Find all School-related info fast with the new School-Specific MBA Forum

It is currently 16 Sep 2014, 02:08

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

Early in the twentieth century, Lake Konfa became very

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:
Manager
Manager
avatar
Joined: 30 Mar 2007
Posts: 183
Followers: 1

Kudos [?]: 4 [0], given: 0

Early in the twentieth century, Lake Konfa became very [#permalink] New post 12 May 2007, 07:08
00:00
A
B
C
D
E

Difficulty:

(N/A)

Question Stats:

0% (00:00) correct 0% (00:00) wrong based on 1 sessions
Early in the twentieth century, Lake Konfa became very polluted. Recently fish populations have recovered as release of industrial pollutants has declined and the lake’s waters have become cleaner. Fears are now being voiced that the planned construction of an oil pipeline across the lake’s bottom might revive pollution and cause the fish population to decline again. However, a technology for preventing leaks is being installed. Therefore, provided this technology is effective, those fears are groundless. 28-09
The argument depends on assuming which of the following?

A: Apart from development related to the pipeline, there will be no new industrial development around the lake that will create renewed pollution in its waters.

B: Other than the possibility of a leak, there is no realistic pollution threat posed to the lake by the pipeline’s construction

C: There is no reason to believe that the leak-preventing technology would be ineffective when installed in the pipeline in Lake Konfa.

D: Damage to the lake’s fish populations would be the only harm that a leak of oil from the pipeline would cause.

E: The species of fish that are present in LakeKonfa now are the same as those that were in the lake before it was affected by pollution.

==> why is C wrong?

Construction contractors working on the cutting edge of technology nearly always work on a "cost-plus" basis only. One kind of cost-plus contract stipulates the contractor's profit as a fixed percentage of the contractor's costs; the other kind stipulates a fixed amount of profit over and above costs.Under the first kind of contract, higher costs yield higher profits for the contractor, so this is where one might expect final costs in excess of original cost estimates to be more common. Paradoxically, such cost overruns are actually more common if the contract is of the fixed-profit kind.

Which one of the following , if true, most helps to resolve the apparent paradox in the situation described above?

A) Clients are much less likely to agree to a fixed-profit type of cost plus contract when it is understood that under certain conditons the project will be scuttled than they are when there is no such understanding

B) On long-term contracts, cost projections take future inflation into account, but since the figures used are provided by the government,they are usually underestimates.

C) On any sizable construction project, the contractor bills the client monthly or quarterly, so any tendency for original cost estimates to be exceeded can be detected early.

D) Clients billed under a cost-plus contract are free to review individual billings in order to uncover wasteful expenditures, but they do so only when the contractor's profit varies with cost.

E) The practice of submitting deliberately exaggerated cost estimates is most common in the case of fixed-profit contracts because it makes the profit, as a percentage of estimated cost, appear modest.

==> very confusing for me
Manager
Manager
User avatar
Joined: 30 Mar 2007
Posts: 222
Followers: 1

Kudos [?]: 2 [0], given: 0

GMAT Tests User
 [#permalink] New post 12 May 2007, 08:13
1. B
Here the argument is, if effective leak proof technology is used, there will not be any environmental threat.

thus C is part of argument rather than an assumption.
Manager
Manager
User avatar
Joined: 30 Mar 2007
Posts: 222
Followers: 1

Kudos [?]: 2 [0], given: 0

GMAT Tests User
 [#permalink] New post 12 May 2007, 08:33
2.In simplified terms ,argument says that based on profit of contractors ,project can be classified in two ways

1) In which contractor take the percentage of total project cost.
2) A fixed profit is taken by the contractor irrespective of project cost.
Now logically in first type of contract, contractors will try to over budget as their profit will increase....
But this is not the case.....so I think only D tries to resolve the paradox.
Senior Manager
Senior Manager
avatar
Joined: 24 Sep 2006
Posts: 281
Followers: 1

Kudos [?]: 4 [0], given: 0

GMAT Tests User
 [#permalink] New post 12 May 2007, 11:00
Agree with B and D
_________________

AimHigher

Senior Manager
Senior Manager
avatar
Joined: 01 Jan 2007
Posts: 326
Followers: 1

Kudos [?]: 17 [0], given: 0

GMAT Tests User
Re: CR question [#permalink] New post 12 May 2007, 11:37
Jamesk486 wrote:
Early in the twentieth century, Lake Konfa became very polluted. Recently fish populations have recovered as release of industrial pollutants has declined and the lake’s waters have become cleaner. Fears are now being voiced that the planned construction of an oil pipeline across the lake’s bottom might revive pollution and cause the fish population to decline again. However, a technology for preventing leaks is being installed. Therefore, provided this technology is effective, those fears are groundless. 28-09
The argument depends on assuming which of the following?

