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A circuits manufacturer in California needs a significant amount of p

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A circuits manufacturer in California needs a significant amount of p  [#permalink]

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New post 24 May 2020, 14:00
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Question Stats:

64% (02:07) correct 36% (02:05) wrong based on 99 sessions

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A circuits manufacturer in California needs a significant amount of pure silver for its wires. The manufacturer had two choices for a source of silver of this grade: a silver mine in a neighboring state or a silver distributor in East Asia. The latter was 30% less expensive when all costs, including transportation and related expenses, were included. The CEO of the manufacturer signed a long-term deal with the East Asian silver distributor, arguing that choice will save money over the course of the contract. This choice of the East Asian silver distributor is likely to prove more expensive than the silver mine in the neighboring state because ___________.

Which of the following most logically completes the passage?

A. the insurance rate for goods shipped over major oceans, especially a shipping route halfway around the globe, is considerably higher than the insurance for all forms of land-based shipping.

B. the pure silver needed for circuitry is typically much more expensive per ounce than the silver that appears in jewelry

C. the workers at the mine in the neighboring state are in a union that has recently gone on strike for higher wages and better working conditions

D. diesel, which should be used to fuel transcontinental supply ships per international regulations, was at an unusually low price during the time when this manufacturer modeled the costs.

E. as of last month, new refinement techniques have caused the price of domestic silver to reach new lows.
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Re: A circuits manufacturer in California needs a significant amount of p  [#permalink]

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New post 24 May 2020, 14:01
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In this question, we want to explain why the plan to use the silver from East Asia will be more costly than the silver from a neighboring state.

The credited answer is (D). If the model used an unusually low price for diesel, and if diesel, usually much more expensive, has to be used for shipping from Asia, then this definitely will cause the East Asia silver to cost more. This is certainly a reason why the East Asia silver will cost more than the model, and a possible reason why it will cost more than the silver from the neighboring state.

We are told that the deal took into account “transportation and related expenses.” Shipping insurance is a related expense, so even if this cost is high, it’s already been factored in. Choice (A) is incorrect.

Choice (B) is out of scope. Both locations, neighboring state & East Asia, have silver of the grade required for circuitry. Silver of other grades, such as that use in jewelry, are not relevant.

We are looking for something that would weaken the CEO’s decision. Choice (C) would strengthen the decision: it does the opposite. It would make the silver from the neighboring state more expensive, and this result would make the CEO’s decision look even better. Choice (C) is incorrect.

Choice (E) is a tempting answer. The price of the silver from the neighboring state has dropped, as of last month. Was this new price included in the CEO’s model? We don’t know. If the model included the new price, then the plan already accounts for this. If the model did not include the new price, then this could be a reason that the silver from the neighboring state would cost less than the model predicted. We don’t know, so we can’t choose (E).
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Re: A circuits manufacturer in California needs a significant amount of p  [#permalink]

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New post 27 May 2020, 09:04
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RAHUL_GMAT wrote:
A circuits manufacturer in California needs a significant amount of pure silver for its wires. The manufacturer had two choices for a source of silver of this grade: a silver mine in a neighboring state or a silver distributor in East Asia. The latter was 30% less expensive when all costs, including transportation and related expenses, were included. The CEO of the manufacturer signed a long-term deal with the East Asian silver distributor, arguing that choice will save money over the course of the contract. This choice of the East Asian silver distributor is likely to prove more expensive than the silver mine in the neighboring state because ___________.

Which of the following most logically completes the passage?

A. the insurance rate for goods shipped over major oceans, especially a shipping route halfway around the globe, is considerably higher than the insurance for all forms of land-based shipping.

B. the pure silver needed for circuitry is typically much more expensive per ounce than the silver that appears in jewelry

C. the workers at the mine in the neighboring state are in a union that has recently gone on strike for higher wages and better working conditions

D. diesel, which should be used to fuel transcontinental supply ships per international regulations, was at an unusually low price during the time when this manufacturer modeled the costs.

E. as of last month, new refinement techniques have caused the price of domestic silver to reach new lows.



All the options are pretty straightforward to eliminate.
The fight lies between option D & E.

Option 'E' is wrong because it talks about 'Domestic Silver's Price' and we are concerned with the price of silver of 'Neighbouring state' and 'East Asia'. Knowledge of the price for Domestic Silver doesn't help us in proving that 'East Asian silver' would be more expensive than the 'Neighbouring State's Silver'.

Option 'D' is correct as it shows the factor which would have led to the underestimation of cost of 'East Asian' silver by the CEO and hence, shows why 'East Asian silver' would be more expensive than the 'Neighbouring State's Silver'.
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Re: A circuits manufacturer in California needs a significant amount of p   [#permalink] 27 May 2020, 09:04

A circuits manufacturer in California needs a significant amount of p

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