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# Technological improvements and reduced equipment costs have

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Re: Technological improvements and reduced equipment costs have [#permalink]  22 Jan 2012, 06:16
C
good question
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Re: Technological improvements and reduced equipment costs have [#permalink]  26 Apr 2012, 11:22
Simplest explanation for A vs C:

Comparing cost per unit in both cases:

Case 1: Initially, cost of solar power per unit will be equal when price to which oil should rise = $35. So for 1 unit, lets say, (cost of solar power) C1 =$35 (cost of oil equalized) + P1 (cost of production)

Case 2: even with new technology

(cost of solar power) C2 = $35 (cost of oil equalized) + P2 (cost of production) Since cost of solar power has decreased, C2 < C1 hence P2 < P1 which means efficiency of production for oil plants has increased. Even I selected the wrong one before Its my first post... Kudos plz Intern Joined: 22 Jan 2012 Posts: 35 Followers: 0 Kudos [?]: 12 [0], given: 0 Re: Technological improvements and reduced equipment costs have [#permalink] 26 Apr 2012, 11:44 IMO the option A talks about the sudden fall in the cost of oil , while the argument talks about the cost efficiency of solar energy in comparison for a longer duration.So option A is wrong as it takes into account the sudden fall and does not compare the prices for a longer perspective. C takes into consideration that the changes have taken place gradually. Manager Joined: 29 Mar 2010 Posts: 142 Location: United States Concentration: Finance, International Business GMAT 1: 590 Q28 V38 GPA: 2.54 WE: Accounting (Hospitality and Tourism) Followers: 1 Kudos [?]: 47 [0], given: 16 Re: Technological improvements and reduced equipment costs have [#permalink] 27 Apr 2012, 18:03 I take it as while the efficiency of oil powered power plants has increased while solar power has not is because it provides an answer to how both sides of the argument can be factually correct. _________________ 4/28 GMATPrep 42Q 36V 640 Intern Joined: 19 Feb 2012 Posts: 17 Followers: 0 Kudos [?]: 1 [0], given: 1 Re: Technological improvements and reduced equipment costs have [#permalink] 28 Nov 2012, 04:36 ∆C unit= 1/E( Csolar - n*Cbarrel ) n = number of barrels used to generate E units of energy Csolar = Cost to generate E units of Solar Power Cbarrel = Cost of a barrel ∆C = Difference in costs between generation of solar power and generation of thermal power for solar power to be economically viable ∆C unit = 0 Then Csolar = n*Cbarrel Question says that although Csolar↓ ,But Cbarrel is still =$35, which means n has to come down. n is inversely proportional to efficiency.

Therefore, C
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Re: Technological improvements and reduced equipment costs have [#permalink]  14 Feb 2013, 08:55
I would better guess and move on , then spend so much time on a question with the approach mentioned above . Not practical solution to eliminate A .
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Re: Technological improvements and reduced equipment costs have [#permalink]  14 Feb 2013, 19:40
Expert's post
ishancrazee wrote:
I would better guess and move on , then spend so much time on a question with the approach mentioned above . Not practical solution to eliminate A .

Actually, you don't have to take numbers and analyze them to eliminate (A). Most probably, people who have explained why (A) doesn't work using numbers, didn't actually take numbers when they were looking for the answer themselves. You simply have to understand that the "threshold of economic viability" has nothing to do with the actual cost of oil. It depends on the difference between 'cost to create solar power' vs 'cost of convert oil to power'. The numbers have been taken to explain the perspective.
And as for guessing, this is a GMAT prep 700+ level question. At that level, all questions are a little tricky and make you think. You might need to take these questions seriously if you are aiming for 700+.
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Re: Technological improvements and reduced equipment costs have [#permalink]  14 Feb 2013, 21:38
Answer is option C as the author compares new solar plant with the new oil fired plants. C provides the most logical explanation.
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Re: Technological improvements and reduced equipment costs have [#permalink]  29 May 2013, 19:44
Of whatever reasons, I would not agree that we can prove A to be incorrect by putting numbers.

I eliminated A because it is too negative. The word "dramatically" means unexpected or sudden change. It is not practical to say "The cost of oil has fallen dramatically in the last decade". A decade is a longer period of time to say dramatic increase or decrease.

Threshold = Cost of Solar - Cost Of Oil (Assume Profit is same in both the cases)
T = S - O

Now since my T is constant, S and O should either increase or decrease together to same extent.
As per the premise, S has become "far more cost-efficient in the last decade", it doesn't use any strong word like "dramatically" , "extraordinarily" , "unexpectedly" etc, So O should keep pace with S.

In such case, C sounds a better option, as the reason for cost-efficiency is common.
A could be correct, had it been simply "The cost of oil has fallen"
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Re: Technological improvements and reduced equipment costs have [#permalink]  03 Jun 2013, 02:04
Expert's post
ConnectTheDots wrote:
Of whatever reasons, I would not agree that we can prove A to be incorrect by putting numbers.

I eliminated A because it is too negative. The word "dramatically" means unexpected or sudden change. It is not practical to say "The cost of oil has fallen dramatically in the last decade". A decade is a longer period of time to say dramatic increase or decrease.

Threshold = Cost of Solar - Cost Of Oil (Assume Profit is same in both the cases)
T = S - O

Now since my T is constant, S and O should either increase or decrease together to same extent.
As per the premise, S has become "far more cost-efficient in the last decade", it doesn't use any strong word like "dramatically" , "extraordinarily" , "unexpectedly" etc, So O should keep pace with S.

