ParadoxDiff: Medium

Logic Breakdown

Passage Summary: When grain gets twice as expensive, the price of beef also nearly doubles, but the price of bread only goes up a little bit.

Reasoning: The stimulus presents a discrepancy where a doubling of grain prices causes a massive increase in beef prices but only a minor increase in bread prices.

Analysis: This paradox requires us to explain why the same raw material (grain) has such a disproportionate impact on two different products. The key likely lies in the 'cost structure' of each item. If grain is the primary expense in producing beef, but only a tiny fraction of the cost of making bread (which involves labor, baking, and packaging), the price difference makes sense. Look for an answer that highlights that grain represents a much larger percentage of the total production cost for beef than it does for bread.

Passage Stimulus

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7.

Which one of the following would, if true, most contribute to an explanation of the phenomenon described above?

Correct Answer
C
C: It directly explains the phenomenon: bread’s costs are mostly labor/marketing, so grain’s doubling has limited effect; beef’s costs are mostly feed, so grain’s doubling nearly doubles beef prices.
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