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Unformatted text preview: m imports are likely to decrease dramatically in the near future. To the extent that this is the case, lowering sugar prices may have a negligible countervailing effect, depending on the demand for Sacchar’s sugar. In the second place, increasing sales by lowering the price of sugar will not yield an increase in income unless the increase in sales is sufficient to overcome the loss in income due to the lower price. This raises three questions the author fails to address. First, will a price decrease in fact stimulate demand? Second, is demand sufficient to meet the increase in supply? Third, can Sacchar increase the sugar production sufficiently to overcome the deficit? In the absence of answers to these questions, we cannot assess the author’s proposal. In conclusion, the author provides an incomplete analysis of the problem and, as a result, provides a questionable solution. To better evaluate the proposal, we would need to know how revenues from imports are likely to change in the future. To streng...
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- Spring '09