#20 - Adjusted for inflation, the income earned from wool

[Administrator]

Complete Question Explanation

Resolve the Paradox—#%. The correct answer choice is (C)

The Paradox in this question is fact-intensive, but not otherwise difficult to understand. An Australian family of sheep farmers saw their income earned from wool sales increase dramatically between 1840 and 1860. The family sold the wool on the international market, where the price for wool was higher than the price paid on the domestic markets. During this period, both the percentage and the amount of wool the family sold on the international market increased dramatically.

However, despite this increase in the family’s income generated by selling wool, the family did not enjoy a commensurate increase in prosperity. The question stem asks us to select the answer choice that most helps to resolve this apparent contradiction. Our prephrase is that the correct answer will tell us that something reduced the family’s income in some other area, or that the purchasing power of their income was deflated in some way.

Answer choice (A): There are two keys to this answer choice. The most important is the restriction of the fact to the end of the 1800s, a time period irrelevant to the paradox, which dealt with events between 1840 and 1860. Next is the focus on the domestic wool market. The reason the family’s income from wool sales increased so dramatically was that they increased the percentage and amount of the wool they sold on the international market. We do not know whether the domestic market prices increased at all, and we have no basis to assess the impact of the comparatively greater increase in prices in Australia generally.

Answer choice (B): This answer choice focuses on the domestic wool market, which is irrelevant to the paradox.

Answer choice (C): This is the correct answer choice. If all sheep farmers produced these other products, then the family at issue in the stimulus did as well. If the prices, both international and domestic, for a whole swath of other products produced by the family decreased sharply during the same period, that drop would help explain why the increase in their profits from wool did not translate into financial prosperity commensurate to the increase.

Answer choice (D): This answer tries to change the facts in order to avoid the paradox. While it may be the case generally that Australian wool producers were in a less favorable position, the stimulus is clear that this particular family enjoyed a substantial increase in income earned from wool.

Answer choice (E): The implication of this answer choice may be that the family discussed in the stimulus faced increased competition. However, the family at issue saw their income from wool sales increase substantially, so this information does not help us to resolve the paradox.

[mpoulson]

Hello,

I wanted help for understanding why the answer was C and not E or D or B. All of these answer seem to support the idea that you can have increase profits in one area, but lose money on the whole due to either increased competitions, or decreased sales in domestic markets. I chose E originally, because it seemed to infer that the family must of been involved in other forms of business which inevitably was not as profitable. Please explain. Thank you for the help. I was really confused on this one.

- Micah

[Emily Haney-Caron]

Hi Micah,

The trick to this question is keeping in mind that we know that the income earned from wool sales increased--adjusted for inflation. That means that any answer choice that explains why they would make less money on wool even though the prices they received were higher cannot be correct, because they did not make less money, from wool, they made more. Therefore, for this question we are looking for another area in which the family might have lost money, other than wool sales, to explain their reduction in prosperity despite the increased income from wool.

B, D, and E all explain how the price they got for their wool could have gone up without their income from wool going up. C is the only answer choice that explains how lost money from another area other than wool could have offset the increase in income from wool.

Hope that helps!

[mpoulson]

Completely understand now. Thank you.

[jlam061695]

In answer choice D, is the phrase"less favorable position than previously" vague and therefore does not necessarily have relation to an increase/decrease in prosperity?

[Clay Cooper]

Hi jlam,

Thanks for your question. No, D is wrong because it does not address this family specifically, but Australian wool producers as a group; additionally, it says competition increased - but that evidence is irrelevant to our situation, in which we know for sure that this specific family sold a higher percentage and larger amount of their wool on an increasingly profitable international market. Even if D were true, it just makes our family an exception to the rule in the group of Australian wool producers; what we need, instead, is something that explains how what we already know about them - that they surely made more money off of wool sales during this period - but nonetheless were worse off overall. Answer choice C does that by establishing that the other areas of their incomes - the other sheep products - likely became less profitable over the same period.

Keep working hard!

[ShannonOh22]

Hey guys - a couple quick questions on this one.

I chose D originally, because I thought increased competition among ALL Australian wool producers might have affected the family's relative "prosperity" in comparison to the rest of the domestic participants in the market. I understand they saw profits due to the increased price on the international market, but isn't "prosperity" a relative term, and one that would depend upon the success of those around them? Therefore if ALL wool producers were in the same "less favorable" position, it would explain the family's lack of relative "prosperity"...? No? I think at this point I'm confusing myself even more.

Second question - I eliminated C because of the specific terms mentioned "mutton, sheepskins, and certain other products" because none of those were mentioned in the stimulus, where the focus was solely on wool. Given that this is a paradox Q, I know we can allow for "new" information to be introduced in the correct answer choice, but I struggle sometimes as to where we draw the line. Do you have any suggestions on how to tell when an answer choice is under the "umbrella" and when it has gone too far?

Thank you in advance!!

[Jeremy Press]

Hi Shannon,

For answer choice D, prosperity is a term that indicates an absolute condition of thriving (especially financially), and so is not dependent on relative competitive status. One could be in a relatively extremely competitive position (maybe one has a monopoly) in a cold market, and therefore not thrive (because, for example, of an overall economic depression or a lack of demand for one's products). By contrast, one could be a bit player (not very competitive) in an extremely hot market, and thrive (because there's so much business being done that everyone makes a good living).

Regarding your question on answer choice C, the issue of "new information" in Family 2 (Assumption, Strengthen, Justify, Resolve) and Family 3 (Weaken) questions is simply a question of whether the new information is relevant to the issues raised by the argument or fact set. Are lower prices for products being sold by a family (we know these are, because answer choice C states that all Australian sheep farmers sell them) relevant to that family's properity? Sure, because they affect the amount of money that family makes. The question is whether the issues raised in the stimulus (here, the broad issue of prosperity) are potentially impacted by the new issues raised in the answer choice (here, the prices for products sold). Look for a direct connection between the umbrella issue in the stimulus and the new issue raised by the answer choice. Here, prosperity is financial, and so are the prices that a family's products sell for. Pretty direct connection. With answer choice D, you need to take a more circuitous route to find a connection. In general, the more inferential steps you have to take (and the less certain those steps are) to make a connection between the answer's content and the stimulus's content, the less likely the answer is having the impact you want.

I hope this helps!

Jeremy

[Bruin96]

I chose answer choice (b) because I thought that the decrease in the domestic market could have led to a lesser income than the previous years. I thought that answer choice b resolved the paradox because although prices in the international market may have increased and if domestic was decreasing dramatically it would have explained why the farmers were unable to enjoy a commensurate increase in fortune/prosperity.


Is the reason why answer choice C is correct partly due to it mentioning both international and domestic prices?

[KelseyWoods]

Hi Bruin96!

The stimulus tells us that "the family generated more income from selling their wool." So regardless of what's happening in the domestic wool market, we know for sure that they had a higher income from selling wool. We have to figure out why even with this higher income from wool, they did not enjoy a commensurate increase in prosperity.

Answer choice (C) resolves the paradox by telling us that even though they may have earned a higher income from selling wool, the prices of other products that all Australian sheep farmers also produced fell. So they had a higher income from wool, but a lower income on all these other products, meaning their total income might actually have been lower, which would explain why the higher wool income didn't result in higher prosperity.

Hope this helps!

Best,
Kelsey