useful to do in advance. If the quota is implemented, he can identify the less profitable fields at that time and retire them. The profit will be affected but will be less affected. This is what others would do too when the quota is implemented. The farmer is not taking advantage of advance knowledge of the quota issue coming into effect in future. But in any case, let's hold this option.

B. Seek long-term contracts to sell grain at a fixed price.

He will be allowed to grow less grain. So long term contracts to sell grain won't help since he will have less grain to sell.

C. Replace obsolete tractors with more efficient new ones.

This is a means of reducing future running cost and perhaps increasing productivity. This is what any farmer would anyway want to do. It has nothing to do with the quota issue and doesn't address that.

D. Put marginal land under cultivation and grow grain on it.

Basically this option says that the farmer should acquire marginal land (bare minimum suitable for agriculture so will be cheap to get) and grow grain on it. Basically, instead of his 100 acres, he will now have 150 acres of acreage. If the quota comes into effect, he can give up the marginal land without impacting his profits much. Marginal land would not have been producing much profit in any case.
Hence, this sounds like a plan.

E. Agree with other farmers on voluntary cutbacks in grain production.

Cutbacks in grain production will reduce profits. This is not the most effective course of action.

Answer (D)
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Under the agricultural policies of Country R, farmers can sell any gra 13 Dec 2023, 13:30
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Understanding the argument -
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. - Fact
It seems inevitable that, in order to curb the resultant escalating overproduction, the grain board will in just a few years have to impose quotas on grain production, limiting farmers to a certain flat percentage of the grain acreage they cultivated previously. - Fact

Suppose an individual farmer in Country R wishes to minimize the impact on profits of the grain quota whose eventual imposition is being predicted. 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?

So, the quotas have not been implemented. They will be in the future. But the Farmer knows now. So what should the farmer do between now and then (when the actual implementation happens)? What is the objective? "to minimize the impact on profits of the grain quota." This is important because we are not focusing on "minimizing the impact on profits" alone. That could be for many reasons, such as good rainfall, fertilizer subsidy, cheap labor, or cheap or even free electricity. We are explicitly focussing on "GRAIN QUOTAS" and how to "minimize the impact on profits" in light of "grain quotas."

Option Elimination -

A. Select in advance currently less profitable grain fields and retire them if the quota takes effect. - Select "in advance," "on the night of quota implementation," or "even after the implementation of quotas" is immaterial.

Say the farmer's current profit from a cultivable land of 100 access is $200,000/- at a revenue of $1 million and cost of $0.8 million. For the sake of discussion, the quota states the farmer can only use 50% of the cultivable land. If we assume linearly, the land would now be 50 access. Profit is $100,000 at a revenue of 0.5 million and cost of $0.4 million.

So the farmer decided "in advance," which 50 access to cut. The farmer's profit will be $100,000/-
Or the farmer decides "on the night of quota announcement" which 50 access to cut. The farmer's profit will still be $100,000/-
Or the farmer decides "after the quota announcement" which 50 access to cut. The farmer's profit will still be $100,000/-

Has anything changed? No. We need some innovative solutions. Let's look at the option D to solidify our learning here.

The farmer immediately buys 100 access to cheap marginal, barren, or non-productive land. So now, between now and the time the quota goes into effect
Farmer's Land is - 200 acres.
Say the profit is $250,000/- at a revenue of $1.25 million and a cost of $1 million.

Now, Qutas goes into effect. The farmer shows that he/she is not using the 100 acres of barren land he/she bought and is now happily cultivating the 100 acres they were cultivating.
So how does it look like -
Farmer's Land is - 100 acres.
Say the profit is $200,000/- at a revenue of $1 million and a cost of $0.8 million.

Now, compared to the scenario highlighted by option A, this is better? Not only better but the best. That is why option A is a classic Distortion.

B. Seek long-term contracts to sell grain at a fixed price. - They already have fixed contracts with the government. Moreover, what is the scope here? "to minimize the impact on profits of the grain quota." Did the grain board say farmers with long-term fixed contracts will not come under this quota? No. So, this is out of scope.

C. Replace obsolete tractors with more efficient new ones. - The scope is "to minimize the impact on profits of the grain quota." The grain quota is key here. We are not concerned about the profits because of "good rainfall, fertilizer subsidy, cheap labor, or cheap or even free electricity blah blah." At best, it is out of scope.

D. Put marginal land under cultivation and grow grain on it. - ok.

E. Agree with other farmers on voluntary cutbacks in grain production. - The scope is "to minimize the impact on profits of the grain quota." Did the grain board say those who voluntarily cut back will not come under the quota? No. So, this is out of scope.
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Under the agricultural policies of Country R, farmers can sell any gra 22 Feb 2025, 10:26
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This is awesome explanation. Very concise and clear. Thank you.

ArtVandaley
D amazing one. Took me more than 1 min to just grasp the information. Though answered it under two.

D is a clear winner and the answer lies in the last sentence.

The board is limiting the farmer to a certain percentage of already used land. So the farmer should try to maximize the land under cultivation in order to get maximum land after the rule becomes effective

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Under the agricultural policies of Country R, farmers can sell any gra 26 Aug 2025, 23:23
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I actually didn't know what marginal land means. I assumed put lesser land into cultivation, which I thought would lessen profits greatly.
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Under the agricultural policies of Country R, farmers can sell any gra 03 Nov 2025, 19:07
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I mean this is a lil shady, it expects us to know what marginal land is. Interesting
Once we know the meaning of it, it's trivial.
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