Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a...
GMAT Critical Reasoning : (CR) Questions
Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helps. By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.
To evaluate the strength of the economist's argument, it would be the most helpful to know which of the following?
Passage Analysis:
| Text from Passage | Analysis |
| Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. |
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| But this practice may hurt more farmers in developing nations than it helps. |
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| By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. |
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| This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers. |
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Argument Flow:
The economist starts by acknowledging fair-trade coffee's good intentions, then argues against it by showing a chain reaction: fair-trade coffee → higher average prices → overproduction → lower prices for regular coffee → harm to non-fair-trade farmers
Main Conclusion:
Fair-trade coffee may hurt more farmers in developing nations than it helps
Logical Structure:
The argument uses a causal chain structure where each step logically follows from the previous one. The economist argues that even though fair-trade coffee helps some farmers, it creates market distortions that end up harming a larger number of non-fair-trade farmers through oversupply and price reduction
Prethinking:
Question type:
Evaluate - We need to find information that would help us determine whether the economist's argument is strong or weak. This means looking for key assumptions that, when tested in extreme scenarios, would either support or undermine the conclusion.
Precision of Claims
The economist makes specific claims about quantity (more coffee produced than consumers want), market effects (raising average prices, lowering non-fair-trade prices), and comparative harm (hurts more farmers than it helps). These are precise, measurable claims about market dynamics.
Strategy
Since this is an evaluate question, we need to identify the key assumptions in the economist's reasoning chain and think about what information would test those assumptions. The argument flows: fair-trade raises prices → encourages overproduction → lowers non-fair-trade prices → hurts more farmers than helped. We should look for information that could either confirm or contradict these causal links.
This asks about whether there's a way to alleviate the negative impact on non-fair-trade farmers. While this might be relevant for policy solutions, it doesn't help us evaluate the strength of the economist's current argument about whether fair-trade coffee hurts more farmers than it helps. The economist is making a claim about the present situation, not asking for solutions. This information wouldn't tell us if the economist's reasoning is sound.
This directly addresses the core assumption in the economist's argument. The economist claims fair-trade coffee 'hurts more farmers than it helps' - this is fundamentally a numbers comparison. To evaluate this claim, we need to know what proportion of farmers are in each category. If only 10% produce fair-trade coffee, then harming the other 90% would indeed hurt more farmers than it helps. But if 70% produce fair-trade coffee, then the economist's claim becomes much weaker. This information is essential for evaluating the argument's strength.
Knowing whether coffee farmers have other income sources might affect how severely they're impacted by coffee price changes, but it doesn't help us evaluate the economist's specific claim about fair-trade coffee hurting more farmers than it helps. This is about the magnitude of impact, not the comparative numbers that the argument hinges on.
This is asking about what consumers should do - essentially a normative question about ethics and policy. However, the economist's argument is descriptive, claiming that fair-trade coffee has certain market effects. Whether consumers 'should' do something doesn't help us evaluate whether the economist's factual claims about market dynamics are correct.
Like choice A, this focuses on potential solutions rather than evaluating the current argument. The economist is making a claim about how fair-trade coffee currently affects farmers, not asking how to help farmers better. Information about alternative helping methods wouldn't tell us whether the economist's analysis of the current fair-trade system is accurate.