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# Electric utilities pay less for low-quality coal per ton

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Electric utilities pay less for low-quality coal per ton [#permalink]  04 Feb 2013, 20:18
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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!
[Reveal] Spoiler: OA

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Re: Electric utilities pay less for low-quality coal per ton [#permalink]  05 Feb 2013, 01:47
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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Re: Electric utilities pay less for low-quality coal per ton [#permalink]  05 Feb 2013, 10:57
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, 13:20
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. Manager Joined: 27 Jul 2012 Posts: 98 Location: India GMAT Date: 10-25-2012 WE: Consulting (Computer Software) Followers: 3 Kudos [?]: 56 [0], given: 62 Re: Electric utilities pay less for low-quality coal per ton [#permalink] 06 Feb 2013, 02:56 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 passage 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. 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 coal C. 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 scope 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. passage does not compares costs of low quality ash and high quality ash 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'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 _________________ if my post helped you, let me know by pressing Kudos... GMAT Pill Representative Joined: 07 Nov 2012 Posts: 346 Schools: LBS '14 (A) GMAT 1: 770 Q48 V48 Followers: 160 Kudos [?]: 230 [2] , given: 4 Re: Electric utilities pay less for low-quality coal per ton [#permalink] 30 Sep 2013, 01:59 2 This post received KUDOS Hi Responding to a PM, regarding why D is wrong. First let us break down the paragraph point by point: Electric utilities pay less for low-quality coal per ton delivered than for high-quality coal. Low quality coal cheaper than high quality coal Yet more low-quality coal than high—quality coal must be burned to generate the same amount of electricity. But need to burn more of it to make 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. Low quality coal also costs more in disposal costs The considerations above, if true, most strongly support which of the following claims? These 3 statements add up to what? 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. D only really talks about the last one of the 3 points. It's not really related to the whole debate - that is to say which is the better OVERALL option high or low quality. Hope it helps _________________ Former GMAT Pill student, now on staff. Used GMATPILL OG 12 and nothing else: 770 (48,48) & 6.0 ... and more Manager Joined: 13 Jul 2013 Posts: 77 GMAT 1: 570 Q46 V24 Followers: 0 Kudos [?]: 6 [0], given: 21 Re: Electric utilities pay less for low-quality coal per ton [#permalink] 03 Jan 2014, 00:23 plumber250 wrote: Hi Responding to a PM, regarding why D is wrong. First let us break down the paragraph point by point: Electric utilities pay less for low-quality coal per ton delivered than for high-quality coal. Low quality coal cheaper than high quality coal Yet more low-quality coal than high—quality coal must be burned to generate the same amount of electricity. But need to burn more of it to make 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. Low quality coal also costs more in disposal costs The considerations above, if true, most strongly support which of the following claims? These 3 statements add up to what? 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. D only really talks about the last one of the 3 points. It's not really related to the whole debate - that is to say which is the better OVERALL option high or low quality. Hope it helps In the same way can you please explain why A is correct? Also what exactly the question is asking? Current Student Joined: 03 May 2013 Posts: 347 Location: India Concentration: Operations, Human Resources Schools: ISB '16, IIMA (M) GPA: 4 WE: Human Resources (Human Resources) Followers: 0 Kudos [?]: 64 [0], given: 61 Re: Electric utilities pay less for low-quality coal per ton [#permalink] 03 Jan 2014, 06:55 FACT1. Electric utilities pay less for low-quality coal per ton than for high-quality coal. FACT2. More low-quality coal than high—quality coal must be burned to generate the same amount of electricity. FACT3. Low-quality coal generates more ash than does high-quality coal PER TON. FACT4. Disposal of ash is becoming more and more expensive. 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....YES ... BECAUSE THERE ARE OTHER FACTORS ALSO EG QUANTITY USED, ASH DISPOSAL... ETC 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...CAN'T REALLY SAY THAT.....OUT PUT ALSO MATTERS..... C. Transportation costs represent a smaller proportion of the cost per delivered ton for low-quality coal than for high-quality coal...COULD BE TRUE IF COAL COST PER TON MORE THAN TRANSPORTATION COST PER TON IN BOTH CASES...BUT THAT'S NOT ASSURED..... 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......SINCE IT IS ONE TON ASH IN BOTH CASES.... APPEARS TO BE OK.....BUT MAY BE PHYSICAL QUALITY OF ASH MAY LEAD TO VARIATION..... 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....WHY PRESUME LOW QUALITY WILL BE PREFERRED IN THIS CASE........ BETWEEN "A"AND "D"........"A" APPEARS BETTER OPTION....... Re: Electric utilities pay less for low-quality coal per ton [#permalink] 03 Jan 2014, 06:55 Similar topics Replies Last post Similar Topics: A certain farmer pays$30 per acre per month to rent 5 02 May 2008, 05:12
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