QUESTION TEXT: If grain prices double then the average…
QUESTION TYPE: Paradox
PARADOX: When grain prices rise, grain fed beef gets expensive much faster than bread does.
ANALYSIS: The first step on paradox questions is to figure out why the situation is confusing. It’s odd that beef gets expensive so much faster than bread does. Bread is mostly made of grain, so we would expect it to get expensive faster.
Note that this question shows how you’re allowed to use outside knowledge to make warranted assumptions. Everyone knows that bread is made from grains – the question doesn’t need to say this explicitly.
So in fact you must use outside knowledge to answer this question. It’s a warranted assumption to say that bread is made from grains. What you’re not allowed to do with outside knowledge is use it to contradict the argument, or add a fact that many people would disagree with.
- Duh. Every employer tries to reduce labor costs. Unlike the correct answer, this answer doesn’t say whether labor costs are actually low. Employers could fail to reduce costs, despite their best efforts.
- Everyone knows that beef is expensive and bread is cheap. The point of the stimulus was that the change in the price of meat was very large compared to the change in the price of bread.
- CORRECT. This shows that grain prices have only a small impact on bread prices, whereas grain prices greatly affect the price of cattle feed and hence the price of cattle.
- This explains why beef got more expensive. It doesn’t explain why beef got expensive so much faster than bread.
- So what? This just tells us a couple of interesting facts about bread and meat purchasing. We have no idea how these facts influence prices.
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