Technological improvements and reduced equipment costs have : GMAT Critical Reasoning (CR)
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# Technological improvements and reduced equipment costs have

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Senior Manager
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Technological improvements and reduced equipment costs have [#permalink]

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29 Oct 2009, 17:37
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36% (02:28) correct 64% (01:17) wrong based on 15 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 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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29 Oct 2009, 20:56
1
KUDOS
IMO C.........
Senior Manager
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30 Oct 2009, 06:45
I get A. If the cost efficiency of solar power is much better than the price has declined quite a bit. If the difference between the price of solar and oil power is still $35 than the price of oil dropped too. The use of “dramatically” makes this even more apparent. Somebody Kudo me if I’m right. _________________ He that is in me > he that is in the world. - source 1 John 4:4 Senior Manager Joined: 16 Jul 2009 Posts: 261 Followers: 5 Kudos [?]: 325 [0], given: 3 Re: Technological improvements and reduced equipment costs have [#permalink] ### Show Tags 30 Oct 2009, 10:02 IMO C, as technological improvement in solar equipments is countered by technological changes which have increased the efficiency of oil-fired power plants, and this explains why the increased cost-efficiency of solar power has not decreased its threshold of economic viability. Senior Manager Status: Yeah well whatever. Joined: 18 Sep 2009 Posts: 345 Location: United States GMAT 1: 660 Q42 V39 GMAT 2: 730 Q48 V42 GPA: 3.49 WE: Analyst (Insurance) Followers: 5 Kudos [?]: 72 [0], given: 17 Re: Technological improvements and reduced equipment costs have [#permalink] ### Show Tags 30 Oct 2009, 14:23 abhi758, I'm almost sure that C is the trap answer. The efficiency of the plant has nothing to do with the actual cost of oil- especially if oil is the input rather than the output (the statement doesn't say though). And even if there's increased efficiency then it's a leaping assumption to believe that that means a difference in the cost of oil. But what's the OA? Anyone know? _________________ He that is in me > he that is in the world. - source 1 John 4:4 Senior Manager Status: Yeah well whatever. Joined: 18 Sep 2009 Posts: 345 Location: United States GMAT 1: 660 Q42 V39 GMAT 2: 730 Q48 V42 GPA: 3.49 WE: Analyst (Insurance) Followers: 5 Kudos [?]: 72 [0], given: 17 Re: Technological improvements and reduced equipment costs have [#permalink] ### Show Tags 30 Oct 2009, 14:26 I stand corrected. http://www.manhattangmat.com/forums/cr- ... t7885.html _________________ He that is in me > he that is in the world. - source 1 John 4:4 Senior Manager Joined: 18 Aug 2009 Posts: 303 Followers: 3 Kudos [?]: 271 [0], given: 9 Re: Technological improvements and reduced equipment costs have [#permalink] ### Show Tags 31 Oct 2009, 03:01 well, I'd have chosen A for this question and 'am confused with C! Manager Joined: 16 Oct 2011 Posts: 135 Location: United States Followers: 0 Kudos [?]: 14 [0], given: 5 Re: Technological improvements and reduced equipment costs have [#permalink] ### Show Tags 16 Nov 2011, 08:08 vannbj wrote: abhi758, I'm almost sure that C is the trap answer. The efficiency of the plant has nothing to do with the actual cost of oil- especially if oil is the input rather than the output (the statement doesn't say though). And even if there's increased efficiency then it's a leaping assumption to believe that that means a difference in the cost of oil. But what's the OA? Anyone know? Hi, I think A only says - a specific case of cost reduction. That does not give a reason for the constant threshold value. Agreed... If one reduces, the other reduces equally, since both use oil. BUt, we do not know, how many are oil-fired and other similar details. So, possibly, when cost reduces, and number of two types of plants are unknown, we cannot conclude. However, C is a typical GMAT answer, I'd say. If changes affected the oil-fired too, difference should be even. I think the value 35, might provoke people to calculate. Thanks! Senior Manager Status: D-Day is on February 10th. and I am not stressed Affiliations: American Management association, American Association of financial accountants Joined: 12 Apr 2011 Posts: 270 Location: Kuwait Schools: Columbia university Followers: 5 Kudos [?]: 272 [0], given: 52 Re: Technological improvements and reduced equipment costs have [#permalink] ### Show Tags 16 Nov 2011, 14:24 I am confused between E and C? any explanation please? _________________ Sky is the limit Manager Joined: 07 Jun 2009 Posts: 212 Followers: 1 Kudos [?]: 38 [1] , given: 9 Re: Technological improvements and reduced equipment costs have [#permalink] ### Show Tags 16 Nov 2011, 18:20 1 This post received KUDOS Would go with 'C' too. Economic viability= Price of a barrel of oil required to produce 'X' watts electricity- Cost of obtaining same Watts of electricity from solar power. This means this difference has remained steady at$35.00, indicating that option 'C' could be one strong reason for it because we know that 'technological improvements' have taken place.

(A) The cost of oil has fallen dramatically. - contrary to the statement of economic viability which is increase in the price of a barrel of oil.
(B) The reduction in the cost of solar-power equipment has occurred despite increased raw material costs
for that equipment.
- not needed
(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.- Adds a new element
(E) When the price of oil increases, reserves of oil not previously worth exploiting become economically
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Re: Technological improvements and reduced equipment costs have [#permalink]

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16 Nov 2011, 18:57
Great question !!

Was tricked in considering A the correct answer. MGMAT forum has some detailed explanation as to how C is correct here.

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

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17 Nov 2011, 00:05
Here is the same kind as this question. If all you guy confront this first, it may be easier. :D

Quote:
Innovations in production technology and decreases in the cost of equipment have made recycling paper into new paper products much more cost-efficient over the last twenty years. Despite these advances, though, the "point of price viability"(the price that new paper made from trees must reach to make recycled paper comparable in price) is unchanged at \$2.12 per ream of paper.

Which of the following, if true, most explains why the increased cost-efficiency of recycled paper has not lowered the point
of price viability?

A) The cost of unprocessed trees to make new paper has fallen dramatically.

B) The decreased in the cost of recycling equipment have occured despite
increased in the cost of raw materials required to manufacture such equipment.

C) Innovations in production technology have made it much more cost-efficient to produce new paper from trees.

D) Most paper is made from the scraps and sawdust left after processing new trees for lumber,
rather than directly from the tree themselves

E) When the price of planting new saplings to replace cut trees becomes more expensive,
forests reserves not previously worth cutting become cost-effective to cut.

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

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17 Nov 2011, 00:19
Great post, but as an improvement to the old one as Torgard says, a bit more detail would be cool. For example, why they are/are not beneficial and also at which level they stop becoming beneficial.P.S - You're a mod now, you can sticky important information......

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Re: Technological improvements and reduced equipment costs have   [#permalink] 17 Nov 2011, 00:19
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