All Courses
Explore Courses UPSC Exam UPSC Test Series Free Notes EduRev Infinity Get the App Login Join for Free
Sign in Open App
GMAT Exam  >  GMAT Questions  >  Economist: Paying extra for fair-trade coffee... Start Learning for Free
SaveJoin the Discussion on the App
Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helps. By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.
To evaluate the strength of the economist's argument, it would be the most helpful to know which of the following?
  • a)
    Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers' profits
  • b)
    What proportion of coffee farmers in developing nations produce fair-trade coffee
  • c)
    Whether many coffee farmers in developing nations also derive income from other kinds of farming
  • d)
    Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmers
  • e)
    How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmers
Correct answer is option 'B'. Can you explain this answer?
FREE This question is part of
Download PDF Attempt Test
Download PDF Attempt this Test
Most Upvoted Answer
Economist: Paying extra for fair-trade coffee—coffee labeled wit...
Let's analyze each answer choice to determine which one would be most helpful in evaluating the argument:
(A) Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers' profits.
  • This answer choice addresses the potential negative impact on non-fair-trade coffee farmers' profits due to increased average prices. However, it does not directly evaluate the strength of the economist's argument. It focuses on finding a solution rather than assessing the argument itself. Therefore, this answer choice is not the most helpful in evaluating the economist's argument.
(B) What proportion of coffee farmers in developing nations produce fair-trade coffee.
  • This answer choice is relevant to the economist's argument as it provides information about the extent of fair-trade coffee production among coffee farmers in developing nations. If a significant proportion of farmers produce fair-trade coffee, it supports the economist's claim that paying extra for fair-trade coffee may have negative consequences for non-fair-trade coffee farmers. Therefore, this information would be helpful in evaluating the strength of the economist's argument.
(C) Whether many coffee farmers in developing nations also derive income from other kinds of farming.
  • This answer choice explores whether coffee farmers in developing nations have alternative sources of income. While this information may be interesting, it does not directly address the central claim made by the economist. It does not evaluate whether paying extra for fair-trade coffee hurts more farmers than it helps. Hence, this answer choice is less relevant to evaluating the strength of the argument.
(D) Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmers.
  • This answer choice introduces a normative perspective on whether consumers should pay extra for fair-trade coffee. While this ethical consideration is important, it does not directly evaluate the strength of the economist's argument. It focuses on the subjective question of what consumers "should" do, rather than assessing the impact of fair-trade coffee on farmers. Therefore, this answer choice is not the most helpful in evaluating the argument.
(E) How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmers.
  • This answer choice seeks to find a solution to the problem posed by the economist's argument. While the information may be useful in developing strategies, it does not evaluate the economist's argument itself. It focuses on finding a way to help fair-trade coffee farmers without negatively impacting non-fair-trade coffee farmers. Therefore, this answer choice is not the most helpful in evaluating the argument.
In conclusion, the most helpful answer choice in evaluating the strength of the economist's argument is (B) What proportion of coffee farmers in developing nations produce fair-trade coffee.
Free Test
FREE
Start Free Test
Start Free Test
Community Answer
Economist: Paying extra for fair-trade coffee—coffee labeled wit...
Understanding the Argument
The economist's argument highlights the unintended consequences of fair-trade coffee pricing. While fair-trade coffee aims to support certain farmers by providing higher prices, it inadvertently affects non-fair-trade coffee farmers negatively.
Importance of Knowing the Proportion of Fair-Trade Farmers
To evaluate the strength of this argument, knowing the proportion of coffee farmers who produce fair-trade coffee is crucial. Here’s why:
  • Impact Assessment: If a small proportion of farmers produce fair-trade coffee, the negative impact on non-fair-trade farmers might be minimal. The overall market dynamics would still allow many farmers to thrive.
  • Market Dynamics: Understanding the ratio helps gauge how much the increase in average prices affects the total supply and demand equilibrium in the coffee market.
  • Policy Implications: If fair-trade farmers make up a significant portion of coffee producers, more comprehensive measures may need to be implemented to support non-fair-trade farmers.
  • Better Solutions: Knowing this proportion can guide initiatives to create a balance, ensuring fair-trade efforts do not undermine the livelihoods of the majority of farmers.

