In order to save money, some of Company X's manufacturing : GMAT Critical Reasoning (CR)
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# In order to save money, some of Company X's manufacturing

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In order to save money, some of Company X's manufacturing [#permalink]

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31 Jul 2008, 09:59
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In order to save money, some of Company X's manufacturing plants converted from oil fuel to natural gas last year, when the cost of oil was more than the cost of natural gas. Because of a sudden, unexpected shortage, however, natural gas now costs more than oil, the price of which has fallen steeply over the past year. The cost of conversion back to oil would more than negate any cost savings in fuel. So Company X's fuel costs this year will be significantly higher than they were last year.

Which of the following is an assumption on which the argument above depends?

(A) Company X does not have money set aside for the increased costs of fuel.
(B) The increase in the cost of fuel cannot be offset by reductions in other operating expenses.
(C) The price of natural gas will never again fall below that of oil.
(D) The cost of fuel needed by those of Company X's plants that converted to natural gas is not less than the cost of fuel needed by those plants still using oil.
(E) The price of oil will not experience a sudden and steep increase.
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Re: CR - oil Vs Gas prices [#permalink]

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31 Jul 2008, 10:32
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Is it C? The argument was based on the assumption that increase in natual gas will be steady or increase during the operating year.
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Re: CR - oil Vs Gas prices [#permalink]

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31 Jul 2008, 13:14
MamtaKrishnia wrote:
In order to save money, some of Company X's manufacturing plants converted from oil fuel to natural gas last year, when the cost of oil was more than the cost of natural gas. Because of a sudden, unexpected shortage, however, natural gas now costs more than oil, the price of which has fallen steeply over the past year. The cost of conversion back to oil would more than negate any cost savings in fuel. So Company X's fuel costs this year will be significantly higher than they were last year.

Which of the following is an assumption on which the argument above depends?

1. Company X does not have money set aside for the increased costs of fuel.

Passage is talking about the "fuel costs" not how to offset it by other revenue

2. The increase in the cost of fuel cannot be offset by reductions in other operating expenses.

Same as above: Passage is talking about the "fuel costs" not how to offset it by other revenue
3. The price of natural gas will never again fall below that of oil.

"Will never" is out of scope. We only need a comparision for this year vs last year. We dont care what happens 10 yrs from now.

4. The cost of fuel needed by those of Company X's plants that converted to natural gas is not less than the cost of fuel needed by those plants still using oil.

Out of Scope: Company X's plants with natural gas vs Company X's plants with Oil.

5. The price of oil will not experience a sudden and steep increase.

This is it. It is stated in the passge that "oil, the price of which has fallen steeply over the past year." we are assuming that the same opposite will not be the case this year i.e. The price of oil will not experience a sudden and steep increase.

IMO 5
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Re: CR - oil Vs Gas prices [#permalink]

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31 Jul 2008, 14:14
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In order to save money, some of Company X's manufacturing plants converted from oil fuel to natural gas last year, when the cost of oil was more than the cost of natural gas. Because of a sudden, unexpected shortage, however, natural gas now costs more than oil, the price of which has fallen steeply over the past year. The cost of conversion back to oil would more than negate any cost savings in fuel. So Company X's fuel costs this year will be significantly higher than they were last year.

Which of the following is an assumption on which the argument above depends?

1. Company X does not have money set aside for the increased costs of fuel.

OOS

2. The increase in the cost of fuel cannot be offset by reductions in other operating expenses.

OOS

3. The price of natural gas will never again fall below that of oil.

"Will never" is out of scope. We only need a comparision for this year vs last year.

4. The cost of fuel needed by those of Company X's plants that converted to natural gas is not less than the cost of fuel needed by those plants still using oil.

This is the right assumption. As we know that only some of the oil plants have converted to gas, there are still plants running with oil, so in order for the fuel costs to significantly increase we are assuming that the price hike by gas is not offset by the drop in prices of oil.

5. The price of oil will not experience a sudden and steep increase.

It does not matter if the price of oil increases as this only confirms that the fuel costs, which have already been hiked with conversion to natural gas are going to further increase
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Re: CR - oil Vs Gas prices [#permalink]

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31 Jul 2008, 16:41
The conclusion of the argument is that the next year fuel cost will be higher than this years which can only be true if the price of Natural gas will not fall.

