Question

The following appeared in a letter to the editor of a Relannian newspaper.
Industry analysts report that the number of dairy farms in Relanna has increased by 25 percent over the last decade. Also, recent innovations in milking technology make it possible for farmers to significantly increase the efficiency of the milking process, allowing them to collect more milk in less time with minimal human intervention. In fact, data from the Relannian Department of Agriculture indicate that labor costs at the majority of Relannian dairy farms are actually lower now than they were ten years ago. Despite increased efficiency and lower labor costs, a carton of cream — a dairy product made from milk — at the local food market costs twice as much as it did two years ago. The only explanation for this dramatic price increase is that farmers are inflating the price of cream to increase their profits.
Write a response in which you discuss one or more alternative explanations that could rival the proposed explanation and explain how your explanations can plausibly account for the facts presented in the argument.

Hint:

Always consider multiple factors that could explain a situation before drawing conclusions. Alternative explanations can often provide more clarity.

Answer 1

While the proposed explanation that farmers are inflating the price of cream to increase their profits is plausible, it is not the only possible explanation for the increase in price. There are several alternative factors that could explain the higher cost of cream without relying solely on profit inflation by farmers.
First, the increase in price could be due to increased demand for cream. Perhaps consumer preferences have shifted in favor of cream, leading to higher prices in response to greater demand. For example, as the popularity of dairy-based products like whipped cream or premium coffee drinks has grown, the demand for cream might have surged, prompting a price increase.
Another potential explanation could be related to changes in transportation or distribution costs. Even though farmers may be collecting more milk efficiently, the costs of transporting milk and cream to market could have increased due to factors such as rising fuel prices, labor shortages in the logistics sector, or regulatory changes in transportation. This would result in higher retail prices for consumers, even if the costs of production have decreased.
Additionally, the dairy industry might have faced higher costs for raw materials used in the production of cream, such as feed for cattle, which could explain the price hike. If feed prices have risen over the past two years, it would naturally lead to higher production costs for dairy products, including cream, which would be reflected in the retail price.
In conclusion, while profit inflation is a possible explanation, the price increase could also be due to shifts in demand, higher transportation costs, or increased input prices. These factors provide alternative explanations that could account for the facts presented in the argument.