atturhari wrote:
From 1998 to 2008, the amount of oil exported from the nation of Livonia increased by nearly 20% as the world’s demand soared. Yet over the same period, Livonia lost over 8,000 jobs in oil drilling and refinement, representing a 25% increase in the nation’s unemployment rate.
Which of the following, if true, would best explain the discrepancy outlined above?
A) Because of a slumping local economy, Livonia also lost 5,000 service jobs and 7,500 manufacturing jobs.
B) Several other countries in the region reported similar percentages of jobs lost in the oil industry over the same period.
C) Because of Livonia’s overvalued currency, most of the nation’s crude oil is now being refined after it has been exported.
D) Technological advancements in oil drilling techniques have allowed for a greater percentage of the world’s oil to be obtained from underneath the ocean floor.
E) Many former oil employees have found more lucrative work in the Livonia’s burgeoning precious metals mining industry
Dear
atturhari,
I'm happy to respond.
This is a good CR question: Veritas questions are often very good.
So, during this period, oil exports from Livonia increased, which naively would seem to suggest that all oil related jobs would increase. Instead, Livonia "
lost over 8,000 jobs in oil drilling and refinement." A paradox. How could oil production go up yet jobs related to oil production go down? Let's look at the answers.
A) Because of a slumping local economy, Livonia also lost 5,000 service jobs and 7,500 manufacturing jobs.Well, the Livonia economy was weak in other sectors, for whatever reasons, but it seems that oil was a strong sector, because of the high imports, so it doesn't explain the job weaknesses there. This is incorrect.
B) Several other countries in the region reported similar percentages of jobs lost in the oil industry over the same period.Do we know that these other nations experienced an increase in oil exports? Maybe, maybe not. It is a period of high demand: maybe that means the other nations also produced more, because they were responding to this demand, or maybe all these similar nations stopped producing oil, which created the high demands by severely limiting the supply. This could be relevant, but we are not sure, so we have to reject it.
C) Because of Livonia’s overvalued currency, most of the nation’s crude oil is now being refined after it has been exported.Aha! Livonia would still have need for jobs in production, but jobs in refining within Livonia would be lost, because all this work is now done elsewhere. This would explain the paradox. This choice is promising.
D) Technological advancements in oil drilling techniques have allowed for a greater percentage of the world’s oil to be obtained from underneath the ocean floor.This would explain another large supply, which might mean that Livonia would have a competitor, but apparently this supply was not enough to offset Livonia's rise in oil exports. This is incorrect.
E) Many former oil employees have found more lucrative work in the Livonia’s burgeoning precious metals mining industryThat's wonderful for those workers, and it solves their personal problems, but it doesn't solve the problem with the argument: it doesn't resolve the paradox of why they lost their jobs in the oil industry in the first place! This is incorrect.
The strongest answer by far is answer choice (C). This is a great question.
Mike