TASK DEFINITION: You are given a background paragraph that describes one or more causal or qualitative relationships such as a relationship in economics or a scientific law and a story that makes use of the concepts or the relationship described in the provided paragraph. You are also given a question about the story that requires an understanding of the relationship described in the background paragraph and the story. You need to come up with an answer to the given question; the answer will be a span from either the question or the story. In order to correctly answer the given question, you need to understand the relationship mentioned in the background paragraph and should be able to use it to understand that in the story. Your answer can not consist of any word that is not mentioned in any of these: the background paragraph, the story, or the question. You can directly copy and paste a span from the story or the question while answering the given question.
PROBLEM: Background Paragraph: There is growing concern regarding the use of pesticides in agriculture. Therefore, many of the current commercial applications of modern biotechnology in agriculture are focused on reducing the dependence of farmers on these chemicals. For example, Bacillus thuringiensis (Bt) is a soil bacterium that produces a protein that can act as an insecticide, known as the Bt toxin . But it is a naturally occurring protein, not a foreign chemical. Could this protein be used in crops instead of pesticides? Traditionally, an insecticidal spray has been produced from these bacteria. As a spray, the Bt toxin is in an inactive state and requires digestion by an insect to become active and have any effect. Crop plants have now been engineered to contain and express the genes for the Bt toxin, which they produce in its active form. When an insect ingests the transgenic crop, it stops feeding and soon thereafter dies as a result of the Bt toxin binding to its gut wall. Bt corn is now commercially available in a number of countries to control corn borer (an insect like a moth or butterfly), which is otherwise controlled by insecticidal spraying. 
Story: Environmental scientists are trying to find a solution to reducing the harmful effects of chemicals on the environment. To that end, they developed a transgenic crop with the help of Bt toxin - they referred to it as case A. To test the effectiveness of this new crop they also studied Bt toxin spray - they referred to it as case B. They need to figure out which case is safer for the environment. 
Question: In which case the Bt toxin would not bind to the insect's gut wall, case A or case B?

SOLUTION: case B.

PROBLEM: Background Paragraph: The trade-off theory of capital structure is the idea that a company chooses how much debt finance and how much equity finance to use by balancing the costs and benefits. The classical version of the hypothesis goes back to Kraus and Litzenberger[1] who considered a balance between the dead-weight costs of bankruptcy and the tax saving benefits of debt. Often agency costs are also included in the balance. This theory is often set up as a competitor theory to the pecking order theory of capital structure. A review of the literature is provided by Frank and Goyal.[2]

An important purpose of the theory is to explain the fact that corporations usually are financed partly with debt and partly with equity. It states that there is an advantage to financing with debt, the tax benefits of debt and there is a cost of financing with debt, the costs of financial distress including bankruptcy costs of debt and non-bankruptcy costs (e.g. staff leaving, suppliers demanding disadvantageous payment terms, bondholder/stockholder infighting, etc.). The marginal benefit of further increases in debt declines as debt increases, while the marginal cost increases, so that a firm that is optimizing its overall value will focus on this trade-off when choosing how much debt and equity to use for financing. 
Story: Company X stopped taking on more debt, and decided to file for bankruptcy, while company Y, kept benefiting from the tax benefits of debt, having a lower debt level. 
Question: Which company had more costs than benefits related to debt, company X or company Y?

SOLUTION: company X.

PROBLEM: Background Paragraph: When waves travel into areas of shallow water, they begin to be affected by the ocean bottom. The free orbital motion of the water is disrupted, and water particles in orbital motion no longer return to their original position. As the water becomes shallower, the swell becomes higher and steeper, ultimately assuming the familiar sharp-crested wave shape. After the wave breaks, it becomes a wave of translation and erosion of the ocean bottom intensifies. 
Story: John studies erosion of soil due to ocean wave. To facilitate his study he measured wave in three different 
points, point A, point B, and point C. Point A is in deep water. Point B is in shallow water, and point C is 
in even shallower water. He needs to publish his findings after analyzing the data. 
Question: Where would we expect higher swell, point B or point   C?

SOLUTION:
point C.