Question

With decreased production this year in many rice-growing countries, prices of the grain on world markets have increased. Analysts blame this increase on the fact that only a small percentage of world production is sold commercially, with government growers controlling most of the rest, distributing it for local consumption. With so little rice being traded freely, even slight changes in production can significantly affect the amount of rice available on world markets.

Which one of the following, if true, would most call into question the analysts' explanation of the price increase?

(A) Rice-importing countries reduce purchases of rice when the price increases dramatically.
(B) In times of decreased rice production, governments store more of the rice they control and reduce their local distribution of rice.
(C) In times of decreased rice production, governments export some of the rice originally intended for local distribution to countries with free grain markets.
(D) Governments that distribute the rice crop for local consumption purchase the grain commercially in the event of production shortfalls.
(E) During reduced rice harvests, rice-importing countries import other kinds of crops, although this fails to compensate for decreased rice imports.

Answer 1

Option D most challenges the analysts' explanation by suggesting that governments purchase rice on the commercial market in the event of production shortfalls, which could increase supply and stabilize prices.

Step-by-step explanation:

The question relates to how a decrease in rice production influences the price of rice on the global market. Analysts have claimed that this price increase is due to a minimal amount of rice being traded freely, as a considerable portion is controlled by governments for local consumption. From the given options, the one that would most challenge the analysts' explanation of the price increase is (D) Governments that distribute the rice crop for local consumption purchase the grain commercially in the event of production shortfalls. This implies that governments engage in market activity to compensate for shortfalls, thereby increasing the supply in the global market and potentially moderating price hikes. Other options do not directly address the relationship between government-controlled supply and market prices.