PT135.S2.Q22 > Question

SECTION 1 · lr

Question 1 Question 2 Question 3 Question 4 Question 5 Question 6 Question 7 Question 8 Question 9 Question 10 Question 11 Question 12 Question 13 Question 14 Question 15 Question 16 Question 17 Question 18 Question 19 Question 20 Question 21 Question 22 Question 23 Question 24 Question 25

SECTION 2 · lr

SECTION 3 · rc

PASSAGE 1

Question 1 Question 2 Question 3 Question 4 Question 5 Question 6 Question 7

PASSAGE 2

Question 8 Question 9 Question 10 Question 11 Question 12 Question 13

PASSAGE 3

Question 14 Question 15 Question 16 Question 17 Question 18 Question 19

PASSAGE 4

Question 20 Question 21 Question 22 Question 23 Question 24 Question 25 Question 26 Question 27

SECTION 4 · lr

Why does reducing the price of domestic wine increase sales of imported wine?

Any hypothesis resolving this discrepancy must introduce a different economic effect or state a difference between wine and other products. It must explain why increasing the price of domestic wine increases sales for its competitor, imported wine—which is apparently contrary to general economic principle.

Economists believe that reducing the price of “any product” stimulates demand for it, not just grocery items. The author does not imply that demand for domestic wine is expected to increase because wine is considered a grocery item.

This refers to the knowledge of merchants, not economists. The author does not imply that merchants must be expecting higher demand in order for lowering prices to have that effect.

This does not state that consumers perceive wines sold at higher prices to be superior. Without knowing whether consumers see imported or domestic wines as superior, this fails to explain the increased demand for imported wine.

This deepens the mystery. If imported wines are more expensive than domestic wines but of similar quality, then why did demand for them increase?

This explains why the economic principle is not violated. Lower domestic wine prices caused demand for both types of wine to increase. This is consistent because the author never stated that demand for domestic wine decreased.

PrepTest 135 - Section 2 - Question 22

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