CR: How to solve this CR??? The cotton farms of Country Q

[cesar.rodriguez.blanco]

How to solve this CR???

The cotton farms of Country Q became so productive that the market could not absorb all that they produced. Consequently, cotton prices fell. The government tried to boost cotton prices by offering farmers who took 25 percent of their cotton acreage out of production direct support payments up to a specified maximum per farm.

The government's program, if successful, will not be a net burden on the budget. Which of the following, if true, is the best basis for an explanation of how this could be so?
(A) Depressed cotton prices meant operating losses for cotton farms, and the government lost revenue from taxes on farm profits.
(B) Cotton production in several counties other than Q declined slightly the year that the support-payment program went into effect in Q.
(C) The first year that the support-payment program was in effect, cotton acreage in Q was 5% below its level in the base year for the program.
(D) The specified maximum per farm meant that for very large cotton farms the support payments were less per acre for those acres that were withdrawn from production than they were for smaller farms.
(E) Farmers who wished to qualify for support payments could not use the cotton acreage that was withdrawn from production to grow any other crop.

[vrajesh.dave]

IMO A:

Since, even though government program is paying farmer to take 25% of their cotton acreage.
The government does not lose tax revenue since the farm are profitable versus government not getting tax revenue or worse giving tax break on non-profitable farms.


What is the OA?

[sunny.jain]

IMO: A

Please see the below demonstration:

Parapharsing;
Gov will fund the farmers who will produce only on 75% of their land to boost the cotton prices.

Fact:
1) cotton production is very high so cotton prices falling.


We have to balance this:

Budget - fund == Budget + ??

Either we can prove fund --> 0
or some other factor might be added to budget,so that it will not be a burden on gov.

I found only A and D were appealing. A is much more stronger explanation than D.

[NIKESH_PAHUJA]

@Sunny ! Nicely explained.


If program is not to be a net burden on the budget, Govt might be getting something which nullifies the effect of direct support payment.

A explains this by stating that tax offsets the money given towards direct support payment.

Hence IMO A

[RonPurewal]

@Sunny ! Nicely explained.


If program is not to be a net burden on the budget, Govt might be getting something which nullifies the effect of direct support payment.

A explains this by stating that tax offsets the money given towards direct support payment.

Hence IMO A

perfect!

[prashant.ranjan]

Greetings everyone,

Hello Ron.

I would just like to verify my reasoning of eliminating (D). Larger cotton farms, unlike smaller cotton farms, if produce cotton, they would definitely hinder with the govt's proposition to bring the cotton prices up. So, the larger cotton farms would be the most obvious customers for the govt's proposal. However (D) presents a reasons why larger cotton farms would be all the more reluctant to follow the govt plan, since they are getting lesser support payment unlike smaller farms (support payment per acre). Hence in a way (D) goes against the conclusion of the argument - to bring the cotton prices up - and hence need to be eliminated.

Ron, could you verify if am correct in my reasoning above.

Thanks and Regards
Prashant
Big Fan!!!

[jlucero]

Greetings everyone,

Hello Ron.

I would just like to verify my reasoning of eliminating (D). Larger cotton farms, unlike smaller cotton farms, if produce cotton, they would definitely hinder with the govt's proposition to bring the cotton prices up. So, the larger cotton farms would be the most obvious customers for the govt's proposal. However (D) presents a reasons why larger cotton farms would be all the more reluctant to follow the govt plan, since they are getting lesser support payment unlike smaller farms (support payment per acre). Hence in a way (D) goes against the conclusion of the argument - to bring the cotton prices up - and hence need to be eliminated.

Ron, could you verify if am correct in my reasoning above.

Thanks and Regards
Prashant
Big Fan!!!

While all of the things that you say are correct, be careful about what your task is on this question. You are not trying to say that the program would be successful or unsuccessful if it were implemented. You are trying to say that, if this plan is successful, it still will not be a burden on the government budget. Your reasoning for eliminating (D) was saying that it can't be true, otherwise the plan couldn't be successful. Not your job here. If the plan was successful, it wouldn't matter to the government's net budget that large farms were getting less per acre. That's why (D) is not correct.