A: Apart from development related to the pipeline, there will be no new industrial development around the lake that will create renewed pollution in its waters.

B: Other than the possibility of a leak, there is no realistic pollution threat posed to the lake by the pipeline’s construction

C: There is no reason to believe that the leak-preventing technology would be ineffective when installed in the pipeline in Lake Konfa.

D: Damage to the lake’s fish populations would be the only harm that a leak of oil from the pipeline would cause.

E: The species of fish that are present in LakeKonfa now are the same as those that were in the lake before it was affected by pollution.

==> why is C wrong?

I am confused between B & D. Can any one explain...?


Construction contractors working on the cutting edge of technology nearly always work on a "cost-plus" basis only. One kind of cost-plus contract stipulates the contractor's profit as a fixed percentage of the contractor's costs; the other kind stipulates a fixed amount of profit over and above costs.Under the first kind of contract, higher costs yield higher profits for the contractor, so this is where one might expect final costs in excess of original cost estimates to be more common. Paradoxically, such cost overruns are actually more common if the contract is of the fixed-profit kind.

Which one of the following , if true, most helps to resolve the apparent paradox in the situation described above?

A) Clients are much less likely to agree to a fixed-profit type of cost plus contract when it is understood that under certain conditons the project will be scuttled than they are when there is no such understanding

B) On long-term contracts, cost projections take future inflation into account, but since the figures used are provided by the government,they are usually underestimates.

C) On any sizable construction project, the contractor bills the client monthly or quarterly, so any tendency for original cost estimates to be exceeded can be detected early.

D) Clients billed under a cost-plus contract are free to review individual billings in order to uncover wasteful expenditures, but they do so only when the contractor's profit varies with cost.

E) The practice of submitting deliberately exaggerated cost estimates is most common in the case of fixed-profit contracts because it makes the profit, as a percentage of estimated cost, appear modest.

I think E is the correct answere choice.

==> very confusing for me


Javed.

Cheers!
Senior Manager
Senior Manager
avatar
Joined: 12 Mar 2006
Posts: 372
Schools: Kellogg School of Management
Followers: 2

Kudos [?]: 27 [0], given: 3

GMAT Tests User
 [#permalink] New post 12 May 2007, 15:56
B for the first one

I chose E initially but after seeing the explanation for D by apache it makes sense. Customers neglect any increase in costs since they look at it only if the costs relate to the profits of constructors. So cost grows unchecked and hence cost+profit ends up being higher than it would've been if the other option was chosen. So D.
Manager
Manager
User avatar
Joined: 30 Mar 2007
Posts: 222
Followers: 1

Kudos [?]: 2 [0], given: 0

GMAT Tests User
 [#permalink] New post 12 May 2007, 21:22
javed,
One of the criterions to measure the lake pollution level is the fish population....
Now argument says
Fears are now being voiced that the planned construction of an oil pipeline across the lake’s bottom might revive pollution and cause the fish population to decline again.

now D says only fish population will decrease due to spillage...but argument says this will revive overall pollution....may be affecting even plants.
Manager
Manager
User avatar
Joined: 30 Mar 2007
Posts: 222
Followers: 1

Kudos [?]: 2 [0], given: 0

GMAT Tests User
 [#permalink] New post 14 May 2007, 01:06
OA please
  [#permalink] 14 May 2007, 01:06
    Similar topics Author Replies Last post
Similar
Topics:
6 Early in the twentieth century, Lake Konfa became very nelz007 7 12 Nov 2012, 23:10
In the early twentieth century, an extraordinary painter gmatjon 8 22 Jun 2010, 18:36
ilankovitch proposed in the early twentieth century that the millhouse 1 15 Jun 2009, 14:51
8 Experts publish their posts in the topic Early in the twentieth century, Lake Konfa became very priyankur_saha@ml.com 36 03 May 2009, 23:03
Early in the twentieth century, Lake Konfa became very alimad 10 17 Jun 2008, 16:48
Display posts from previous: Sort by

Early in the twentieth century, Lake Konfa became very

  Question banks Downloads My Bookmarks Reviews Important topics  


GMAT Club MBA Forum Home| About| Privacy Policy| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group and phpBB SEO

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.