The Flerenchian government decided to limit the import of chocolate fr

Question

The Flerenchian government decided to limit the import of chocolate from the four countries which export the greatest amount of chocolate to Flerenchia. An analyst hired by the government maintains that in the near future this will cause a large increase in domestic sales of chocolate produced in Flerenchia.

Which of the following, if true, would most likely render this prediction inaccurate?

A. A new tax bill that would discourage foreign investment in the chocolate industry is being debated by the Flerenchian government.

B. Flerenchian companies" orders for milk chocolates, which account for 60 percent of sales by chocolate companies, rose faster than for other types of chocolates during the past year.

C. Worldwide orders for chocolate made in Flerenchia dropped by more than 15 percent during the past year.

D. Substantial inventories of foreign-made chocolate were stockpiled in Flerenchia during the past year.

E. Companies in the chocolate industries of many countries showed a significantly increased demand for chocolate during the past year.

gloomybison · Answer

A. A new tax bill that would discourage foreign investment in the chocolate industry is being debated by the Flerenchian government.
Just because it is being debated doesn't necessarily mean that domestic sales will fall. Also, even if the new tax bill passes we don't know whether it will negatively impact the domestic sales

B. Flerenchian companies" orders for milk chocolates, which account for 60 percent of sales by chocolate companies, rose faster than for other types of chocolates during the past year.
Irrelevant, we don't care about the chocolate types, this doesn't somehow explain how domestic sales will be affected

C. Worldwide orders for chocolate made in Flerenchia dropped by more than 15 percent during the past year.
This may affect but still what if amount of domestic demand exceeds the worldwide orders, Also note that we care about domestic sales so exports are not really of our concern

D. Substantial inventories of foreign-made chocolate were stockpiled in Flerenchia during the past year.
 Correct

E. Companies in the chocolate industries of many countries showed a significantly increased demand for chocolate during the past year.
Again exports are not our concern we care about domestic sales

kungfury42 · Answer

(A) The word "debated" is the key here. Since we don't know which way will the bill swing we have no basis to determine whether it will strengthen or weaken the Analyst's claims of a large increase in the domestic sales. Eliminate A.

(B) If anything, B suggests that the demand for Flerenchian companies' milk chocolates is increasing and that these companies might see greater domestic sales. B does little to nothing to undermine analyst's claims. Eliminate B.

(C) Decrease in worldwide orders has an unpredictable impact on the increased domestic adoption of these chocolates. Maybe the domestic consumers would want to save their local brand from bankruptcy and would start consuming it more or maybe the chocolates made in Florenchia became so bad that the domestic consumers like them less too. Eliminate C.

(D) Perfect!! This is a perfect spoil-sport for the analyst's prediction. If substantial inventories of foreign-made chocolate were stockpiled in Flerenchia during the past year, we cannot foresee a large increase in domestic sales of domestic chocolates in the near future. It will go unaffected.

(E) Irrelevant. If companies in other countries registered demands, doesn't mean that the companies in Florenchia too will register increased demands. Eliminate E.

Isha19 · Answer

STIMULUS  - The first line of the stimulus presents a fact about the current situation of imports of chocolate in Flerenchia and this statement also makes up for a premise for the analyst's conclusion in the next sentence. The second statement presents the analyst's conclusion.

TYPE OF QUESTION  (as understood from the question statement) - Weaken

PRE-THINKING  - maybe the demand for chocolates has dramatically decreased for some time.

OPTIONS  - A: This might render the statement inaccurate because if the government is trying to increase domestic sales then it should be open to foreign investment to grow the market. But option D helps prove inaccuracy more than this statement.

B: The stimulus does not tell us which type of chocolate will be imported limitedly - so it does not matter the  past sale  of the different types of chocolates.

C: Worldwide orders are irrelevant and do not help prove the argument inaccurate.

D : This is in line with our pre-thinking. If there are sufficient inventories then the government can limit imports for some time but that would not necessarily lead to a rise in the domestic sales of chocolate.

E: Irrelevant. It does not matter if worldwide demand for chocolates have increased - we are talking specifically about Flerenchia

ANSWER : D

CareerLauncherMBA · Answer

The correct answer is D. A large supply of foreign-made chocolate was stored in Flerenchia during the past year. Explanation Argument Breakdown Government action: Limits on chocolate imports from the four largest exporters. Analyst's prediction: This will lead to a significant rise in sales of Flerenchian chocolate. What would make the prediction inaccurate? Anything that allows the chocolate market to keep supplying foreign chocolate, despite the new import limits. If the market can still provide foreign chocolate after the restrictions, domestic chocolate makers would not gain as much. Option Analysis A. A new tax bill that would discourage foreign investment ... This affects investment, not immediate chocolate sales. B. Flerenchian companies’ orders for milk chocolates ... rose faster ... This describes trends in chocolate types, not factors that challenge the analyst’s prediction. C. Worldwide orders for chocolate made in Flerenchia dropped ... This is about exports, not domestic sales or the supply of foreign chocolate. D. A large supply of foreign-made chocolate was stored ... If there is a large stock of foreign chocolate, supply will not drop immediately after the import limit. Stores can continue to sell foreign chocolate from this stock, so domestic producers will not experience an immediate increase in sales. The analyst's prediction about a quick rise in domestic sales is likely inaccurate for this reason. E. Companies in chocolate industries of many countries showed ... increased demand ... This is about demand elsewhere, not the inventory situation in Flerenchia. Want to give a Free GMAT diagnostic: https://2ly.link/2Alsw

The Flerenchian government decided to limit the import of chocolate fr

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