In New Zealand, the grape is a long-established crop, but the truffle—an edible fungus that grows on the roots of...
GMAT Graphics Interpretation : (GI) Questions
In New Zealand, the grape is a long-established crop, but the truffle—an edible fungus that grows on the roots of certain trees—became a commercial crop in the 1980s. The graph represents projected cumulative net income for grape and truffle crops through the end of the year, in thousands of New Zealand dollars per hectare (NZ$1,000/ha), for each of the first 11 years since planting. Cumulative net income is equal to total revenue from crop sales for the years since planting minus total investment costs over those same years.
From each drop-down menu, select the option that creates the most accurate statement about these projections based on the given information.
Owning the Dataset
Table 1: Text Analysis
| Text Component | Literal Content | Simple Interpretation |
|---|---|---|
| Geographic Context | In New Zealand | The data represents farming in New Zealand |
| Crop Type 1 | the grape is a long-established crop | Grapes have been grown for a long time in New Zealand |
| Crop Type 2 | the truffle—an edible fungus that grows on the roots of certain trees | Truffles are valuable fungi cultivated on tree roots |
| Truffle History | became a commercial crop in the 1980s | Truffles are a newer commercial crop in NZ |
| Graph Content | projected cumulative net income | The chart shows predicted profit or loss over time |
| Units | thousands of New Zealand dollars per hectare (NZ$1,000/ha) | Values are in thousands of NZ dollars per hectare |
| Time Period | first 11 years since planting | Covers years 1 through 11 after planting |
| Net Income Definition | total revenue from crop sales for the years since planting minus total investment costs over those same years | Cumulative net income = total income minus total costs from year 1 to current year |
Table 2: Chart Analysis
| Chart Component | What's Shown | What This Tells Us |
|---|---|---|
| Chart Type | 2-series line chart for 11 years | Shows grape and truffle investments over time |
| X-axis | Years since planting (1-11) | Progression after planting each crop |
| Y-axis | NZ$1,000/ha (from -40 to 20) | Tracks profit or loss per hectare |
| Grapes | Black solid line, starts at -21, ends at +6 | Grapes start with losses but recover steadily |
| Truffles | Blue dotted line, starts at -23, reaches -35 at year 5, ends at +16 | Truffles have deeper early losses, but end far higher |
| Break-even | Both cross above zero around years 9-10 | Profits only appear late in the investment |
| Growth Pattern | Grapes: steady linear rise after year 8; Truffles: large dip until year 5, then quick gains | Grapes are reliable; truffles involve more risk, but potentially higher reward |
Key Insights
- Truffles reach their lowest cumulative net income (−35) in year 5, showing a greater investment risk compared to grapes.
- Grape cumulative net income increases linearly by 4,000 NZ$/ha each year after year 8.
- Both crops require around 9–10 years to break even, emphasizing the long-term nature of these agricultural investments.
- By year 11, truffles surpass grapes in profit, reaching +16 compared to grapes' +6, making truffles the more lucrative option despite their initially deeper losses.
Step-by-Step Solution
Question 1: Finding the Year of Lowest Truffle Cumulative Net Income
Complete Statement:
Cumulative net income from truffles is least at the end of the [BLANK] year since planting.
Breaking Down the Statement
- Statement Breakdown 1:
- Key Phrase: Cumulative net income from truffles
- Meaning: The sum of all profits and losses from truffle production up through a certain year.
- Relation to Chart: Corresponds to the values shown for truffles on the graph (the blue dotted line with squares).
- Important Implications: Focus only on the truffle cumulative net income line, not grapes.
- Key Phrase: Cumulative net income from truffles
- Statement Breakdown 2:
- Key Phrase: is least
- Meaning: Looking for the lowest (most negative) cumulative net income value.
- Relation to Chart: Find the lowest y-value reached by the truffle line.
- Important Implications: Negative values are less than positive values—so the minimum is the most negative point.
- Key Phrase: is least
What is needed: At which of these years (3rd, 5th, or 7th) is the truffle line at its minimum value?
Solution:
- Condensed Solution Implementation: Read the truffle line values at years 3, 5, and 7, compare them, and select the smallest (most negative) one.
- Necessary Data points: Truffle cumulative net income at: Year 3 = -29, Year 5 = -35, Year 7 = -25 (in thousands of NZ$/ha).
- Calculations Estimations: -29 > -35 < -25, so the minimum (least) is -35 at year 5.
- Comparison to Answer Choices: Year 5 is among the answer choices (3rd, 5th, 7th). 5th is the correct response.
FINAL ANSWER Blank 1: 5th
Question 2: Projecting Grape Net Income for Year 12
Complete Statement:
If cumulative net income for grapes continues to grow at the same rate as in years 8 through 11 since planting, the cumulative net income from grapes for the 12th year since planting will be approximately NZ$ [BLANK] per hectare.
Breaking Down the Statement
- Statement Breakdown 1:
- Key Phrase: cumulative net income for grapes continues to grow at the same rate as in years 8 through 11
- Meaning: Assume the year-to-year gain from years 8 to 11 keeps happening in year 12.
- Relation to Chart: Look at the grapes cumulative net income line (black solid line) from years 8-11.
- Key Phrase: cumulative net income for grapes continues to grow at the same rate as in years 8 through 11
- Statement Breakdown 2:
- Key Phrase: for the 12th year since planting
- Meaning: Use the pattern from previous years to extend the graph to year 12.
- Relation to Chart: Add one more year of growth at the same rate.
- Key Phrase: for the 12th year since planting
What is needed: What will the cumulative net income from grapes be in year 12 if the recent trend continues?
Solution:
- Condensed Solution Implementation: Find the value increase per year for grapes from years 8-11, add that to the year 11 value to get year 12.
- Necessary Data points: Years 8–11 for grapes: Year 8 = -6, Year 9 = -2, Year 10 = 2, Year 11 = 6 (all in thousands NZ$/ha). Each year increases by 4.
- Calculations Estimations: Year 11 value (6) + 4 = 10 (for year 12). 10 thousand NZ$ = 10,000 NZ$/ha.
- Comparison to Answer Choices: Options include 4,000 / 7,000 / 10,000 / 13,000; 10,000 is the correct choice.
FINAL ANSWER Blank 2: 10,000
Summary
For blank 1, we found the truffle cumulative net income was lowest at the end of year 5. For blank 2, by continuing the consistent growth in grape income, we calculated year 12's grape cumulative net income as NZ$10,000 per hectare.
Question Independence Analysis
Each question focuses on a different crop and uses a different type of reasoning—one is about historical minimum for truffles, the other is about projecting grapes' growth. They are independent.