Conclusion
In summary, option B is the most critical piece of information needed to assess the economist's argument. It provides essential context about the overall impact of fair-trade coffee pricing on the broader community of coffee farmers in developing nations.
Attention GMAT Students!
To make sure you are not studying endlessly, EduRev has designed GMAT study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in GMAT.
< Previous Question Next Question >
Explore Courses for GMAT exam

Similar GMAT Doubts

John Maynard Keynes and Friedrich Hayek, two prominent public figures associated with the Great Depression that started with the collapse of the stock market in 1929, both proposed different ways to restore the economy. Keynes, an economist from Cambridge, believed that the government should intervene in the situation, whereas Hayek, a professor from Austria, maintained that government involvement would be futile.Although Hayek almost singlehandedly established the distinction between microeconomics and macroeconomics, engineering the transfer from classical economics to the more practical and application-oriented methodology of mathematical economics, his solution for emerging from the Great Depression was underestimated in the light of Keynes contribution to economic theory. In his 2012 study Keynes Hayek: The Clash that Defined Modern Economics, famous theorist Nicholas Wapshott traces the history of the applications of both mens theories, giving unprecedented importance to Hayeks work. Describing how the Keynesian vision dominated Western economic analyses until the 1970s, Wapshott surmises that the primary reason for the dominance of Keynes theory during the Depression was that Hayeks solutions to the issue of economic recession were not politically viable. Hayek prescribed to the belief that, when left to its own devices, the market would eventually recover from its downturn and resume its equilibrium; this position was, not surprisingly, rejected by both the US and European political organizations, each seeking to prove its worth in reestablishing the economys prosperity.Which of the following would the author most likely agree with?

Recently,some economists have concluded that the major impediment to job growth in the U.S. is the enormous national debt. While many politicians would like to stimulate job growth by increasing government spending, these economists believe it will have the opposite effect and thus want to cut spending immediately.Historically, when total debt levels exceed 90% of domestic GDP, economic growth falls significantly causing job losses and overall economic malaise.The current U.S. debt is over 96% of GDP, so it is hard to argue the importance of decreasing this percentage and the economists are correct on this point. However, what these economists fail to understand is that cutting spending at this critical juncture would put too much pressure on a fragile economy. In the short term, spending should be left at current levels and revenue should be increased by increasing taxes on wealthy individuals and some corporations. As the economy strengthens, then spending can be decreased with the goal of reducing the debt percentage of GDP to a figure below 90%.Q. The portions inunderlineplay which of the following roles?

merican economists continually attempt to gauge the health of the economy, both for the gain of the private sector as well as for the global standing of the United States. Different elements of the economy react differently to changes in prosperity. Some elements rise and fall as the economy waxes and wanes. These are known as coincident indicators. Other elements are known as leading indicators and usually show a downturn before the economy does. A third group of elements are known as lagging indicators and lose vigor only after the economy has already begun to slow. Economists can predict the direction of the economy by monitoring these indicators.Coincident indicators, such as manufacturing and employment rates, are the best gauge of the current state of the economy. A continued shift in these indicators allows economists to determine whether the economy itself is in the process of an upturn or a downturn. These indicators coincide with shifts in the economy because they are dependent on sustained prosperity. But since coincident indicators reflect only the current state of the economy, they are not especially useful in predicting how the economy will perform in the near future. Economists must look to other indicators for that.The indicators with the greatest predictive power are leading indicators, such as mortgage applications and profit margins. When these indicators rise or fall, economists can often foretell similar changes in the country’s economic health. These indicators do not cause changes in the economy. Rather, they often signal changes in economic behavior that lead to shifts in the economic cycle. By contrast, the third type of indicator – lagging indicators – is useless as a harbinger of change. But these indicators can be helpful in confirming the assessments of economists.Determining which elements of the economy fall into which category of indicator requires analysis of copious data and an understanding of the factors that propel the economy. One must determine which events surrounding a turn in the business cycle actually contributed to the change. Establishing a solid framework for understanding the behavior of these indicators helps economists to avoid miscalculations and to guide the country through periods of slow or negative economic growth.Q.The passage suggests that lagging indicators would be least helpful in determining which of the following?

merican economists continually attempt to gauge the health of the economy, both for the gain of the private sector as well as for the global standing of the United States. Different elements of the economy react differently to changes in prosperity. Some elements rise and fall as the economy waxes and wanes. These are known as coincident indicators. Other elements are known as leading indicators and usually show a downturn before the economy does. A third group of elements are known as lagging indicators and lose vigor only after the economy has already begun to slow. Economists can predict the direction of the economy by monitoring these indicators.Coincident indicators, such as manufacturing and employment rates, are the best gauge of the current state of the economy. A continued shift in these indicators allows economists to determine whether the economy itself is in the process of an upturn or a downturn. These indicators coincide with shifts in the economy because they are dependent on sustained prosperity. But since coincident indicators reflect only the current state of the economy, they are not especially useful in predicting how the economy will perform in the near future. Economists must look to other indicators for that.The indicators with the greatest predictive power are leading indicators, such as mortgage applications and profit margins. When these indicators rise or fall, economists can often foretell similar changes in the country’s economic health. These indicators do not cause changes in the economy. Rather, they often signal changes in economic behavior that lead to shifts in the economic cycle. By contrast, the third type of indicator – lagging indicators – is useless as a harbinger of change. But these indicators can be helpful in confirming the assessments of economists.Determining which elements of the economy fall into which category of indicator requires analysis of copious data and an understanding of the factors that propel the economy. One must determine which events surrounding a turn in the business cycle actually contributed to the change. Establishing a solid framework for understanding the behavior of these indicators helps economists to avoid miscalculations and to guide the country through periods of slow or negative economic growth.Q.According to the passage, the main purpose of economic indicators is which of the following?

