Escalating worldwide demand for corn has led to a sharp increase in the market price of corn, and corn prices...
GMAT Critical Reasoning : (CR) Questions
Escalating worldwide demand for corn has led to a sharp increase in the market price of corn, and corn prices are likely to remain high. Corn is extensive used as feed for livestock, and because profit margins are tight in the livestock business, many farmers are expected to leave the business. With fewer suppliers, meat prices will surely rise. Nonetheless, observers expect an immediate short-term decrease in meat prices.
Which of the following, if true, most helps to justify the observers' expectation?
Passage Analysis:
| Text from Passage | Analysis |
| Escalating worldwide demand for corn has led to a sharp increase in the market price of corn, and corn prices are likely to remain high. |
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| Corn is extensive used as feed for livestock, and because profit margins are tight in the livestock business, many farmers are expected to leave the business. |
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| With fewer suppliers, meat prices will surely rise. |
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| Nonetheless, observers expect an immediate short-term decrease in meat prices. |
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Argument Flow:
The argument sets up a logical chain: corn demand rises → corn prices rise → livestock farmers quit → fewer meat suppliers → meat prices should rise. But then it throws us a curveball by saying observers expect the opposite to happen in the short term.
Main Conclusion:
There's a paradox where meat prices are expected to decrease in the short term, even though the logical chain suggests they should increase due to rising corn costs and farmers leaving the business.
Logical Structure:
This isn't a traditional argument trying to prove something. Instead, it presents a puzzle or contradiction between what economic logic suggests should happen (meat prices rising) and what observers actually expect to happen (meat prices falling). We need to find what explains this contradiction.
Prethinking:
Question type:
Strengthen - We need to find information that makes the observers' expectation of immediate short-term meat price decrease more believable, even though logic suggests prices should rise due to fewer suppliers.
Precision of Claims
The key claim is about timing and direction - observers expect an 'immediate short-term decrease' in meat prices, which contradicts the logical expectation of price increases due to reduced supply from farmers leaving the business.
Strategy
We need to think of scenarios that would cause meat prices to drop in the short term, despite the long-term trend of farmers leaving the livestock business. The key is finding reasons why meat supply might temporarily increase or demand might temporarily decrease right now, before the supply reduction from farmers quitting takes full effect.
This choice focuses on the cause of corn price increases (supply decline vs. demand growth), but this doesn't help explain why meat prices would decrease in the short term. Whether corn prices rose due to supply issues or demand issues, the end result is still the same - higher corn costs squeeze livestock farmers. This doesn't provide any mechanism for why meat prices would temporarily drop.
This directly explains the paradox! When farmers are being squeezed out of business, they don't just close up shop and keep their animals - they rush to sell their livestock immediately to cut their losses. This creates a sudden flood of meat hitting the market all at once, which drives prices down temporarily due to oversupply. Even though there will be fewer farmers long-term (leading to higher prices later), right now there's actually more meat available than usual because of this early liquidation.
While people converting to less meat consumption might eventually affect meat prices, this doesn't explain an 'immediate short-term decrease.' Dietary changes happen gradually over time, and even if they were happening quickly, we'd need to know the scale of this conversion to determine if it would significantly impact prices. This doesn't address the specific timing or magnitude needed.
This talks about what might happen as meat prices rise in the future - more producers might enter the business. However, this doesn't explain why we'd see an immediate short-term decrease in prices right now. This is more about long-term market corrections, not the current paradox we need to resolve.
Livestock producers switching to alternative feed sources might help them stay profitable and avoid the supply reduction, but this doesn't explain why prices would actually decrease in the short term. At best, this might prevent prices from rising as much as expected, but it doesn't create the downward pressure needed for an actual price decrease.