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Some analysts maintain that an embargo by country Litora on

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Senior Manager
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Some analysts maintain that an embargo by country Litora on [#permalink] New post 22 Dec 2003, 09:24
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A
B
C
D
E

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Some analysts maintain that an embargo by country Litora on the export of a strategic metal to country Zenda, if imposed, would drive up the price of the metal in Zenda at least tenfold. They note that few other countries export the metal and that, with an embargo. Zenda might have to depend on asтАФyet тАУ unexploited domestic sources of the metal.

Which of the following, if true, constitutes the most serious objection to the analysis above ?

(A) LitoraтАЩs economy depends heavily on foreign currency earned by the export of the strategic metal to other countries.

(B) There are foreign-policy steps that Zenda could take to appease Litora and avoid being subjected to an embargo on the metal.

(C) Geologists believe that additional deposits of the metal could possibly be found with in the territory of Litora.

(D) Only a small proportion of ZendaтАЩs import expenditures is devoted to the import of the metal from Litora.

(E) In case of an embargo, Zenda could buy the metal indirectly from Litora on the world market at a lessthan one-third increase in cost.


Please explain ?
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 [#permalink] New post 22 Dec 2003, 10:18
E

Only E explains why the cost of metal will not go tenfold in Zenda.
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Re: CR - Country Litora [#permalink] New post 22 Dec 2003, 10:37
Geethu wrote:
Some analysts maintain that an embargo by country Litora on the export of a strategic metal to country Zenda, if imposed, would drive up the price of the metal in Zenda at least tenfold. They note that few other countries export the metal and that, with an embargo. Zenda might have to depend on asтАФyet тАУ unexploited domestic sources of the metal.

Which of the following, if true, constitutes the most serious objection to the analysis above ?

(A) LitoraтАЩs economy depends heavily on foreign currency earned by the export of the strategic metal to other countries.
(B) There are foreign-policy steps that Zenda could take to appease Litora and avoid being subjected to an embargo on the metal.
(C) Geologists believe that additional deposits of the metal could possibly be found with in the territory of Litora.
(D) Only a small proportion of ZendaтАЩs import expenditures is devoted to the import of the metal from Litora.
(E) In case of an embargo, Zenda could buy the metal indirectly from Litora on the world market at a less than one-third increase in cost.

Please explain ?


Analysis : Embargo will drive up price of metal and will force Zenda to look for domestic sources for the metal.

I think A

A says, Litora cannot afford to impose the embargo..so the analysis is
based on a very unlikely situation.


I liked E too.
But 'E' still results in an increase in cost and Zenda may STILL find it cheaper to look for domestic sources. OR Zenda will buy from the world market... but "could" in E makes it weaker than A.
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Re: CR - Country Litora [#permalink] New post 22 Dec 2003, 10:52
praetorian123 wrote:
Analysis : Embargo will drive up price of metal and will force Zenda to look for domestic sources for the metal.

I think A

A says, Litora cannot afford to impose the embargo..so the analysis is
based on a very unlikely situation.


I liked E too.
But 'E' still results in an increase in cost and Zenda may STILL find it cheaper to look for domestic sources. OR Zenda will buy from the world market... but "could" in E makes it weaker than A.


A says "export to countries" not specifically Zenda.

Stimulus says that "would drive up the price of the metal in Zenda AT LEAST TENFOLD"
Only E gives a reason to think it won't.
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 [#permalink] New post 23 Jan 2004, 20:18
E Final Answer

(E) In case of an embargo, Zenda could buy the metal indirectly from Litora on the world market at a lessthan one-third increase in cost.

This clearly denies the conclusion that Zenda has to depend on domestic unexploited source.
  [#permalink] 23 Jan 2004, 20:18
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