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A new technique for extracting residues of oil from existing

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A new technique for extracting residues of oil from existing [#permalink] New post 18 Jun 2010, 10:17
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A new technique for extracting residues of oil from existing oil wells by using lignins, a by-product of papermaking, is profitable provided that oil prices are over 20 dollars a barrel. Since oil prices are rising, investors looking for companies with prospects for rapid growth in profits would be wise to invest in paper manufacturers, whose currently almost worthless by-product will soon be a profit-boosting commodity.

Which of the following, if true, most seriously weakens the argument above?
(A) A small quantity of lignins are currently sold by paper manufacturers to chemical companies, but most of the lignins produced are burnt as waste.
(B) The 20-dollar-a-barrel oil price as a threshold of profitability for using lignins allows for the increased cost of refining crude oil that has been extracted using lignins.
(C) Only one-half to two-thirds of the total oil in a well can be extracted using conventional techniques of pumping and flooding with water.
(D) Petroleum-based substances that can be used as a substitute for lignins in extracting oil are costly and are made from oil, and these substances therefore increase in price as oil increases in price.
(E) The quantity of lignins produced annually in the manufacture of paper is several times larger than the amount that is likely to be useful in the oil industry.
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Re: lignins [#permalink] New post 18 Jun 2010, 12:02
go with E as all others strengthen the args.

OA?

Last edited by ramana on 19 Jun 2010, 00:20, edited 1 time in total.
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Re: lignins [#permalink] New post 18 Jun 2010, 18:13
Thanks. Pls elaborate.
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Re: lignins [#permalink] New post 19 Jun 2010, 00:37
A new technique for extracting residues of oil from existing oil wells by using lignins, a by-product of papermaking, is profitable provided that oil prices are over 20 dollars a barrel. Since oil prices are rising, investors looking for companies with prospects for rapid growth in profits would be wise to invest in paper manufacturers, whose currently almost worthless by-product will soon be a profit-boosting commodity.

Which of the following, if true, most seriously weakens the argument above?
(A) A small quantity of lignins are currently sold by paper manufacturers to chemical companies, but most of the lignins produced are burnt as waste. -- strengthen,worthless/waste byproduct can used to refine oil

(B) The 20-dollar-a-barrel oil price as a threshold of profitability for using lignins allows for the increased cost of refining crude oil that has been extracted using lignins. increased costof refining crude oil using lignins. again profit. stenghten

(C) Only one-half to two-thirds of the total oil in a well can be extracted using conventional techniques of pumping and flooding with water. irrelevant - drawbacks of other techniques.


(D) Petroleum-based substances that can be used as a substitute for lignins in extracting oil are costly and are made from oil, and these substances therefore increase in price as oil increases in price. Costly petroleum-based substance cant be compared to worthless by-product.


(E) The quantity of lignins produced annually in the manufacture of paper is several times larger than the amount that is likely to be useful in the oil industry. larger than required, implies only some part is used which cant be profit boosting commodity.


correct me if am wrong.
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Re: lignins [#permalink] New post 19 Jun 2010, 02:50
Anyone else who wanna pitch in

thanks
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Re: lignins [#permalink] New post 21 Jun 2010, 10:54
Answer should be B.

(A) A small quantity of lignins are currently sold by paper manufacturers to chemical companies, but most of the lignins produced are burnt as waste.
-- currently is key word. Though currently lignin is sold in small quantity, in future it might be sold in larger proportion to the chemical companies and eventually creating profits for investors.

(B) The 20-dollar-a-barrel oil price as a threshold of profitability for using lignins allows for the increased cost of refining crude oil that has been extracted using lignins.
-- Since the threshold value of oil per barrel is increasing the cost of refining the crude oil, eventually use of lignins won't be profit making aspect. This will weaken the author's argument.

(C) Only one-half to two-thirds of the total oil in a well can be extracted using conventional techniques of pumping and flooding with water.
-- This answer choice is strengthening the argument. Opposite answer choice.

(D) Petroleum-based substances that can be used as a substitute for lignins in extracting oil are costly and are made from oil, and these substances therefore increase in price as oil increases in price.
-- This answer choice is also strengthening the argument. Opposite answer choice.

(E) The quantity of lignins produced annually in the manufacture of paper is several times larger than the amount that is likely to be useful in the oil industry.
-- Since lignin is just a by-product, it doesn't matter even if part of it is going to get used by oil industry.

OA please. Thank You.

Thanks,
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Re: lignins [#permalink] New post 21 Jun 2010, 11:25
E for me too. the argument says that "... to invest in paper manufacturers, whose currently almost worthless by-product will soon be a profit-boosting commodity. " so if there are larger amounts and thus larger supply there is no reason for such an investment by oil companies.
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Re: lignins [#permalink] New post 21 Jun 2010, 18:45
OA is E.

@mikioso : thanks. Theory of demand and supply applies here :-)
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Re: lignins [#permalink] New post 26 Jul 2010, 01:49
nusmavrik wrote:
OA is E.

@mikioso : thanks. Theory of demand and supply applies here :-)


E for me

Since oil prices are rising, investors looking for companies with prospects for rapid growth in profits would be wise to invest in paper manufacturers, whose currently almost worthless by-product will soon be a profit-boosting commodity.

