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Senior Manager
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Technological improvements and reduced equipment costs have [#permalink]
 30 Jul 2006, 12:59
Question Stats:
0% (00:00) correct
 0% (00:00) wrong based on 0 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.
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CEO
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Looks like a straight C.
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SAID BUSINESS SCHOOL, OXFORD - MBA CLASS OF 2008
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Manager
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E 85 % C sounds compelling also but there is no mention
of tech change in oil-fired power plants. so it is out.
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Manager
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waiting for OA 
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Senior Manager
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The OA is C. However, I would appreciate if someone could explain why it is not A.
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SVP
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Clear winner C.
If the price of Oil fell dramatically, it would have an effect on the threshold. But the threshold has remained unchanged.
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Re: CR --- Solar and Oil [#permalink]
31 Jul 2006, 15:02
C is the clear choice.
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Current Student
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mailtheguru wrote: The OA is C. However, I would appreciate if someone could explain why it is not A.
1. We don`t know the current price per barrel of oil (in the context of this passage). Could be $10 or $100 p/barrel??
2. Even if we did know the ppb, who's to say that the sudden drop wasn't a market anomaly and prices wouldn`t return to their original level after a few days, weeks, years of trading...???
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Re: CR --- Solar and Oil [#permalink]
24 Aug 2006, 06:25
it's C. Fr A, even if the cost of oil has fallen dramatically, taty's beside the point: the question deals with the cost efficiency of solar power. Also, we know nothing about the cost of oil since the stimulus talks only about the price.
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Manager
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My answer is C
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