Country L used to import wheat from Country S because Country S's price per bale was the cheapest available. When Country S raised its price by 25 percent, however. Country L decided to transfer its business to Country D. which now boasted the best deal available.
Which of the following, if true, would be best supported by the assertions above?
A) The cost to harvest a bale of wheat in Country S increased by 25 percent.
B) If Country S were to lower its price below Country D's price, then Country L would resume its import relationship with Country S.
C) If Country L could somehow reduce the cost of producing domestic wheat by 25 percent. it wouldn't need to rely on any wheat imports.
D) Country S and Country D do not import or export any wheat from each other.
E) If Country D were to increase its price per bale of wheat by 25 percent, then a bale of wheat from Country S would once again be less expensive.
OA E
Source: Princeton Review
Country L used to import wheat from Country S because Country Ss price per bale was the cheapest available.
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Let say price of wheat in Country S is 100 per bale
After 25% increase it would become 125 per bale.
Since business shifted from S to D it means Price in Country D must be more than 100 and less than 125 , lets assume the lowest price 101 per bale.
now as per E if price increases by 25% in Country D, the new min price will become - 126.25 per bale... Hence E holds true...
It is better to take some numbers to solve in such questions...
After 25% increase it would become 125 per bale.
Since business shifted from S to D it means Price in Country D must be more than 100 and less than 125 , lets assume the lowest price 101 per bale.
now as per E if price increases by 25% in Country D, the new min price will become - 126.25 per bale... Hence E holds true...
It is better to take some numbers to solve in such questions...