Country Y uses its scarce foreign-exchange reserves to buy scrap iron for recycling into steel. Although the
steel thus produced earns more foreign exchange than it costs, that policy is foolish. Country Y’s own
territory has vast deposits of iron ore, which can be mined with minimal expenditure of foreign exchange.
Which of the following, if true, provides the strongest support for Country Y’s policy of buying scrap iron
abroad?
(A) The price of scrap iron on international markets rose significantly in 1987.
(B) Country Y’s foreign-exchange reserves dropped significantly in 1987.
(C) There is virtually no difference in quality between steel produced from scrap iron and that produced from
iron ore.
(D) Scrap iron is now used in the production of roughly half the steel used in the world today, and experts
predict that scrap iron will be used even more extensively in the future.
(E) Furnaces that process scrap iron can be built and operated in Country Y with substantially less foreign
exchange than can furnaces that process iron ore
. I didn't understand OG explanation, detailed explanation please. whats wrong with D?

!	TomB - consider posting a more descriptive subject that will help others find and identify this question in the future.

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IMO E, as option D does not reason out sufficiently that why country Y should continue its policy of buying scrap iron and is clearly out of scope.

E again is quite direct . no other option makes sense
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Summary: Y use foreign-exchange (FE) reserves to buy scrap iron (SI) for recycling in to steel. (1).
Although the steel thus earn more FE than its cost, (1) is foolish
Y have vast SI ->mined with minimal foreign-exchange.

(E) SI was used in production with the cost < cost of expenditure from FE
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Hi Roopika,

We have to find an option statement that supports Country Y policy of importing scrap iron instead of mining domestically available iron ore.

Now, what is the reason given in favor of mining iron ore over importing iron scrap?

The reason is that it will save foreign exchange that is being spent in buying iron scrap from abroad. (Since iron ore resources are domestically available, mining them is not going to use foreign exchange)

Now, what would support Country Y in the face of such reasoning?

Let's prethink, which is what we do a lot at e-GMAT Prethinking means thinking of an answer or structure of an answer before moving over to the option statements.

Now, what can Country Y say, in response to above criticism?

Country Y's response to the above criticism

"Dude, you are right. I can save foreign exchange if I mine iron ore than import iron scrap. But you seem to forget one thing: we don't build houses using either iron ore or scrap iron. We need to process these raw materials to make them usable. And you know what. Processing iron ore will consume much more foreign exchange than processing scrap iron, so much so that the overall foreign exchange required for a similar quantity of scrap iron would be lesser than the same required for iron ore (considering both the stages of purchase of raw material and processing of this raw material into final product). Now, the best you can do is shut up your mouth".

Well, this is what option E is suggesting, although in a polite way

Hope this helps.

Let me know if you have any further queries.

-Chiranjeev
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