Top Courses for GMATView all

Top Courses for GMAT

Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helps. By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.To evaluate the strength of the economists argument, it would be the most helpful to know which of the following?a)Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers profitsb)What proportion of coffee farmers in developing nations produce fair-trade coffeec)Whether many coffee farmers in developing nations also derive income from other kinds of farmingd)Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmerse)How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmersCorrect answer is option 'B'. Can you explain this answer?
Question Description
Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helps. By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.To evaluate the strength of the economists argument, it would be the most helpful to know which of the following?a)Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers profitsb)What proportion of coffee farmers in developing nations produce fair-trade coffeec)Whether many coffee farmers in developing nations also derive income from other kinds of farmingd)Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmerse)How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmersCorrect answer is option 'B'. Can you explain this answer? for GMAT 2024 is part of GMAT preparation. The Question and answers have been prepared according to the GMAT exam syllabus. Information about Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helps. By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.To evaluate the strength of the economists argument, it would be the most helpful to know which of the following?a)Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers profitsb)What proportion of coffee farmers in developing nations produce fair-trade coffeec)Whether many coffee farmers in developing nations also derive income from other kinds of farmingd)Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmerse)How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmersCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for GMAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helps. By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.To evaluate the strength of the economists argument, it would be the most helpful to know which of the following?a)Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers profitsb)What proportion of coffee farmers in developing nations produce fair-trade coffeec)Whether many coffee farmers in developing nations also derive income from other kinds of farmingd)Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmerse)How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmersCorrect answer is option 'B'. Can you explain this answer?.
Solutions for Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helps. By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.To evaluate the strength of the economists argument, it would be the most helpful to know which of the following?a)Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers profitsb)What proportion of coffee farmers in developing nations produce fair-trade coffeec)Whether many coffee farmers in developing nations also derive income from other kinds of farmingd)Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmerse)How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmersCorrect answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for GMAT. Download more important topics, notes, lectures and mock test series for GMAT Exam by signing up for free.
Here you can find the meaning of Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helps. By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.To evaluate the strength of the economists argument, it would be the most helpful to know which of the following?a)Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers profitsb)What proportion of coffee farmers in developing nations produce fair-trade coffeec)Whether many coffee farmers in developing nations also derive income from other kinds of farmingd)Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmerse)How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmersCorrect answer is option 'B'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helps. By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.To evaluate the strength of the economists argument, it would be the most helpful to know which of the following?a)Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers profitsb)What proportion of coffee farmers in developing nations produce fair-trade coffeec)Whether many coffee farmers in developing nations also derive income from other kinds of farmingd)Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmerse)How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmersCorrect answer is option 'B'. Can you explain this answer?, a detailed solution for Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helps. By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.To evaluate the strength of the economists argument, it would be the most helpful to know which of the following?a)Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers profitsb)What proportion of coffee farmers in developing nations produce fair-trade coffeec)Whether many coffee farmers in developing nations also derive income from other kinds of farmingd)Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmerse)How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmersCorrect answer is option 'B'. Can you explain this answer? has been provided alongside types of Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helps. By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.To evaluate the strength of the economists argument, it would be the most helpful to know which of the following?a)Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers profitsb)What proportion of coffee farmers in developing nations produce fair-trade coffeec)Whether many coffee farmers in developing nations also derive income from other kinds of farmingd)Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmerse)How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmersCorrect answer is option 'B'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice Economist: Paying extra for fair-trade coffee—coffee labeled with the Fairtrade logo—is intended to help poor farmers, because they receive a higher price for the fair-trade coffee they grow. But this practice may hurt more farmers in developing nations than it helps. By raising average prices for coffee, it encourages more coffee to be produced than consumers want to buy. This lowers prices for non-fair-trade coffee and thus lowers profits for non-fair-trade coffee farmers.To evaluate the strength of the economists argument, it would be the most helpful to know which of the following?a)Whether there is a way of alleviating the impact of the increased average prices for coffee on non-fair-trade coffee farmers profitsb)What proportion of coffee farmers in developing nations produce fair-trade coffeec)Whether many coffee farmers in developing nations also derive income from other kinds of farmingd)Whether consumers should pay extra for fair-trade coffee if doing so lowers profits for non-fair-trade coffee farmerse)How fair-trade coffee farmers in developing nations could be helped without lowering profits for non-fair-trade coffee farmersCorrect answer is option 'B'. Can you explain this answer? tests, examples and also practice GMAT tests.
Explore Courses for GMAT exam

Top Courses for GMAT

Explore Courses

Suggested Free Tests

Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev
Get App
© EduRev
Education Revolution
Signup to see your scores go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup