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# Technological improvements and reduced equipment costs have

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Manager
Joined: 21 Feb 2012
Posts: 115
Location: India
Concentration: Finance, General Management
GMAT 1: 600 Q49 V23
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WE: Information Technology (Computer Software)
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Kudos [?]: 108 [0], given: 15

Technological improvements and reduced equipment costs have [#permalink]

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22 Apr 2012, 05:01
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65% (hard)

Question Stats:

55% (02:18) correct 45% (01:33) wrong based on 166 sessions

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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 hasnot 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 costsfor 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 economicallyviable.

Can someone explain this one...?
[Reveal] Spoiler: OA
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Re: here is a good one [#permalink]

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23 Apr 2012, 02:58
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Re: here is a good one [#permalink]

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24 Apr 2012, 06:16
Its a cause effect CR. Its assumed that the improvement in efficiency of solar power conversion to electricity will have an effect that threshhold price for oil decreases. If we reverse the relation we should be fine to explain the paradox. Hence C.
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Re: Technological improvements and reduced equipment costs have [#permalink]

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03 Jun 2015, 09:23
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Re: Technological improvements and reduced equipment costs have [#permalink]

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03 Jun 2015, 09:59
piyushksharma wrote:
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.

Converting solar energy directly into electricity , cost-efficient in the last decade due to -

1. Technological improvements
2. Reduced equipment costs

Contra -

Rise in Price/Barrel (Oil ) { Fixed at $35 }=> More economic Viability of new solar power plants compared to New Oil Fired Plants Plants. Thus effectiveness of new solar power plants depends on Rise in Price of Oil. When price of oil rises people will tend to shift from Oil based power plants to Solar Power Plants. This has not happened till now despite Cost-Efficient production process , since Price of Oil has remain the same at$35.

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. - Not true.
B. The reduction in the cost of solar-power equipment has occurred despite increased raw material costsfor that equipment. - Absolutely not true.
C. Technological changes have increased the efficiency of oil-fired power plants. - True + Reduced Equipment Cost
D. Most electricity is generated by coal-fired or nuclear, rather than oil-fired, power plants. - Out of scope.
E. When the price of oil increases, reserves of oil not previously worth exploiting become economically viable. - Out of scope.
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Abhishek....

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Re: Technological improvements and reduced equipment costs have   [#permalink] 03 Jun 2015, 09:59
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