Innovations in production technology and decreases in the

Nope. The passage mean the machine that produce RECYCLE PAPER make the price of RP reduce. But not talking about the NEW PAPER (NP). The big surprise is the price of RP and NP is the same. SO, we have to find the answer that reduce the price of NP or the other factor that make the price of RP not change anymore.

Hi,

Can someone explain this paradox question.??

THanks,
Jai

See if the explanations here help you. It is discussed in detail here.

technological-improvements-and-reduced-equipment-costs-have-146797.html

oh damn..took some time to comprehend what the point of price viability is..
if the price of the new paper is not increasing, then the recycled one will not be used.
the point of price viability remained unchanged, although it is cheaper now than before to recycle.
it must be true then the price for new paper decreased
C tells exactly this thing.

The answer is C

The paradox that needs to be resolved is :-
Explain why the increased cost-efficiency of recycled paper has not lowered the point of price viability?
Essentially it is asking about relative difference between cost of recycled paper and fresh paper.

Premise 1 ) Recycled paper is cheaper now
Premise 2) Cost efficiency of recycled paper is still high.



What the Question is asking is the why the relative difference in price of recycled paper and new fresh paper has not reduced?


Imagine your parents give you and your brother a math quiz each week
In your First math test you scored 90/100 marks and were the topper. Your brother scored 89/100 marks and was the loser.
In your second Math test you scored only 80/100 marks BUT you will still the topper.
How can this happen? Your performance has gone down, but you still won !! ?
This can happen If your brother's performance has also gone down compared to the first test. He was behind you in first test and he has gone further down in this test.
Here's comes into play the concept of relativity. Your performance has gone down and relative to your performance your brother performance has also gone down.

This is exactly what is happening in the question.
Cost of recycled paper is down but it has still not fallen to the level to the fresh paper ? why??? because fresh paper cost has also fallen further down.
The relative difference between the two cost is still the same.

TWENTY YEARS AGO }}}}}}=====> RECYCLED PAPER 10$ FRESH PAPER 6$ DIFFERENCE 4$
NOW AT CURRENT TIME}}}} ====> RECYCLED PAPER 8$ FRESH PAPER 4$ DIFFERENCE 4$


What option matches this fact ?

(C) Innovations in production technology have made it much more cost-efficient to produce new paper from trees.

Therefore the price of new paper has also gone down and the gap between the two types of paper is not closed.




Innovations in production technology and decreases in the cost of equipment have made recycling paper into new paper products much more cost-efficient over the last twenty years. Despite these advances, though, the "point of price viability" (the price that new paper made from trees must reach to make recycled paper comparable in price) is unchanged at $2.12 per ream of paper.

Which of the following, if true, most explains why the increased cost-efficiency of recycled paper has not lowered the point of price viability?

(A)The cost of unprocessed trees to make new paper has fallen dramatically.
(B)The decreases in the cost of recycling equipment have occurred despite increases in the cost of raw materials required to manufacture such equipment.
(C)Innovations in production technology have made it much more cost-efficient to produce new paper from trees.
(D)Most paper is made from the scraps and sawdust left after processing new trees for lumber, rather than directly from the trees themselves.
(E)When the price of planting new saplings to replace cut trees becomes more expensive, forests reserves not previously worth cutting become cost-effective to cut.

I disagree saying that the price per barrel oil would have to rise doesn't preclude that oil didn't drop in value over that time period. Since if it went from $100 to $65 the price it would need to rise is still $35.

So according to you we need to assume that oil price is a constant starting point. I am not buying it. I am moving on this is a bad question.

Just to point out here - this is not a bad question. It is a high level Gmat Prep (official) question. So it might be worth your while to put in the effort to understand the solution. The logic is undeniable.

Solar energy more cost efficient now BUT economic viability unchanged. WHY?


Which of the following, if true, does most to help explain why the increased cost-efficiency of solar power has not decreased its threshold of economic viability?


Great to know, but isn't solar energy FREE of cost for about 12 hours a day? Then why would oil still be economically more viable? Maybe if we can produce more electricity per unit of oil, then it would make sense.


This is good news, but it's irrelevant and doesn't help explain the discrepancy. OUT!


This looks good. If the tech changes have increased the efficiency of oil-fired power plants, it means these plants can produce more electricity per unit of oil. This would explain explain why the viability of solar plants has remained unchanged, as oil plants have become even more viable. KEEP!


This is irrelevant. OUT!



We are concerned with the viability of new oil plants vs. new solar plants and not new reserves of oil. OUT!

Between A & C, C is definitely better.

C is the answer.

Premise 1:Technological improvements and reduced equipment costs have made converting solar energy directly into electricity far more cost-efficient in the last decade

Conclusion: However, the threshold of economic viability for solar power (that is, the price per barrel to which oil would have to rise in order for new solar power plants to be more economical than new oil-fired power plants) is unchanged at thirty-five dollars.


