PT140.S2.Q7 > Question

SECTION 1 · lr

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SECTION 2 · lr

SECTION 3 · lr

SECTION 4 · rc

PASSAGE 1

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

PASSAGE 2

Question 7 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

If grain prices double, why would the average price of a loaf of bread rise only 10 to 15 percent, even though the price of grain-fed beef would almost double?

The correct answer will suggest a difference between grain-fed beef and a loaf of bread that could make changes in grain price have less of an effect on the price of a loaf of bread than on the price of grain-fed beef.

The labor costs involved in beef don’t have a clear relationship to grain prices. We wouldn’t expect reduced labor costs to change the impact of grain prices on the price of grain-fed beef. In any case, we want to explain the strangely low impact grain price has on bread price.

The price of beef compared to the price of bread is irrelevant, because we’re trying to explain the disparity in percentage change in price. Why, if grain price doubles, does bread price only increase 10 to 15% when beef price almost doubles?

Most of the cost of bread isn’t related to grain. But most of the cost of grain-fed beef is related to grain. This could explain why bread price is less affected by changes in grain price.

The comparison in the stimulus involves price changes in bread and grain-fed beef. The fact grain-fed beef isn’t very common compared to other beef doesn’t impact this comparison.

Do we have any reason to think being sourced by an independent baker vs. a large wholesale processing operation would impact the degree to which changes in grain price would affect bread or beef price? No.

PrepTest 140 - Section 2 - Question 7

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