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Technological improvements and reduced equipment costs have [#permalink]
15 Dec 2004, 17:49
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Technological improvements and reduced equipment costs have made converting solar 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 thrity-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.
I picked A. The correct answer is C. I read the explanation a number of times. I don't understand why A is not correct. Please help.
This is the part that I don't understand:
"Actual oil prices control how far, given the viability threshold, solar power is from economic viability but do not figure in the determination of the threshold, so choices A and E are incorrect."
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