Country Y uses its scarce foreign-exchange reserves to buy scrap iron

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