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Information and IdeasMediumSelect finding that supports an economic claim

Information and Ideas practice question

When the town of Marbury reopened its Saturday farmers' market on Main Street, some permanent shopkeepers worried that the outdoor vendors would draw customers away from their stores. Economist Priya Raghunathan disagrees. She argues that the market produces a "spillover" effect: people who come downtown for the vendors' produce also spend money at the established businesses a few steps away, so the market increases rather than reduces those businesses' sales.

Which finding, if true, would most strongly support Raghunathan's argument?

  1. A. Vendors at the market reported selling out of their produce earlier in the day whenever the weather was clear and warm.
  2. B. In a survey conducted at the market, most shoppers said that they enjoyed browsing the storefronts along Main Street.
  3. C. On Saturdays when the market operated, receipts at cafés and shops within one block of the market were 18 percent higher than on Saturdays when it did not, while receipts at comparable businesses elsewhere in Marbury were unchanged.Correct
  4. D. Marbury's total annual retail sales have increased in each of the three years since the market reopened.

Answer: C. On Saturdays when the market operated, receipts at cafés and shops within one block of the market were 18 percent higher than on Saturdays when it did not, while receipts at comparable businesses elsewhere in Marbury were unchanged.

Raghunathan's claim is specifically that the market raises sales at nearby permanent businesses. Choice C supplies exactly that: a sales increase at businesses next to the market on market days, plus a control group (businesses elsewhere) that rules out a town-wide trend. Choice A is about the vendors' own sales, not the permanent shops the claim concerns. Choice B reports shoppers' enjoyment of browsing, an attitude rather than evidence of spending, so it cannot establish increased sales. Choice D cites a town-wide, year-long total, which is too general: it does not isolate the businesses near the market, does not separate the vendors' own sales from the shops', and could reflect any number of other causes.

Why the other answers are wrong

A. Vendors at the market reported selling out of their produce earlier in the day whenever the weather was clear and warm.
This is about how much the outdoor vendors sold, but Raghunathan's claim concerns sales at the permanent shopkeepers' stores.
B. In a survey conducted at the market, most shoppers said that they enjoyed browsing the storefronts along Main Street.
Saying shoppers enjoy browsing storefronts reports an attitude, not spending — browsing isn't buying, so this can't show the shops' sales rose.
D. Marbury's total annual retail sales have increased in each of the three years since the market reopened.
A town-wide annual total doesn't isolate the businesses near the market or separate their sales from the vendors', and the rise could stem from any number of other causes.

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