PrepTest 140

Incorrect. First, this answer doesn't address bread at all. Second, reducing labor costs doesn't establish that those costs are minimal compared to feed costs, thus allowing the latter to be a larger driver of product pricing.

Incorrect. Since the paradox is about the percent increase in cost, the relative absolute cost of each of the products doesn't provide resolution. The relationship between the grain costs and the product costs is, not between the two products.

Correct. Argument or Facts:
Facts

Question Type:
Paradox

Stimulus Summary:
If grain prices double:

(1) Bread prices will go up 10-15%

(2) Grain-fed beef prices will double

Answer Anticipation:
This Paradox question highlights the effects of a change. That change is the cost of grain doubling. One might expect that the impact on various things that require grain would go up by a matching amount, but that's not the case—bread prices go up by a smaller amount, whereas grain-fed beef prices match the increase in grain prices. This discrepancy in the impact of the given change on these two items is what must be resolved.

So why might grain prices have a different effect on one grain-requiring item than another? Since we're trying to explain a difference, there must be a relevant difference between the products that can provide this explanation. And it must have to do with how much of the final cost of the product can be attributed to grain. For bread, the cost of grain must be a smaller proportion of the total cost than that of grain-fed beef. If that's the case, then it'd explain why changing grain prices have a larger impact on the latter than the former.

Answer Explanation:
This answer establishes a relevant difference—grain costs make up a minority of the cost of bread (since something else makes up the majority), but the majority of the cost of grain-fed beef. If that's the case, then the latter would be expected to be affected by the cost of grain more than the former, thus explaining the different effect on prices seen by the change in grain costs.

Key Takeaway:
When a change has an unexpected result, that result needs to be tied to the change. When the unexpected result is different between two things, then those things must have a relevant difference that's likely to show up in the correct answer.

Incorrect. The paradox revolves around changes to the price of grain-fed beef, not all beef, so other types of beef are out of scope.

Incorrect. Without tying these bakers and wholesale processors to price or grain sourcing, this answer is out of scope.