Q8 - After an area has been hit by a natural disaster, there

[kyuya]

Okay so lets set the scene.

There was a horrible tornado in town X, and all of the plywood houses have unfortunately been knocked down. Who knew?

So we head to the store to get more plywood for our house, but we find that the price of the plywood is waaaaaaay higher than it was previous to the tornado. Clearly the store is taking advantage of the fact that we all need the plywood to fix our houses, right?

But wait. the stimulus is telling us the owner is not just being a horrible person raising the plywood prices - but he HAS to. Bringing plywood into this disaster zone ain't cheap, and it requires raising the price to compensate for the cost of getting it in here. Maybe he had the plywood flew in via fancy jet since cars couldn't go through the rubble.

So actually we learn that the retailers are are paying more for the wood than they did previous to the accident, and they must pass the price over to us so they don't go out of business because bringing it in is "expensive". Well how expensive? Expensive enough to justify the price rising to the extent it did?

So is this argument air tight? Well, the stimulus is assuming something.

It is assuming that the price of transporting the plywood in is actually high enough that it makes up the difference in price for the wood and there isn't something else going on here. All we are told is it is expensive.. but who's to say the retailer isn't still jacking the price up?

(A) This is unfortunate for the people in these areas, but doesn't matter. Is not assumed at all.

(B) This may or may not be true, but it doesn't matter either way. Even if they have to, it tells us nothing about whether the retailer did or did not add on extra price to the plywood, thereby making the argument fall apart.

(C) If we negate this and say "some" retailers make enough money on each sheet of plywood sold to absorb for long an increase in shipping costs without raising prices, does it make the argument fall apart? This answer choice is talking about sheets of plywood sold, NOT about the actual pricing of the plywood itself. We don't really care about what happens after the sale, we are interested in how the price becomes the way it is, and if retailers are taking advantage of a bad situation.

(D) The AMOUNT of plywood being transported is never discussed and is ultimately useless information. We are concerned about the price.


Okay, so the right answer.

(E) If we negate this and state that the increase in prices charged by retailers for plywood following a natural disaster DOES exceed the increase in cost to the retailers. Then this would mean that, that price that retailers are selling it for IS going beyond the accommodated prices of flying the plywood in the super expensive jet, and the owner is therefore raising the price for some other reason. Greed?

I think it's easy to get caught up on an answer choice like (C), but if you stay close to the core of the argument, it becomes a really unattractive answer choice. We want to explain a discrepancy in the prices (where the assumption is), and when we stick to this closely, the fact the they are talking about after plywood gets sold makes it irrelevant right away.

[tommywallach]

Just chiming in that I love your explanations. That is all.

-t

[Amy K994]

Anyone can explain why C) is wrong?
It also related to the prices.