The author faultly assumes that demand for lignins will rise Since oil prices are rising and oil companies will need more of this by-product named "lignins".
Yes, it is true but demand will rise if the quantity of lignins is limited, but if NOW it is too much of this stuff?! it would not ris demand. no demand no profit.


The quantity of lignins produced annually in the manufacture of paper is several times larger than the amount that is likely to be useful in the oil industry.
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Re: lignins [#permalink] New post 26 Jul 2010, 02:19
E it is....
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Re: lignins [#permalink] New post 26 Jul 2010, 02:48
+1 for E
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Re: lignins [#permalink] New post 26 Jul 2010, 09:22
E......
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Re: lignins [#permalink] New post 26 Jul 2010, 12:14
E for me too
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Re: lignins [#permalink] New post 26 Jul 2010, 17:59
(A) A small quantity of lignins are currently sold by paper manufacturers to chemical companies, but most of the lignins produced are burnt as waste. < supports the conclusion by saying that the lignins are worthless now and will become more valuable later>
(B) The 20-dollar-a-barrel oil price as a threshold of profitability for using lignins allows for the increased cost of refining crude oil that has been extracted using lignins. <gives the explanation why cost is high>
(C) Only one-half to two-thirds of the total oil in a well can be extracted using conventional techniques of pumping and flooding with water. <gives more support to conclusion by saying that there is a lot of oil that can extracted using lingins>
(D) Petroleum-based substances that can be used as a substitute for lignins in extracting oil are costly and are made from oil, and these substances therefore increase in price as oil increases in price. <gives reason for not using petroleum based products>
(E) The quantity of lignins produced annually in the manufacture of paper is several times larger than the amount that is likely to be useful in the oil industry. <bingo>
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Re: lignins [#permalink] New post 26 Jul 2010, 20:38
E it is...

I just began to realize a lot of the CR questions expect the test taker to know some supply and demand concepts. Not sure if the GMAC is tuning its test for business folks.
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Re: lignins [#permalink] New post 26 Jul 2010, 22:37
nusmavrik wrote:
A new technique for extracting residues of oil from existing oil wells by using lignins, a by-product of papermaking, is profitable provided that oil prices are over 20 dollars a barrel. Since oil prices are rising, investors looking for companies with prospects for rapid growth in profits would be wise to invest in paper manufacturers, whose currently almost worthless by-product will soon be a profit-boosting commodity.


this argument can be easily narrowed down to B and E rest all are beyond the facts given in the argument.

B talks about rising cost, which need not essentially impact profitability. There4 B ruled out.

The scope of the argument is broadened from a new technique for extracting residues of oil, which is expected to be profitable if oil prices are 20$ a barrel(in premise) to investors looking to invest in paper manufacturing companies, whose worthless by-product will soon be a profit-boosting commodity(in conclusion). Thus there is a gap between the two. To weaken the argument we would need to attack the assumption. For example we could say profitability will be negatively impacted that if not as much of the new technique for extracting oil is significantly applied. Less demand in turn would affect the supply of Lignins. The by-product will soon be a nonprofit-boosting commodity. Consequently investors will not invest in paper manufacturing. E clarifies demand supply relation and attacks the assumption.
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Re: lignins [#permalink] New post 27 Jul 2010, 09:35
The choice is definitely between B and E.

The argument is talking about investors who are looking to invest in paper manufacturers with the hope to increase profits. Anything that shows that investing in paper manufacturing will not be a good idea will hurt the argument.

option B does not discuss anything about paper or its by-product

option E says that lignins are too much in supply and will easily able to fulfill the demand for it. Hence no scope of profitability.
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Re: lignins [#permalink] New post 27 Jul 2010, 10:23
nusmavrik wrote:
A new technique for extracting residues of oil from existing oil wells by using lignins, a by-product of papermaking, is profitable provided that oil prices are over 20 dollars a barrel. Since oil prices are rising, investors looking for companies with prospects for rapid growth in profits would be wise to invest in paper manufacturers, whose currently almost worthless by-product will soon be a profit-boosting commodity.

Which of the following, if true, most seriously weakens the argument above?
(A) A small quantity of lignins are currently sold by paper manufacturers to chemical companies, but most of the lignins produced are burnt as waste.
(B) The 20-dollar-a-barrel oil price as a threshold of profitability for using lignins allows for the increased cost of refining crude oil that has been extracted using lignins.
(C) Only one-half to two-thirds of the total oil in a well can be extracted using conventional techniques of pumping and flooding with water.
(D) Petroleum-based substances that can be used as a substitute for lignins in extracting oil are costly and are made from oil, and these substances therefore increase in price as oil increases in price.
(E) The quantity of lignins produced annually in the manufacture of paper is several times larger than the amount that is likely to be useful in the oil industry.

knowing your success rate in CR and SC ..
i was expecting a real touhgie from you ... Is GMAT exam in actual so generous ??
I go with E

thnx


P S - comments to be taken lightly ( Oh !! No its a SC question again ..)
u inspire guys like me who are struggling to increase the hit rate eyond 75% ..
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Re: lignins [#permalink] New post 13 Sep 2010, 03:03
Yup...E for me too
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Re: lignins [#permalink] New post 14 Sep 2010, 05:10
+1 for E
Re: lignins   [#permalink] 14 Sep 2010, 05:10
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