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prachich1987 wrote:Farmers in developing countries claim that the United States government, through farm subsidies, is responsible for the artificially low global price of wheat. Because the U.S. government buys whatever wheat American farmers are unable to sell on the open market, American farmers have no incentive to modulate the size of their crops according to the needs of the global market. As a result, American farmers routinely produce more wheat than the global market can absorb and the global price of wheat is kept low. Without these subsidies, the farmers in developing economies claim, American farmers would produce only the amount of wheat that they could sell on the open market and the global price of wheat would rise.

Which of the following, if true, most weakens the claims of the farmers in developing countries regarding the price of wheat?

A) Wheat that is not processed for consumption is often used for certain industrial applications.
B) Non-governmental buyers of wheat and wheat products are able to predict how much wheat they will need several years in advance.
C)The United States government offers similar subsidies to soybean farmers, though the global price of soybeans is significantly higher than that of wheat.
D) Other countries, such as Canada and Russia, are likely to produce more wheat if the United States were to reduce its output.
E)The price of sorghum, a crop for which the United States government offers no subsidies, is lower than that of wheat.

The first step in ANY strengthen or weaken problem is to get a clear idea in your head regarding the argument you are trying to strengthen or weaken.

US Subsidies --> American farmers no incentive to alter production --> produce too much grain --> flood world market --> push price of wheat down

**Conclusion: remove U.S. subsidy --> price of wheat will rise.

Because this is a weaken question, we need to find ANY evidence that shows that removing the U.S. subsidy WILL NOT cause the price to rise --> i.e. is there anything else pushing the cost of wheat down that is OUTSIDE of the chain of events discussed above??

Next step, move through the choices ELIMINATING anything wrong (we are not really looking for 1 right answer, but 4 wrong ones!!)

A - the question is about total sales, not specific uses - Irrelevant

B - the passage explains that American farmers ignore world demand (whether that demand is known in advance or not) - Irrelevant

C - **Common Wrong Answer Type** Providing information about an unrelated alternative... knowing ANYTHING about the market for soybeans is worthless to an argument about the market for wheat.

D - CORRECT This tells us that eliminating the subsidy will drop US production, but the chain of events falls apart because other actors will step in --> produce too much wheat --> and flood the market (i.e. evidence that other countries will step in and do what the US does now means that the end result or the original chain remains unchanged) --> the price of wheat stays down.

E - While this choice might slightly weaken (having no subsidy resulted in a price that is relatively low, therefore there is less evidence that dropping a subsidy will increase price), we have no idea where the price of sorghum was to begin with. With a subsidy, the price might drop even further! This is exactly why comparisons to a different crop are irrelevant.

Hope this helps!

Whit

prachich1987 wrote:Thanks Whitney the OA is D.
But D states that "Other countries, such as Canada and Russia, are likely to produce more wheat if the United States were to reduce its output."
Even if these countries produce more wheat, the government there may not offer subsidies & the prices may not be low.

Note that the only impact attributed to the subsidies is to make the US produce more wheat than the world market demands:

(you can essentially read the phrase "that causes" or "leads to" at every arrow below)

US Subsidies --> American farmers no incentive to alter production --> produce too much grain --> flood world market --> push price of wheat down

So it actually doesn't matter if other governments offer subsidies if we are told that the farmers in other countries WILL produce more wheat if the US reduces its output. The new chain of events will look like this:

US drops subsidies --> American farmers have incentive to alter production --> produce less grain --> BUT other farmers jump in and produce more wheat --> world market stays flooded (not by the US but by other countries) --> push price of wheat down

So notice that it is not that subsidies themselves push the price down, rather it is their effect on the production by US farmers. In D, we are told that other countries WILL produce more wheat (we cannot add assumptions about why they would or would not in the face of subsidies).


Whit