Find all School-related info fast with the new School-Specific MBA Forum

It is currently 30 Sep 2014, 13:57

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

Technological improvements and reduced equipment costs have

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:
Director
Director
avatar
Joined: 27 Jun 2005
Posts: 517
Location: MS
Followers: 2

Kudos [?]: 12 [0], given: 0

Technological improvements and reduced equipment costs have [#permalink] New post 16 Feb 2006, 20:28
00:00
A
B
C
D
E

Difficulty:

(N/A)

Question Stats:

80% (01:48) correct 20% (01:19) wrong based on 21 sessions
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 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.
Current Student
User avatar
Joined: 29 Jan 2005
Posts: 5252
Followers: 23

Kudos [?]: 134 [0], given: 0

Reviews Badge
 [#permalink] New post 16 Feb 2006, 20:35
Only (C) makes any logical sense to me. But then again, I could be misreading the question :?
Senior Manager
Senior Manager
avatar
Joined: 08 Sep 2004
Posts: 258
Location: New York City, USA
Followers: 1

Kudos [?]: 9 [0], given: 0

 [#permalink] New post 16 Feb 2006, 21:32
Yeah, only C seems to support the arguement.

- Vipin
CEO
CEO
User avatar
Joined: 20 Nov 2005
Posts: 2922
Schools: Completed at SAID BUSINESS SCHOOL, OXFORD - Class of 2008
Followers: 15

Kudos [?]: 81 [0], given: 0

 [#permalink] New post 17 Feb 2006, 01:08
C seems pretty good.

B, D and E are out of scope.

A talks about cost of oil only.
_________________

SAID BUSINESS SCHOOL, OXFORD - MBA CLASS OF 2008

VP
VP
User avatar
Joined: 07 Nov 2005
Posts: 1133
Location: India
Followers: 3

Kudos [?]: 28 [0], given: 1

 [#permalink] New post 17 Feb 2006, 02:53
Only C validates the claim.
Intern
Intern
avatar
Joined: 18 Feb 2006
Posts: 23
Followers: 0

Kudos [?]: 0 [0], given: 0

Re: CR-Solar Energy [#permalink] New post 18 Feb 2006, 19:00
Edit: Wow, I suck. Trying again, (A) is apparently the "gotcha" answer here...

I have to go with (C) now as the passage talks about energy efficiency and economic viability, not energy cost.
Manager
Manager
avatar
Joined: 06 May 2013
Posts: 59
Concentration: Marketing, Technology
GMAT 1: 710 Q50 V35
GMAT 2: 730 Q49 V40
WE: Consulting (Computer Software)
Followers: 0

Kudos [?]: 4 [0], given: 16

Technological improvements and reduced equipment costs [#permalink] New post 10 Jul 2013, 03:19
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 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.
Manager
Manager
avatar
Joined: 06 May 2013
Posts: 59
Concentration: Marketing, Technology
GMAT 1: 710 Q50 V35
GMAT 2: 730 Q49 V40
WE: Consulting (Computer Software)
Followers: 0

Kudos [?]: 4 [0], given: 16

Re: Technological improvements and reduced equipment costs [#permalink] New post 10 Jul 2013, 04:00
I know that the crux of the solution is to eliminate one from A and C. But if we pick A as the right answer, we are assuming that the efficiency of Oil-Fired plants hasn't decreased and if we chose C as the right answer, we are assuming that the price of Oil either hasn't risen or doesn't affect the cost efficiency of Oil-Fired plants.
I am having loads of confusions like these I would be grateful if someone could clear this for me. :cry:
1 KUDOS received
GMAT Pill Representative
User avatar
Joined: 07 Nov 2012
Posts: 346
Schools: LBS '14 (A)
GMAT 1: 770 Q48 V48
Followers: 138

Kudos [?]: 185 [1] , given: 4

Re: Technological improvements and reduced equipment costs have [#permalink] New post 10 Jul 2013, 08:02
1
This post received
KUDOS
Hi Nikhil,

No - we're not assuming anything else when we see the answer.

The correct answer is C.

Think about it in any business context - if you improve your efficiency, the thing that counteracts that is your competitor improving its. Meaning you get no where...

This logically works here, and makes C correct.

Does that make sense
_________________

Former GMAT Pill student, now on staff. Used GMATPILL OG 12 and nothing else: 770 (48,48) & 6.0



... and more

Manager
Manager
avatar
Joined: 06 May 2013
Posts: 59
Concentration: Marketing, Technology
GMAT 1: 710 Q50 V35
GMAT 2: 730 Q49 V40
WE: Consulting (Computer Software)
Followers: 0

Kudos [?]: 4 [0], given: 16

Re: Technological improvements and reduced equipment costs have [#permalink] New post 11 Jul 2013, 00:09
plumber250 wrote:
Hi Nikhil,

No - we're not assuming anything else when we see the answer.

The correct answer is C.

Think about it in any business context - if you improve your efficiency, the thing that counteracts that is your competitor improving its. Meaning you get no where...

This logically works here, and makes C correct.

Does that make sense


Hey, thank you for the explanation. But I was actually wondering if you could explain to me why is A wrong? On what grounds do we consider A incorrect or is it just about picking which is more relevant from A and C?
At the same time, can you tell me where am I going wrong here? In my eyes, a decrease in Oil price would also keep the economic viability unchanged right?
Moreover, In C ain't we assuming that although efficiency of the plants has increased, the cost of raw materials or production is still the same? Doesn't this assumption deem the answer incorrect?
Expert Post
5 KUDOS received
Veritas Prep GMAT Instructor
User avatar
Joined: 16 Oct 2010
Posts: 4811
Location: Pune, India
Followers: 1132

Kudos [?]: 5171 [5] , given: 164

Re: Technological improvements and reduced equipment costs have [#permalink] New post 11 Jul 2013, 00:19
5
This post received
KUDOS
Expert's post
nikhil.jones.s wrote:
plumber250 wrote:
Hi Nikhil,

No - we're not assuming anything else when we see the answer.

The correct answer is C.

Think about it in any business context - if you improve your efficiency, the thing that counteracts that is your competitor improving its. Meaning you get no where...

This logically works here, and makes C correct.

Does that make sense


Hey, thank you for the explanation. But I was actually wondering if you could explain to me why is A wrong? On what grounds do we consider A incorrect or is it just about picking which is more relevant from A and C?
At the same time, can you tell me where am I going wrong here? In my eyes, a decrease in Oil price would also keep the economic viability unchanged right?
Moreover, In C ain't we assuming that although efficiency of the plants has increased, the cost of raw materials or production is still the same? Doesn't this assumption deem the answer incorrect?



No, it is not about picking the more relevant option. A is incorrect. Here is the explanation as I gave on another thread of this question:

It is a good tricky CR question. People with a quantitative bent of mind would love it, I am sure.
Let me put some numbers here to make it clearer. You need the numbers to understand that a paradox exists. Once you do understand that, resolving it is very simple.

Sunlight is free. Infra needed to convert it to electricity is expensive. Say for every one unit of electricity, you need to spend $50 in a solar power plant.

Oil is expensive. Infra needed to convert it to electricity, not so much. Say for every one unit of electricity, you need to spend $40 in an oil fired power plant. Say, the split here is $25 + $15 ($25 is the cost of oil used and $15 is cost of infra for a unit of electricity).

Oil based electricity is cheaper. If the cost of oil rises by $10 to $35, solar power will become viable.
This $35 = the threshold of economic viability for solar power = the price per barrel to which oil would have to rise (mind you, this isn't the actual price of oil)

What happens if you need to spend only $45 in a solar power plant for a unit of electricity? Would you expect 'the threshold of economic viability for solar power' to go to 30? Yes! Now, for solar viability, 'cost of oil + cost of infra in oil power plant' should be only $45. 'Cost of infra in oil power plant' = 15 so we need the oil to go up to $30 only. That will make solar power plants viable. So the threshold of economic viability should decrease.

But the threshold of economic viability for solar power is still $35! It doesn't decrease. That is the paradox! How do you resolve it? By saying that 'Cost of infra in oil power plant' has also gone down by $5 and is only $10 now.

This is what the scene is like now:

Sunlight is free. Infra needed to convert it to electricity is expensive. For every one unit of electricity, you need to spend $45 in a solar power plant.

Oil is expensive. Infra needed to convert it to electricity, not so much. For every one unit of electricity, you need to spend $35 in an oil fired power plant. The split now is $25 + $10 ($25 is the cost of oil used and $10 is cost of infra for a unit of electricity).

You still need the oil price to go up to $35 so that cost of electricity generation in oil power plant is also $45. So you explained the paradox by saying that "Technological changes have increased the efficiency of oil-fired power plants." So, option (C) is correct.

If you think about it now, the actual price of the oil has nothing to do with 'the threshold of economic viability for solar power'. This threshold is $35 so you need the oil to go up to $35. Whether the actual price of oil is $10 or $15 or $20, it doesn't matter. It still needs to go up to $35 for solar viability. So option (A) is incorrect.
_________________

Karishma
Veritas Prep | GMAT Instructor
My Blog

Save $100 on Veritas Prep GMAT Courses And Admissions Consulting
Enroll now. Pay later. Take advantage of Veritas Prep's flexible payment plan options.

