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QOTD # 1 During an economic depression, it is common

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QOTD # 1 During an economic depression, it is common [#permalink] New post 06 May 2016, 00:49
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During an economic depression, it is common for food prices to increase even as incomes decrease. Surprisingly, however, researchers determined that during a depression, for every 5 percent increase in the cost of bread, the lowest socioeconomic class actually increases the amount of bread purchased per capita by 3 percent.

Which of the following hypotheses best accounts for the researchers’ findings?

(A) Not all food costs increase during a depression; some food items actually become less expensive.

(B) Because bread consumption does not increase by the same percentage as the cost does, people are likely consuming more of other food items to compensate.

(C) When incomes decrease, people are typically forced to spend a larger proportion of their income on basic needs, such as food and housing.

(D) People who suddenly cannot afford more expensive foods, such as meat, must compensate by consuming more inexpensive foods, such as grains.

(E) During a depression, people in the lowest socioeconomic class will continue to spend the same amount of money on food as they did before the depression began.
[Reveal] Spoiler: OA

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Re: QOTD - During an economic depression, it is common for food [#permalink] New post 15 May 2016, 19:22
This is a paradox question. The Answer choice C solves the paradox by giving a reason why people increase their spending on food during economic depression
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Re: QOTD - During an economic depression, it is common for food [#permalink] New post 16 May 2016, 03:55
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Re: QOTD - During an economic depression, it is common for food [#permalink] New post 16 May 2016, 06:38
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This Reading Comprehension question is really a Logic question. Such questions typically consist of a single paragraph with one question. First, analyze the argument: During a depression, it is normal for food prices to increase at the same time that incomes decrease. Logically, this would make it more difficult for people to afford the same food that they used to purchase prior to the depression. A study showed a surprising result, however: when the cost of bread went up during a depression, the poorest people actually bought more bread. Note that the argument doesn’t say merely that more money is spent on bread; that would be expected if the price increased. The argument says that the actual amount of bread purchased increased. The correct answer will explain why people would buy more bread even though the cost has gone up and incomes have declined. While choice (A) is likely true in the real world, it does not explain why people buy more bread when the cost of bread has increased and incomes have declined. Choice (B) is an example of faulty logic. It is true that the cost increase is a higher percentage than the consumption increase, but this does not mean that people are consuming less bread and therefore need to eat other things to compensate. In fact, the opposite is true: the argument explicitly states that people are buying more bread than they were! Choice (C) is tempting because it talks about people spending a “larger” proportion of income on food— but “proportion” is a value relative only to the person’s income level. It does not indicate that the person is spending more money on a particular thing. More importantly, though, this choice does not answer the question asked. Correct choice (D), in contrast, provides a reason why an increase in the cost of one food item might cause people to consume more of that item despite a loss of income: other food items are even more expensive and are, thus, much less affordable. The people still need some amount of food to survive, so they purchase more of the food item that does not cost as much money. This accounts for the researchers’ findings. Even if choice (E) were true (and this would be difficult if incomes are decreasing), it would not explain why people buy more bread at a time when the bread costs more and incomes are declining.

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Re: QOTD - During an economic depression, it is common for food   [#permalink] 16 May 2016, 06:38
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QOTD # 1 During an economic depression, it is common

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