Profit question

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Profit question

by jayavignesh » Sun Jun 19, 2011 9:11 am
The alfalfa industry requires comparatively large amounts of water. The past decade has seen both a steep rise in the price of water for agriculture and a rise of 15% in overall profits in the alfalfa industry, even though the market price of alfalfa didn't fluctuate substantially.

Any of the following statements, if true, helps to explain the rise in profits EXCEPT

1.The number of alfalfa growers has grown by 25%.

2.The price of shipping and handling has risen by 15%.

3.The formation of the Alfalfa Growers Union has enabled alfalfa growers to obtain substantially lower prices for agricultural machinery.

4.A nationwide best-seller published at the beginning of the decade postulates a healthy diet, in which alfalfa is a staple.

5.New overseas markets for alfalfa have opened recently.
Source: — Critical Reasoning |

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by KP3882 » Sun Jun 19, 2011 9:56 am
The alfalfa industry requires comparatively large amounts of water. The past decade has seen both a steep rise in the price of water for agriculture and a rise of 15% in overall profits in the alfalfa industry, even though the market price of alfalfa didn't fluctuate substantially.

Any of the following statements, if true, helps to explain the rise in profits EXCEPT

1.The number of alfalfa growers has grown by 25%.
The overall production went up so the profits can go up.

2.The price of shipping and handling has risen by 15%.
The market price DID NOT go up bu the costs went up - profits cannot increase. Hence, this is the answer.

3.The formation of the Alfalfa Growers Union has enabled alfalfa growers to obtain substantially lower prices for agricultural machinery.
Decreased prices push up profits

4.A nationwide best-seller published at the beginning of the decade postulates a healthy diet, in which alfalfa is a staple.
Marketing efforts are enhancing demand. Hence, increased sales and hence increased profits.

5.New overseas markets for alfalfa have opened recently.
Market is expanding. Hence, increased sales and hence increased profits.[/b]

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by abhishek.pati » Tue Jun 21, 2011 11:36 pm
IMO B

As B.The price of shipping and handling has risen by 15%. (no way we can say it relates to the increase in profits.....it can go either way ...so this is the answer.)

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by vikram4689 » Wed Jun 22, 2011 1:30 am
All but B, states the reasoning to explain the paradox. Increase in production prices will, in NO CASE, decrease the price.
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