Reading Comprehension

Mergers and acquisitions in the U.S. food industry have provoked controversy for many years. Critics are concerned that mergers, by reducing the numbers of firms and increasing industry concentration, make it easier for firms to increase output prices and lower wages and input prices. Others argue that mergers and acquisitions (M&As) increase efficiencies and boost productivity by allowing companies to lower costs and provide consumers with goods at lower prices.

Until 1977, consolidation was not much of an issue for most food industries. At that time, the average four-firm concentration ratios (the percentage of the industry that is controlled by the top four firms) for eight food industries-meatpacking, meat processing, poultry slaughter and processing, cheese making, fluid milk processing, flour milling, feed processing, and oilseed crushing (soybean, cottonseed, and corn)-were about 31 percent. A wave of mergers and acquisitions led to a jump in average concentration to about 44 percent by 1992. Were these M&As efficient, and did acquired companies increase their productivity after being acquired?

Labor productivity, or output per worker, is one measure of production efficiency. Using U.S. Census Bureau plant-level data to examine processing plants in the eight food industries, researchers found that the processing plants were highly productive before being acquired and they significantly improved their labor productivity afterward. The five major food industries-meat processing, dairy (which includes both milk and cheese) and grain processing (which includes flour milling and feed processing)-doubled their output per worker, and two other industries realized at least 50-percent increases in output per worker over 1972-92. Only one of the eight industries, poultry slaughter and processing, failed to increase output per worker, and it experienced a vast increase in the processing of value-added products as plants switched from producing whole birds to producing poultry parts. The analysis suggests that mergers and acquisitions contributed to the general improvement in labor productivity.



Which of the following can be logically inferred from the third paragraph?


(A) The U.S. Census Bureau's data does not accurately reflect worker output.

(B) Few poutry plants have switched from producing whole birds to producing bird parts.

(C) Meatpacking and oilseed crushing are not considered "major" food industries.

(D) Many other industries have increased their four-firm concentration ratio as much as the food industry has.

(E) The increase in output per worker led to massive layoffs between 1972 and 1992.

Which of the following can be logically inferred from the third paragraph?


(A) The U.S. Census Bureau's data does not accurately reflect worker output. ---We do not know

(B) Few poutry plants have switched from producing whole birds to producing bird parts. --- We do not know

(C) Meatpacking and oilseed crushing are not considered "major" food industries. ---This is correct because these industries are referred as two other industries in the third para.

(D) Many other industries have increased their four-firm concentration ratio as much as the food industry has. ---Out of scope of this passage.

(E) The increase in output per worker led to massive layoffs between 1972 and 1992.--- again not in scope.

karthikpandian19 wrote:Mergers and acquisitions in the U.S. food industry have provoked controversy for many years. Critics are concerned that mergers, by reducing the numbers of firms and increasing industry concentration, make it easier for firms to increase output prices and lower wages and input prices. Others argue that mergers and acquisitions (M&As) increase efficiencies and boost productivity by allowing companies to lower costs and provide consumers with goods at lower prices.

Until 1977, consolidation was not much of an issue for most food industries. At that time, the average four-firm concentration ratios (the percentage of the industry that is controlled by the top four firms) for eight food industries-meatpacking, meat processing, poultry slaughter and processing, cheese making, fluid milk processing, flour milling, feed processing, and oilseed crushing (soybean, cottonseed, and corn)-were about 31 percent. A wave of mergers and acquisitions led to a jump in average concentration to about 44 percent by 1992. Were these M&As efficient, and did acquired companies increase their productivity after being acquired?

Labor productivity, or output per worker, is one measure of production efficiency. Using U.S. Census Bureau plant-level data to examine processing plants in the eight food industries, researchers found that the processing plants were highly productive before being acquired and they significantly improved their labor productivity afterward. The five major food industries-meat processing, dairy (which includes both milk and cheese) and grain processing (which includes flour milling and feed processing)-doubled their output per worker, and two other industries realized at least 50-percent increases in output per worker over 1972-92. Only one of the eight industries, poultry slaughter and processing, failed to increase output per worker, and it experienced a vast increase in the processing of value-added products as plants switched from producing whole birds to producing poultry parts. The analysis suggests that mergers and acquisitions contributed to the general improvement in labor productivity.



Which of the following can be logically inferred from the third paragraph?


(A) The U.S. Census Bureau's data does not accurately reflect worker output.

(B) Few poutry plants have switched from producing whole birds to producing bird parts.

(C) Meatpacking and oilseed crushing are not considered "major" food industries.

(D) Many other industries have increased their four-firm concentration ratio as much as the food industry has.

(E) The increase in output per worker led to massive layoffs between 1972 and 1992.

Why cant B be the answer?

In the last few lines it states "it experienced a vast increase in the processing of value-added products as plants switched from producing whole birds to producing poultry parts"

Jaiswal,

B cant be rightly inferred as the PASSAGE and the ANSWER CHOICE is contradictory. The answer choice mentions the FEW POULTRY plants which is no where mentioned in the passage

jaiswalamrita wrote:

karthikpandian19 wrote:Mergers and acquisitions in the U.S. food industry have provoked controversy for many years. Critics are concerned that mergers, by reducing the numbers of firms and increasing industry concentration, make it easier for firms to increase output prices and lower wages and input prices. Others argue that mergers and acquisitions (M&As) increase efficiencies and boost productivity by allowing companies to lower costs and provide consumers with goods at lower prices.

Until 1977, consolidation was not much of an issue for most food industries. At that time, the average four-firm concentration ratios (the percentage of the industry that is controlled by the top four firms) for eight food industries-meatpacking, meat processing, poultry slaughter and processing, cheese making, fluid milk processing, flour milling, feed processing, and oilseed crushing (soybean, cottonseed, and corn)-were about 31 percent. A wave of mergers and acquisitions led to a jump in average concentration to about 44 percent by 1992. Were these M&As efficient, and did acquired companies increase their productivity after being acquired?

Labor productivity, or output per worker, is one measure of production efficiency. Using U.S. Census Bureau plant-level data to examine processing plants in the eight food industries, researchers found that the processing plants were highly productive before being acquired and they significantly improved their labor productivity afterward. The five major food industries-meat processing, dairy (which includes both milk and cheese) and grain processing (which includes flour milling and feed processing)-doubled their output per worker, and two other industries realized at least 50-percent increases in output per worker over 1972-92. Only one of the eight industries, poultry slaughter and processing, failed to increase output per worker, and it experienced a vast increase in the processing of value-added products as plants switched from producing whole birds to producing poultry parts. The analysis suggests that mergers and acquisitions contributed to the general improvement in labor productivity.



Which of the following can be logically inferred from the third paragraph?


(A) The U.S. Census Bureau's data does not accurately reflect worker output.

(B) Few poutry plants have switched from producing whole birds to producing bird parts.

(C) Meatpacking and oilseed crushing are not considered "major" food industries.

(D) Many other industries have increased their four-firm concentration ratio as much as the food industry has.

(E) The increase in output per worker led to massive layoffs between 1972 and 1992.

Why cant B be the answer?

In the last few lines it states "it experienced a vast increase in the processing of value-added products as plants switched from producing whole birds to producing poultry parts"