A Even if the price of oil has decreased we can not be sure that it has increased cost efficiency
B is irrelevant to the argument
C is correct as it gives us a reason why oil fired plants are still widely used more electricity per barrel of oil
D Out of scope
E Out of scope

Thanks for the response but actually it is a bad question because I score 90% on CR (you can even see that on your very own Veritas site I have an account) and there is only 1-2 questions I have seen that I think are bad and this is one of them. So I am not concerned to get this type of question wrong. if one comes up so be it. This isn't the norm.

The advice don't question the GMAT is correct. It is super unproductive to waste your time doing it. However, if you have done 400 CR questions and you only question 1-2 of them then I believe it's fine. The GMAT isn't flawless and can clearly make mistakes. Generally they are near flawless. This question sucks on so many levels.

153. Technological improvements and reduced equipment costs have made converting solar energy directly into electricity far more cost-efficient in the last decade. However, the threshold of economic viability for solar power (that is, the price per barrel to which oil would have to rise in order for new solar power plants to be more economical than new oil-fired power plants) is unchanged at thirty-five dollars.

Which of the following, if true, does most to help explain why the increased cost-efficiency of solar power has not decreased its threshold of economic viability?
(A) The cost of oil has fallen dramatically.
(B) The reduction in the cost of solar-power equipment has occurred despite increased raw material costs for that equipment.
(C) Technological changes have increased the efficiency of oil-fired power plants.
(D) Most electricity is generated by coal-fired or nuclear, rather than oil-fired, power plants.
(E) When the price of oil increases, reserves of oil not previously worth exploiting become economically viable.


Again if we start that solar technology costs the equivalent of $145 per barrel. Let's say oil is $110.

Technological improvements make solar now $75 and oil is now $40


C) Doesn't even make sense because we're talking about the solar price as measured per barrel of oil. I am happy to get this question wrong. And I would damage myself jumping through the mental gymnastics as you have to get to answer C.

Also, to add this isn't to say C is wrong. However, the price of oil dropping dramatically is clearly going to have a bigger impact than increased efficiency.

Dropping dramatically implies a big drop 20-30% if not more? Improved efficiencies is very vague and can mean anything. In this case, I would be looking for the strong language of A over the weak language of C. It doesn't take a rocket scientist to figure that oil is a pretty big input cost of an oil plant!


Let me change the question to a more real world example to illustrate:

153. Technological improvements and reduced equipment costs have made converting solar energy directly into electricity far more cost-efficient in the last decade. However, the threshold of economic viability for solar powered cars (that is, the price per barrel to which oil would have to rise in order for gasoline to be more expensive than powered cars) is unchanged at $1 per liter.

Which of the following, if true, does most to help explain why the increased cost-efficiency of solar powered cars has not decreased its threshold of economic viability?

(A) The cost of oil has fallen dramatically. It used to be cost me $2 to fill up my car now it costs me $1. For Kilowatt Hours to fill up my car it costs me $3 and now it costs me $2. Still above my cost
(B) The reduction in the cost of solar-power equipment has occurred despite increased raw material costs for that equipment. Okay but a reduction still happened wrong!
(C) Technological changes have increased the efficiency of oil-fired power plants. Okay this would lower my cost. This answer looks good do. But efficiency isn't the same as a word like dramatic! Efficiency could mean 1% or 2% or 100%. It is a vague word implying anything greater than 0%
(D) Most electricity is generated by coal-fired or nuclear, rather than oil-fired, power plants. (unrelated as we are discussing a comparison between oil and solar only.
(E) When the price of oil increases, reserves of oil not previously worth exploiting become economically viable. Adds useless information about what happens when oil goes up clearly wrong.

You're assuming far too much in A. No one knows what solar energy is in this fake world. You can't just make random real world assumption. Though, ironically, you're real world assumptions are super wrong and Solar is a lot more than oil. People following your advice of making assumptions that solar is free 10 hrs a day will hurt them from answering questions right. That's a bad way to think about the answer.

I love when people mindlessly write a solution that is based on the correct answer not logic. It helps no one.

Thanks for your feedback Sam.
Best of Luck with your GMAT prep! Cheers!

The answer is C. Here is my two cents

Here "point of price viability" means the comparison between the price of recycled and new paper. It is unchanged.

Acc to the argument, even though the price of recycled paper has decreased (the word cost-efficient in the argument) it is still comparable to the price of the new paper.

Lets see what does Cost efficiency means ? It means Innovation in production technology along with simultaneous decrease in the cost of equipment. However despite this ,the cost efficiency of recycled paper vs cost efficiency of new paper has not improved .What could be the reason ? The same innovation in technology must have led to decrease in the cost of producing new paper from trees ,which is option C .

In the given options A and C come close ...however A discusses about reduction in the cost of raw material(The cost of unprocessed trees to make new paper has fallen dramatically) .but what we are discussing is Cost efficiency ,hence A can be rejected .

Hence C.

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