LSAT 8 | Section 1 | Logical Reasoning: Q9

LR Question 9 Explanation

QUESTION TEXT: Complains that milk bottlers take enormous markups…

QUESTION TYPE: Must be True

FACTS: When raw milk prices rise, bottled milk prices also rise. Markups are small, therefore bottled milk prices aren’t rising as fast as raw milk prices.

When raw milk prices fall bottled milk prices also fall. Markups are large, therefore bottled milk prices aren’t falling as fast as raw milk prices.

We don’t know what happens when prices are stable.

ANALYSIS: This is a long question. Make sure you know the detail. The basic idea is that bottlers don’t instantly respond to changes in price. That means markups increase when prices fall and markups decline when prices rise.

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1. This isn’t necessarily true. Bottled milk prices do rise when raw milk prices increase. It may be that the price of a bottle is highest then even if profits aren’t too high. Profits = sale price – cost of bottled milk to seller.
2. We know that some cost increases are passed along. They’re just not passed along fully or immediately.
3. This is tempting, but it is talking about an extended period of time. We only know what happens when prices are rising and falling. We don’t know what happens when prices stay low and stable.
4. CORRECT. Yes. We know this is true because milk bottlers make higher profits when raw milk prices drop. So if their costs fall by 15% they may only lower prices 10%. That’s not a proportional decrease.
5. We only know that profits are smallest “proportionate to the retail price.” It could be that profits are actually quite higher as a number (e.g. 30 cents) while low as a percentage (1%.) This answer choice is talking about the number.

Recap: The question begins with “Complains that milk bottlers take enormous markups”. It is a Must be True question. Learn how to master LSAT MBT questions on the LSAT Logical Reasoning question types page.