Hence IMO C.

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Re: CR - oil Vs Gas prices [#permalink]

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31 Jul 2008, 17:20
MamtaKrishnia wrote:
In order to save money, some of Company X's manufacturing plants converted from oil fuel to natural gas last year, when the cost of oil was more than the cost of natural gas. Because of a sudden, unexpected shortage, however, natural gas now costs more than oil, the price of which has fallen steeply over the past year. The cost of conversion back to oil would more than negate any cost savings in fuel. So Company X's fuel costs this year will be significantly higher than they were last year.

Which of the following is an assumption on which the argument above depends?

1. Company X does not have money set aside for the increased costs of fuel. -> this is just a statement and does not affect the concl.
2. The increase in the cost of fuel cannot be offset by reductions in other operating expenses. -> this is irrelevant since we say fuel costs will be higher and not overall gain or loss.
3. The price of natural gas will never again fall below that of oil. -> this is apt since if it were to fall then prediction made here about the following will be false
4. The cost of fuel needed by those of Company X's plants that converted to natural gas is not less than the cost of fuel needed by those plants still using oil. -> it talks about other companies too and is OOS
5. The price of oil will not experience a sudden and steep increase. -> if this were expected then also fuel costs would only increase.ELIMINATE

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Re: CR - oil Vs Gas prices [#permalink]

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31 Jul 2008, 18:10
OA pls and OE too
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Re: CR - oil Vs Gas prices [#permalink]

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31 Jul 2008, 19:24
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OA is D.

OE is
The conclusion of the argument is that "Company X's fuel costs this year will be significantly higher than they were last year. Why? Because some of the company's plants switched from oil to natural gas when the price of gas was lower, and now the price of gas has outstripped the price of oil. We are asked to find an assumption that is necessary for the argument to work.
(A) Whether Company X has the money to cover its costs does not affect the amount of those costs.
(B) We do not need to assume that the costs cannot be offset by reducing expenditures in other areas in order for Company X's costs to be higher.
(C) We do not need to assume that gas will never be cheaper than oil in order for Company X's costs
to be higher.
(D) CORRECT. The author does not take into account the fact that only "some" of the company's plants converted to natural gas. Some of the plants, then, still use oil, which is now cheaper. So in order to conclude that the company will have to spend more on fuel, the author must assume that the extra cost of the natural gas for the plants that converted is at least as much as the cost of the oil for the plants that did not.
(E) We do not need to assume that the price of oil will not suddenly rise in order for the argument to work.
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Re: CR - oil Vs Gas prices [#permalink]

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31 Jul 2008, 20:35
MamtaKrishnia wrote:
OA is D.

OE is
The conclusion of the argument is that "Company X's fuel costs this year will be significantly higher than they were last year. Why? Because some of the company's plants switched from oil to natural gas when the price of gas was lower, and now the price of gas has outstripped the price of oil. We are asked to find an assumption that is necessary for the argument to work.
(A) Whether Company X has the money to cover its costs does not affect the amount of those costs.
(B) We do not need to assume that the costs cannot be offset by reducing expenditures in other areas in order for Company X's costs to be higher.
(C) We do not need to assume that gas will never be cheaper than oil in order for Company X's costs
to be higher.
(D) CORRECT. The author does not take into account the fact that only "some" of the company's plants converted to natural gas. Some of the plants, then, still use oil, which is now cheaper. So in order to conclude that the company will have to spend more on fuel, the author must assume that the extra cost of the natural gas for the plants that converted is at least as much as the cost of the oil for the plants that did not.
(E) We do not need to assume that the price of oil will not suddenly rise in order for the argument to work.

This one is tough
Good explanation
whats the source of this question ?
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Re: CR - oil Vs Gas prices [#permalink]

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31 Jul 2008, 21:06
good one
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Re: CR - oil Vs Gas prices [#permalink]

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31 Jul 2008, 22:08
MamtaKrishnia wrote:
In order to save money, some of Company X's manufacturing plants converted from oil fuel to natural gas last year, when the cost of oil was more than the cost of natural gas. Because of a sudden, unexpected shortage, however, natural gas now costs more than oil, the price of which has fallen steeply over the past year. The cost of conversion back to oil would more than negate any cost savings in fuel. So Company X's fuel costs this year will be significantly higher than they were last year.

