medium · GMAT Verbal
When wealthy Nation Y subsidizes its grain exports, Y's farmers sell abroad below their cost of production. Last year Y's subsidized grain flooded the world market and the world grain price fell. Farmers in developing country Z, who sell grain only at the world price and receive no subsidy, saw their revenue per ton drop.
Which of the following is most strongly supported by these statements?
- Nation Y's export subsidies were the single sole cause of the entire decline in world grain prices.
- Z's farmers earned less revenue per ton of grain than they would have at the higher pre-decline world price.
- Z's farmers would clearly have earned a great deal more if their own government had subsidized them.
- Nation Y's farmers still earned an overall profit even though they sold their grain abroad below their cost of production.
- Developing countries ought to impose protective tariffs on the cheap subsidized grain entering from wealthy nations.
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