Question

The chart below gives the per unit selling prices and costs, in rupees, of 11 items prepared by a sweetshop. Producer's margin is the gap between the cost and the producer's selling price. Retailer's margin is the gap between the producer's selling price and the retailer's selling price.

Based on the chart, which of the following conclusions can be made?

• A. Producer's margin for panir kachouri is less than the retailer's margin.
• B. Producer's margin for chicken pizza is more than the retailer's margin.
• C. Producer's margin for fish spring roll is more than the retailer's margin.
• D. Producer's and retailer's margins are highest for panir kachouri alone.

Hint:

Compare the two vertical gaps, cost to producer's price, and producer's price to retailer's price, item by item rather than looking at overall height.

Answer 1

The Correct Option is C

The chart plots three values for each of the 11 sweetshop items: the cost, the producer's selling price, and the retailer's selling price. The gap from the cost line up to the producer's selling price line is the producer's margin. The gap from the producer's selling price line up to the retailer's selling price line is the retailer's margin. To answer this question, look at the vertical gaps at each item, not the absolute heights.

1. Producer's margin for panir kachouri is less than the retailer's margin: At panir kachouri, the jump from the cost line to the producer's price line is clearly the bigger of the two jumps, so the producer's margin here is more than the retailer's margin, not less. This option is wrong.
2. Producer's margin for chicken pizza is more than the retailer's margin: At chicken pizza, the producer's price line sits close to the cost line while the retailer's price line jumps up sharply above it. The retailer's margin is the bigger gap here, so this option is wrong.
3. Producer's margin for fish spring roll is more than the retailer's margin: At fish spring roll, the cost to producer's price gap is wide, while the producer's price to retailer's price gap on top of it is comparatively small. So the producer earns the larger share of the markup on this item, and this statement holds.
4. Producer's and retailer's margins are highest for panir kachouri alone: Panir kachouri does show large margins, but items further along the chart, such as fish spring roll and chicken spring roll, show gaps that are just as wide or wider. So panir kachouri is not uniquely the highest, and this option is wrong.

Only the third statement, about fish spring roll, is supported by the chart.

Let's summarize:

• Producer's margin equals producer's selling price minus cost.
• Retailer's margin equals retailer's selling price minus producer's selling price.
• Reading a chart like this means comparing gap sizes at one item at a time, not comparing absolute price levels across items.

So the correct conclusion is that the producer's margin for fish spring roll is more than the retailer's margin, option (C).