In such case, C sounds a better option, as the reason for cost-efficiency is common.
A could be correct, had it been simply "The cost of oil has fallen"

Actually, ignoring an option because it is too 'extreme' is not the right approach. An option, even with 'never', 'all' etc could be true. It's all about the context. Usually, the contexts used in CR questions are real life and there are few absolutes in life hence, you might have heard that extreme answers are not correct. It is just a rule of thumb and may not always hold.

As for this option being extreme due to the presence of 'dramatic', I don't see how that word is a problem. If we are talking about multiple decades, oil price falling dramatically over the last decade could make sense. Say, if it is $100 a barrel for many decades and then falls to$50 a barrel over the last decade.

(A) is incorrect because the actual cost of oil is immaterial.
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Re: Technological improvements and reduced equipment costs have [#permalink]  15 Oct 2013, 15:47
I will summarize Veritas' idea.
To be more economical, total costs of the solar-power plant are less than those of oil-fired plant.
Total costs of solar-power plant = Cost of sunlight (Zero) + Cost of infrastructure (called SP)
Total costs of oil-fired plant = Cost of oil + Cost of infra (called OF)
So we have: SP <= Cost of oil + OF; or SP - OF <= Cost of oil = Threshold
Past: SP - OF = 35 = Threshold
Present: because of the technological improvements, SP will decrease. If OF is unchanged, threshold will be decreased.
But Threshold (price of oil) is unchanged, so OF must be decreased with some reasons.
In all answers, we need find something which makes OF decrease.
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Re: Technological improvements and reduced equipment [#permalink]  22 Mar 2014, 23:08
boeinz wrote:
How to kill 'A'?

Hi，A is incorrect. We are comparing two kinds of plants with the term "threshhold of viability for solar energy"which measures the difference. The price of oil at 35 dollars is just used to describe the difference. Oil of price is not the core issue, but the 35 dollars is. Here, the price of oil is a production element of fired plant. It is just a cost example of this kind of plant. Am I clear?
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Re: Technological improvements and reduced equipment [#permalink]  14 Jun 2014, 08:44
MICKEYXITIN wrote:
noboru wrote:
boeinz wrote:
How to kill 'A'?

Same here.
I agree with C; but A is also correct.
Could anybody clarify?

A is incorrect because the premise also said that the the price per oil barrel is unchanged (=$35). We cannot change the premise of the argument. A is counter-fact in saying that oil price has fallen. Consider:- 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. As per above statement P = price per barrel of oil dP = rise in price of oil required to make solar viable. Argument says:- "dP" is unchanged it does not comment anything about "P". Manager Joined: 12 Nov 2012 Posts: 159 Location: India Concentration: Finance, Technology GMAT 1: 650 Q51 V26 GMAT 2: 690 Q50 V32 GMAT 3: 710 Q51 V34 GPA: 2.7 WE: Analyst (Computer Software) Followers: 3 Kudos [?]: 29 [0], given: 123 Re: Technological improvements and reduced equipment costs have [#permalink] 03 Aug 2014, 23:51 manishpal77899 wrote: reply by gmatdetroyer.i find it helpful.pls read it carefully... let us say earlier it used to cost$50 to get 1 unit of power using solar power system....and one barrel of oil costing $20 produced 1 unit of energy using oil fired system.... oil wud have to rise to$50 per barrel so that we cud switch to solar power...or solar power wud have to fall to $20 to make the switch economically viable... Now if Oil prices have fallen dramatically!!! we were getting 1 unit from$20 of oil...lets say oil prices have fallen to $5 per barrel .... and now we are getting 1 unit from oil power for$5 ...

Also solar power has become more efficient...say now we are getting 2 units of energy from $50 using solar power...this means 1 unit for$25 ... in this case solar power wud have to fall to $5 or oil wud have to rise to$25 ....
SO you can see THRESHOLD HAS CHANGED....BUT ACCORDING TO STIMULI THRESHOLD REMAINS UNCHANGED...

sO wat wud have happened..??

now with increased efficiency..we can get 2 units of energy from solar power and it still costs us $50 .... As the stimuli says the threshold remains the same.... wat if oil power plants have become efficient ... earlier we were getting 1 unit from$20 ...NOW WE GET 2 UNITS USING $20 ...??? in this case..either solar power drops to$20 or oil rises to $50 .... threshold remains the same... Important thing in this question is THRESHOLD....thats wat makes it confusing....hope it helps... But now you need to re-calculate the threshold values. Since efficiency has increased, we need to calculate threshold levels / unit of energy. In this case the new threshold will change which is counter to the argument. So, the question is, how can we keep threshold constant when efficiency of solar based and oil-fired power plants has changed? _________________ C'est la vie Intern Joined: 24 Oct 2014 Posts: 12 Followers: 1 Kudos [?]: 0 [0], given: 1 Technological improvements and reduced equipment costs have [#permalink] 09 Apr 2015, 17:01 The questions is very straight forward - Economical viability for solar power is "price per barrel to which oil has to rise in order for new solar power plants to be more economical than new oil fired power plants" Although the unit for this viability is$/barrel.

The comparison really is between

[cost to produce electricity in new oil fired power plant]/[cost to produce electricity in new solar power plants]

Therefore, even if when denominator goes down, and simultaneously numerator is also going down (option C), the economical viability remains constant.

The \$/barrel calculated from the above statement is not related to the actual cost of oil/barrel.
Technological improvements and reduced equipment costs have   [#permalink] 09 Apr 2015, 17:01

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