Veritas Prep Reviews

Manager
Manager
avatar
Joined: 06 May 2013
Posts: 59
Concentration: Marketing, Technology
GMAT 1: 710 Q50 V35
GMAT 2: 730 Q49 V40
WE: Consulting (Computer Software)
Followers: 0

Kudos [?]: 4 [0], given: 16

Re: Technological improvements and reduced equipment costs have [#permalink] New post 11 Jul 2013, 04:08
VeritasPrepKarishma wrote:
nikhil.jones.s wrote:
plumber250 wrote:
Hi Nikhil,

No - we're not assuming anything else when we see the answer.

The correct answer is C.

Think about it in any business context - if you improve your efficiency, the thing that counteracts that is your competitor improving its. Meaning you get no where...

This logically works here, and makes C correct.

Does that make sense


Hey, thank you for the explanation. But I was actually wondering if you could explain to me why is A wrong? On what grounds do we consider A incorrect or is it just about picking which is more relevant from A and C?
At the same time, can you tell me where am I going wrong here? In my eyes, a decrease in Oil price would also keep the economic viability unchanged right?
Moreover, In C ain't we assuming that although efficiency of the plants has increased, the cost of raw materials or production is still the same? Doesn't this assumption deem the answer incorrect?



No, it is not about picking the more relevant option. A is incorrect. Here is the explanation as I gave on another thread of this question:

It is a good tricky CR question. People with a quantitative bent of mind would love it, I am sure.
Let me put some numbers here to make it clearer. You need the numbers to understand that a paradox exists. Once you do understand that, resolving it is very simple.

Sunlight is free. Infra needed to convert it to electricity is expensive. Say for every one unit of electricity, you need to spend $50 in a solar power plant.

Oil is expensive. Infra needed to convert it to electricity, not so much. Say for every one unit of electricity, you need to spend $40 in an oil fired power plant. Say, the split here is $25 + $15 ($25 is the cost of oil used and $15 is cost of infra for a unit of electricity).

Oil based electricity is cheaper. If the cost of oil rises by $10 to $35, solar power will become viable.
This $35 = the threshold of economic viability for solar power = the price per barrel to which oil would have to rise (mind you, this isn't the actual price of oil)

What happens if you need to spend only $45 in a solar power plant for a unit of electricity? Would you expect 'the threshold of economic viability for solar power' to go to 30? Yes! Now, for solar viability, 'cost of oil + cost of infra in oil power plant' should be only $45. 'Cost of infra in oil power plant' = 15 so we need the oil to go up to $30 only. That will make solar power plants viable. So the threshold of economic viability should decrease.

But the threshold of economic viability for solar power is still $35! It doesn't decrease. That is the paradox! How do you resolve it? By saying that 'Cost of infra in oil power plant' has also gone down by $5 and is only $10 now.

This is what the scene is like now:

Sunlight is free. Infra needed to convert it to electricity is expensive. For every one unit of electricity, you need to spend $45 in a solar power plant.

Oil is expensive. Infra needed to convert it to electricity, not so much. For every one unit of electricity, you need to spend $35 in an oil fired power plant. The split now is $25 + $10 ($25 is the cost of oil used and $10 is cost of infra for a unit of electricity).

You still need the oil price to go up to $35 so that cost of electricity generation in oil power plant is also $45. So you explained the paradox by saying that "Technological changes have increased the efficiency of oil-fired power plants." So, option (C) is correct.

If you think about it now, the actual price of the oil has nothing to do with 'the threshold of economic viability for solar power'. This threshold is $35 so you need the oil to go up to $35. Whether the actual price of oil is $10 or $15 or $20, it doesn't matter. It still needs to go up to $35 for solar viability. So option (A) is incorrect.


Wow! I wish i could give more than one kudos to this answer. Thank you :). I had forgotten the fact that the economic viability remains constant.
SVP
SVP
User avatar
Joined: 01 Oct 2013
Posts: 2003
Followers: 266

Kudos [?]: 59 [0], given: 0

Premium Member
Re: Technological improvements and reduced equipment costs have [#permalink] New post 24 Aug 2014, 22:11
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).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
Re: Technological improvements and reduced equipment costs have   [#permalink] 24 Aug 2014, 22:11
    Similar topics Author Replies Last post
Similar
Topics:
Technological improvements and reduced equipment costs have mailtheguru 10 30 Jul 2006, 11:59
Technological improvements and reduced equipment costs have amansingla4 4 25 Jun 2006, 00:59
Technological improvements and reduced equipment costs have kimmyg 6 13 Sep 2005, 04:33
Technological improvements and reduced equipment costs have Questor 3 15 Dec 2004, 17:49
Technological improvements and reduced equipment costs have ruhi 5 04 Nov 2004, 05:11
Display posts from previous: Sort by

Technological improvements and reduced equipment costs have

  Question banks Downloads My Bookmarks Reviews Important topics  


GMAT Club MBA Forum Home| About| Privacy Policy| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group and phpBB SEO

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.