Which of the following is an assumption on which the argument above depends?

1. Company X does not have money set aside for the increased costs of fuel.
2. The increase in the cost of fuel cannot be offset by reductions in other operating expenses.
3. The price of natural gas will never again fall below that of oil.
4. The cost of fuel needed by those of Company X's plants that converted to natural gas is not less than the cost of fuel needed by those plants still using oil.
5. The price of oil will not experience a sudden and steep increase.

IMO D)
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01 Aug 2008, 03:19
A very good question. +1. What is the source?
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01 Aug 2008, 05:12
Good Q. I missed the evil some in the stimuli and thought D was comparing X with some other company's plants

+1
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01 Aug 2008, 21:20
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Well m not really sure if i should disclose the source ..
But then just for every ones benefit i highly recommend online Manhattan question banks.
As these have some really good Qs with excellent explanations.
You get these Q banks free of cost if you purchase any of their books.
there are about 6 free online tests, 3 non-adaptive tests and 1 SC Q bank.

Do try it. I can guarantee that it will be useful.
I hope this helps
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Re: CR - oil Vs Gas prices [#permalink]

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01 Aug 2008, 21:31
MamtaKrishnia wrote:
Well m not really sure if i should disclose the source ..
But then just for every ones benefit i highly recommend online Manhattan question banks.
As these have some really good Qs with excellent explanations.
You get these Q banks free of cost if you purchase any of their books.
there are about 6 free online tests, 3 non-adaptive tests and 1 SC Q bank.

Do try it. I can guarantee that it will be useful.
I hope this helps

sure thanks
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Re: CR - oil Vs Gas prices [#permalink]

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27 Sep 2010, 10:06
Hi MamtaKrishnia,

Good question I must say.

Please could you provide the Manhattan Question bank link.. I am unable to locate it.
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Re: CR - oil Vs Gas prices [#permalink]

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27 Sep 2010, 14:54
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If you reverse the answer choice D , the argument fails..So that is the answer.
Try to reverse the statement and check if argument fails. if argument fails i.e. the answer for assumption question.

1. Company X does not have money set aside for the increased costs of fuel. Company X does have money set aside for the increased costs of fuel ...This statement doesn't address Conclusion
2. The increase in the cost of fuel cannot be offset by reductions in other operating expenses. argument is not talking about operating expenses-Out Of Scope
3. The price of natural gas will never again fall below that of oil. argument is talking about future oil price rates
4. The cost of fuel needed by those of Company X's plants that converted to natural gas is not less than the cost of fuel needed by those plants still using oil. Reverse the answer, Argument breaks...So this is the answer
5. The price of oil will not experience a sudden and steep increase. Reverse this ...argument still works.so this is out
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Re: CR - oil Vs Gas prices [#permalink]

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27 Sep 2010, 19:42
Good one. Went with B which was absolutely incorrect.

Makes sense after reading the OE.
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28 Sep 2010, 00:02
Good Q. The given choices except D are quite out of scope. But, the length of D makes you think a few times
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Re: CR - oil Vs Gas prices [#permalink]

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28 Sep 2010, 05:57
In order to save money, some of Company X's manufacturing plants converted from oil fuel to natural gas last year, when the cost of oil was more than the cost of natural gas. Because of a sudden, unexpected shortage, however, natural gas now costs more than oil, the price of which has fallen steeply over the past year. The cost of conversion back to oil would more than negate any cost savings in fuel. So Company X's fuel costs this year will be significantly higher than they were last year.

Which of the following is an assumption on which the argument above depends?

(A) Company X does not have money set aside for the increased costs of fuel.

Not relevant...
(B) The increase in the cost of fuel cannot be offset by reductions in other operating expenses.

(C) The price of natural gas will never again fall below that of oil. .....Still it dosnt make sure cost will not increase

(D) The cost of fuel needed by those of Company X's plants that converted to natural gas is not less than the cost of fuel needed by those plants still using oil.
correct ..Use the negation technique(describe in CR bible) ... it will clearly weaken the argument

(E) The price of oil will not experience a sudden and steep increase.
Re: CR - oil Vs Gas prices   [#permalink] 28 Sep 2010, 05:57

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