The alfalfa industry requires comparatively large amounts of water.

Question

The alfalfa industry requires comparatively large amounts of water. The past decade has seen both a steep rise in the price of water for agriculture and also a rise of 15% in overall profits in the alfalfa industry, even though the market price of alfalfa didn't fluctuate substantially.

Any of the following statements, if true, helps to explain the rise in profits EXCEPT

Any of the following statements, if true, helps to explain the rise in profits EXCEPT

A. The number of alfalfa growers has grown by 25%.

B. The price of shipping and handling has risen by 15%.

C. The formation of the Alfalfa Growers Union has enabled alfalfa growers to obtain substantially lower prices for agricultural machinery.

D. A nationwide best-seller published at the beginning of the decade postulates a healthy diet, in which alfalfa is a staple.

E. New overseas markets for alfalfa have opened recently.

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madsb18 · Answer

B. The price of shipping and handling has risen by 15%.

everything else supports increase in sales volume which in turn increases the industry profits.

dhart · Answer

first i did'nt register to read the word except and thought c or d were good options but then realised from a post that
option B is good , rest all is strengthnesr

Vivek1707 · Answer

A. More growers means more overall production/sales, which could raise total industry profits. Out.
B. Higher shipping and handling costs are simply higher expenses. That makes the 15% rise in profits harder to explain, not easier. Looks good.
C. Cheaper machinery lowers costs, which can offset the higher water costs and increase profits. Eliminate.
D. If alfalfa became more popular, demand and sales could rise, increasing profits. Eliminate.
E. New overseas markets mean more potential sales, which can explain higher profits. Eliminate.

TheAdmissionHub · Answer

The alfalfa industry requires comparatively large amounts of water. The past decade has seen both a steep rise in the price of water for agriculture and also a rise of 15% in overall profits in the alfalfa industry, even though the market price of alfalfa didn't fluctuate substantially.
 
 Any of the following statements, if true, helps to explain the rise in profits EXCEPT
 
 A. The number of alfalfa growers has grown by 25%.
  Wrong:  they are more overall so more profits can be registered
 B. The price of shipping and handling has risen by 15%.
 Correct:  this makes the passage more paradoxical because it we add up extra expenses how can we explain that profits go up in spite of the rising costs of water?
 
 C. The formation of the Alfalfa Growers Union has enabled alfalfa growers to obtain substantially lower prices for agricultural machinery.
  Wrong:  that’s why it had higher profits; it’s saving money on something. This explains the paradox
 D. A nationwide best-seller published at the beginning of the decade postulates a healthy diet, in which alfalfa is a staple.
  Wrong:  As it’s a staple now, this fact comes with gaining higher profits.
 E. New overseas markets for alfalfa have opened recently.
 Wrong:  more market of Alfalfa= more profits overall

Minka99 · Answer

I am quite certain that  B is the correct answer  here. At first I was a bit confused because I did not register that the passage is talking about an industry as a whole, not a singular company. B is correct because it is the only choice that does not explain the paradox.
A: more growers in the industry -> higher profits for the industry
C: lower machinery costs -> higher profits for the industry
D: product being promoted as healthy and a staple diet item -> good for industry -> higher profits for the industry
E: more markets open for the specific industry -> higher profits for the industry

Bunuel · Answer

OFFICIAL EXPLANATION

The alfalfa industry requires comparatively large amounts of water. The past decade has seen both a steep rise in the price of water for agriculture and also a rise of 15% in overall profits in the alfalfa industry, even though the market price of alfalfa didn't fluctuate substantially.

Any of the following statements, if true, helps to explain the rise in profits EXCEPT

Any of the following statements, if true, helps to explain the rise in profits EXCEPT

A. The number of alfalfa growers has grown by 25%.

Incorrect.

This is a Paradox Question, but one that asks you to choose the answer choice which does not help to resolve the paradox of the existing premises (all the others answer choices do):

Premise A: There was a steep rise in the price of water for agriculture (expenses)
✖
Premise B: There was an increase of 15% in profits in the alfalfa industry
✖
Premise C: The market price of alfalfa hasn't changed much (i.e., no greater revenues because of price)

Resolving Premise: ?

If some expenses are higher but there are higher profits in the industry, it means either that (a) revenues (=expenses+profits) are higher too; or (b) other expenses (=revenues-profits) are lower.

The question stem asks you to focus on explaining the rise in profits, therefore focus on premise B. Don't allow the first and third premise to distract you; think what else could explain the increase the amount of money made in alfalfa or lower the costs of alfalfa production... and eliminate all such answer choices.

A steep increase in the number of growers can explain why revenues (and therefore profits) are still high. You need an answer choice which does not explain the paradox.

Wait, but wouldn't an increase in supply actually drive down prices, and lead to lower profits?

It's true that according to economic theory prices are a function of demand, but we must be careful about making more assumptions than are necessary in solving this CR question. Remember the following:

a) The question belongs to the Profits/Revenues/Expenses type. Therefore, limit your reasoning to the application of this formula. Don't import another economic rule (in this case laws of supply and demand) which is not known to be utilized in CR questions.

b) Even if we were to assume that the grow in supply led to a price decrease, this would still not tell us whether the price decrease affected profits. It could always be that reduction of revenue due to price decreases was offset by the economy of scale, and did not affect profit adversely.

Because of these considerations, this answer choice is not the best of all the answer choices.

B. The price of shipping and handling has risen by 15%.

If the alfalfa growers are forced to pay more for getting their produce to markets, the paradox of the profits of the alfalfa industry growing by 15% is emphasized, not resolved.

C. The formation of the Alfalfa Growers Union has enabled alfalfa growers to obtain substantially lower prices for agricultural machinery.

Incorrect.

This is a Paradox Question, but one that asks you to choose the answer choice which does not help to resolve the paradox of the existing premises (all the others answer choices do):

Premise A: There was a steep rise in the price of water for agriculture (expenses)
✖
Premise B: There was an increase of 15% in profits in the alfalfa industry
✖
Premise C: The market price of alfalfa hasn't changed much (i.e., no greater revenues because of price)

Resolving Premise: ?

If some expenses are higher but there are higher profits in the industry, it means either that (a) revenues (=expenses+profits) are higher too; or (b) other expenses (=revenues-profits) are lower.

The question stem asks you to focus on explaining the rise in profits, therefore focus on premise B. Don't allow the first and third premise to distract you; think what else could explain the increase the amount of money made in alfalfa or lower the costs of alfalfa production... and eliminate all such answer choices.

A substantially lower price for machinery, a major drop in expenses, could explain how profits grew despite higher water prices. You need an answer choice which does not explain the paradox.

D. A nationwide best-seller published at the beginning of the decade postulates a healthy diet, in which alfalfa is a staple.

Incorrect.

A nationwide best-seller telling people to eat alfalfa? Yep, this could definitely help explain higher revenues and therefore higher profits. You need an answer choice which does not explain the paradox.

E. New overseas markets for alfalfa have opened recently.

Incorrect.

The opening of new overseas markets could explain the rise in revenues and therefore in profits. You need an answer choice which does not explain the paradox.

The alfalfa industry requires comparatively large amounts of water.

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GMAT Critical Reasoning (CR) Questions

The alfalfa industry requires comparatively large amounts of water.

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

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From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards