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Senior Manager
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Electric utilities pay less for low-quality coal per ton [#permalink]
04 Feb 2013, 21:18
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Question Stats:
61% (03:16) correct
38% (01:48) wrong based on 2 sessions
Electric utilities pay less for low-quality coal per ton delivered than for high-quality coal. Yet more low-quality coal than high—quality coal must be burned to generate the same amount of electricity. Moreover, per ton of coal burned, low-quality coal generates more ash than does high-quality coal, and the disposal of ash is becoming more and more expensive. The considerations above, if true, most strongly support which of the following claims? A. A coal-burning utility might not be assured of benefiting economically by always adhering to the policy of keeping its overall coal purchasing costs as low as possible. B. In those regions where the cost of disposing of coal ash is negligible, it is more expensive for coal-burning utilities to use high-quality coal than low-quality coal. C. Transportation costs represent a smaller proportion of the cost per delivered ton for low-quality coal than for high-quality coal. D. It is no less expensive to dispose of a ton of coal ash that results from the burning of high-quality coal than it is to dispose of a ton of coal ash that results from the burning of low-quality coal. E. In regions where coal-ash disposal is the least expensive, reserves of low-quality coal are likely to decline at a faster rate than are reserves of high-quality coal. Can someone provide detailed explanations of the answer choices. Thanks!
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Re: Electric utilities pay less for low-quality coal per ton [#permalink]
05 Feb 2013, 02:47
A) CORRECT. Although utilities pay less for low-quality coal, they must use more of it and also bear expenditures involved in ash disposal. Therefore a policy of always buying low-quality coal might not always lead to economic benefit if the costs are greater than the savings. B) Incorrect. Even if the cost of disposing coal ash is negligible, utilities must buy more of low-quality coal to generate the same amount of electricity. Therefore the savings from buying low-quality coal (as compared to high-quality coal) may be mitigated through the increased usage of low quality coal. Therefore we cannot conclude reasonably that buying high-quality coal will be more expensive in this situation. C) Incorrect. We are not given any details on the proportion of costs involved so cannot make this conclusion. D) Incorrect. We are given no information about disposal costs, so we cannot compare. E) Incorrect. The rate of decline of coal reserves are not based on the costs involved in disposing off ash generated through burning the coal. We cannot reasonably draw this conclusion. A) is therefore the correct answer.
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Senior Manager
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Re: Electric utilities pay less for low-quality coal per ton [#permalink]
05 Feb 2013, 11:57
fozzzy wrote: Electric utilities pay less for low-quality coal per ton delivered than for high-quality coal. Yet more low-quality coal than high—quality coal must be burned to generate the same amount of electricity. Moreover, per ton of coal burned, low-quality coal generates more ash than does high-quality coal, and the disposal of ash is becoming more and more expensive. The considerations above, if true, most strongly support which of the following claims?
A. A coal-burning utility might not be assured of benefiting economically by always adhering to the policy of keeping its overall coal purchasing costs as low as possible. B. In those regions where the cost of disposing of coal ash is negligible, it is more expensive for coal-burning utilities to use high-quality coal than low-quality coal. C. Transportation costs represent a smaller proportion of the cost per delivered ton for low-quality coal than for high-quality coal. D. It is no less expensive to dispose of a ton of coal ash that results from the burning of high-quality coal than it is to dispose of a ton of coal ash that results from the burning of low-quality coal. E. In regions where coal-ash disposal is the least expensive, reserves of low-quality coal are likely to decline at a faster rate than are reserves of high-quality coal.
Can someone provide detailed explanations of the answer choices. Thanks! Why D is wrong? D is assumption , right? What if disposal of Coal ash from low quality coal cost $10 and disposal of Coal ash from High quality coal cost $50. Assumption is hidden premise--> Strengthner D. It is no less expensive to dispose of a ton of coal ash that results from the burning of high-quality coal than it is to dispose of a ton of coal ash that results from the burning of low-quality coal.
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Re: Electric utilities pay less for low-quality coal per ton [#permalink]
05 Feb 2013, 14:20
Electric utilities pay less for low-quality coal per ton delivered than for high-quality coal. Yet more low-quality coal than high—quality coal must be burned to generate the same amount of electricity. Moreover, per ton of coal burned, low-quality coal generates more ash than does high-quality coal, and the disposal of ash is becoming more and more expensive.
I'm going to do a hypothetical based on what's given: Ordering a ton of coal. It's 45 dollars for a ton of low quality coal, and $10 for a ton of high quality coal. Hypothetically, say 1.5 tons is needed to generate electricity from low quality coal, and 1 ton is needed to generate electricity from high quality coal. This means our costs are at $7.50 for low quality coal buyers, and $10 for high quality coal buyers for the generation of electricity. Now we will look up disposal, for a ton of low quality coal we will say it'd $10 a ton for disposal, and $5 for high quality coal disposal. This creates low quality coal burning ton price of $17.5 and a high quality price off 15$. Ultimately, this isnt necessary to do, but it paints the picture.
The considerations above, if true, most strongly support which of the following claims?
A. A coal-burning utility might not be assured of benefiting economically by always adhering to the policy of keeping its overall coal purchasing costs as low as possible.Correct. This is essentially saying, buying low priced coal might not always be the economic best option. See above, there are other costs which might make it economically not better. Again, this isn't saying that it absolutely must always be true, it's just saying that it must "could be true" B. In those regions where the cost of disposing of coal ash is negligible, it is more expensive for coal-burning utilities to use high-quality coal than low-quality coalNO. This isn't guaranteed, because aside from disposal you have electricity generation. We don't know if they need far more coal to produce electricity. If the case, this would be false. C. Transportation costs represent a smaller proportion of the cost per delivered ton for low-quality coal than for high-quality coal. We don't know what transportation costs will even be. D. It is no less expensive to dispose of a ton of coal ash that results from the burning of high-quality coal than it is to dispose of a ton of coal ash that results from the burning of low-quality coal.No. Apples to apples. Could be true, we don't know for sure though. E. In regions where coal-ash disposal is the least expensive, reserves of low-quality coal are likely to decline at a faster rate than are reserves of high-quality coal. No. We don't know if this is the case or not.
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Re: Electric utilities pay less for low-quality coal per ton [#permalink]
06 Feb 2013, 03:56
Electric utilities pay less for low-quality coal per ton delivered than for high-quality coal. Yet more low-quality coal than high—quality coal must be burned to generate the same amount of electricity. Moreover, per ton of coal burned, low-quality coal generates more ash than does high-quality coal, and the disposal of ash is becoming more and more expensive. The considerations above, if true, most strongly support which of the following claims? A. A coal-burning utility might not be assured of benefiting economically by always adhering to the policy of keeping its overall coal purchasing costs as low as possible. can be proved from the passageB. In those regions where the cost of disposing of coal ash is negligible, it is more expensive for coal-burning utilities to use high-quality coal than low-quality coal. output of low quality coal is less, probable lot more low quality coal needs to be burned to match the output of high quality coal and that may equalise or exceed the cost for generating power from low quality coalC. Transportation costs represent a smaller proportion of the cost per delivered ton for low-quality coal than for high-quality coal. Transportation cost is out of scopeD. It is no less expensive to dispose of a ton of coal ash that results from the burning of high-quality coal than it is to dispose of a ton of coal ash that results from the burning of low-quality coal. passage does not compares costs of low quality ash and high quality ashE. In regions where coal-ash disposal is the least expensive, reserves of low-quality coal are likely to decline at a faster rate than are reserves of high-quality coal. can't be sure,people might use low quality coal because of cost reasons and they might not like to use low quality coal for lower output
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Re: Electric utilities pay less for low-quality coal per ton
[#permalink]
06 Feb 2013, 03:56
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