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Some analysts maintain that an embargo by country Litora on

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Director
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Some analysts maintain that an embargo by country Litora on [#permalink] New post 03 May 2007, 01:53
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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 as—yet – unexploited domestic sources of the metal.

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

(A) Litora’s 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 Zenda’s 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 with logic.
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Re: CR Metal Price [#permalink] New post 03 May 2007, 02:06
vshaunak@gmail.com 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 as—yet – unexploited domestic sources of the metal.

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

(A) Litora’s economy depends heavily on foreign currency earned by the export of the strategic metal to other countries.
This statement talks about litora's economy and hence out of scope of the argument. Eliminate

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

This choice is irrelavent. Eliminate

(C) Geologists believe that additional deposits of the metal could possibly be found with in the territory of Litora.
Information of additional depostits of metal in litora is immaterial to the argument hence eliminate
(D) Only a small proportion of Zenda’s import expenditures is devoted to the import of the metal from Litora.
This statement talks about the imports of Zenda while the argument is about metal price in Zenda hence eliminate.

(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 is correct choice. As it says that even after imposing embrago the price of metal in zenda will rise only by 1/3 of the original cost.

Please explain with logic.


Javed.

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 [#permalink] New post 03 May 2007, 03:00
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 as—yet – unexploited domestic sources of the metal.

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

(A) Litora’s economy depends heavily on foreign currency earned by the export of the strategic metal to other countries.
out of scope.As we have to find an option which will refute speculation of price increase of the metal in Zenda at least tenfold

(B) There are foreign-policy steps that Zenda could take to appease Litora and avoid being subjected to an embargo on the metal.
this can only be done in future...so out of scope

(C) Geologists believe that additional deposits of the metal could possibly be found with in the territory of Litora.
out of scope....we have nothing to do with deposits in Litora......if it were Zenda this option could have been a strong contender.

(D) Only a small proportion of Zenda’s import expenditures is devoted to the import of the metal from Litora.
this will not avoid the price rise situation as demand will be more that supply is this case also.


(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 is the best choice...but it will also lead to increase in metal cost ..but not 10 fold
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 [#permalink] New post 03 May 2007, 09:14
E is the clear winner.
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 [#permalink] New post 03 May 2007, 09:48
apache 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 as—yet – unexploited domestic sources of the metal.

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

(A) Litora’s economy depends heavily on foreign currency earned by the export of the strategic metal to other countries.
out of scope.As we have to find an option which will refute speculation of price increase of the metal in Zenda at least tenfold

(B) There are foreign-policy steps that Zenda could take to appease Litora and avoid being subjected to an embargo on the metal.
this can only be done in future...so out of scope

(C) Geologists believe that additional deposits of the metal could possibly be found with in the territory of Litora.
out of scope....we have nothing to do with deposits in Litora......if it were Zenda this option could have been a strong contender.

(D) Only a small proportion of Zenda’s import expenditures is devoted to the import of the metal from Litora.
this will not avoid the price rise situation as demand will be more that supply is this case also.


(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 is the best choice...but it will also lead to increase in metal cost ..but not 10 fold


Yup...E it is...Good explanation!!!
  [#permalink] 03 May 2007, 09:48
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