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A new technique for extracting residues of oil from existing

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Status: Impossible is not a fact. It's an opinion. It's a dare. Impossible is nothing.
Affiliations: University of Chicago Booth School of Business
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A new technique for extracting residues of oil from existing  [#permalink]

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New post Updated on: 10 Mar 2018, 03:23
2
11
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A
B
C
D
E

Difficulty:

  75% (hard)

Question Stats:

60% (01:57) correct 40% (02:11) wrong based on 336 sessions

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A new technique for extracting residues of oil from existing oil wells by using lignins, a by-product of papermaking, is profitable provided that oil prices are over 20 dollars a barrel. Since oil prices are rising, investors looking for companies with prospects for rapid growth in profits would be wise to invest in paper manufacturers, whose currently almost worthless by-product will soon be a profit-boosting commodity.

Which of the following, if true, most seriously weakens the argument above?

(A) A small quantity of lignins are currently sold by paper manufacturers to chemical companies, but most of the lignins produced are burnt as waste.

(B) The 20-dollar-a-barrel oil price as a threshold of profitability for using lignins allows for the increased cost of refining crude oil that has been extracted using lignins.

(C) Only one-half to two-thirds of the total oil in a well can be extracted using conventional techniques of pumping and flooding with water.

(D) Petroleum-based substances that can be used as a substitute for lignins in extracting oil are costly and are made from oil, and these substances therefore increase in price as oil increases in price.

(E) The quantity of lignins produced annually in the manufacture of paper is several times larger than the amount that is likely to be useful in the oil industry.

Originally posted by nusmavrik on 18 Jun 2010, 11:17.
Last edited by broall on 10 Mar 2018, 03:23, edited 1 time in total.
Reformatted question, added OA
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Re: A new technique for extracting residues of oil from existing  [#permalink]

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New post 19 Jun 2010, 01:37
A new technique for extracting residues of oil from existing oil wells by using lignins, a by-product of papermaking, is profitable provided that oil prices are over 20 dollars a barrel. Since oil prices are rising, investors looking for companies with prospects for rapid growth in profits would be wise to invest in paper manufacturers, whose currently almost worthless by-product will soon be a profit-boosting commodity.

Which of the following, if true, most seriously weakens the argument above?
(A) A small quantity of lignins are currently sold by paper manufacturers to chemical companies, but most of the lignins produced are burnt as waste. -- strengthen,worthless/waste byproduct can used to refine oil

(B) The 20-dollar-a-barrel oil price as a threshold of profitability for using lignins allows for the increased cost of refining crude oil that has been extracted using lignins. increased costof refining crude oil using lignins. again profit. stenghten

(C) Only one-half to two-thirds of the total oil in a well can be extracted using conventional techniques of pumping and flooding with water. irrelevant - drawbacks of other techniques.


(D) Petroleum-based substances that can be used as a substitute for lignins in extracting oil are costly and are made from oil, and these substances therefore increase in price as oil increases in price. Costly petroleum-based substance cant be compared to worthless by-product.


(E) The quantity of lignins produced annually in the manufacture of paper is several times larger than the amount that is likely to be useful in the oil industry. larger than required, implies only some part is used which cant be profit boosting commodity.


correct me if am wrong.
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Re: A new technique for extracting residues of oil from existing  [#permalink]

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New post 26 Jul 2010, 21:38
1
E it is...

I just began to realize a lot of the CR questions expect the test taker to know some supply and demand concepts. Not sure if the GMAC is tuning its test for business folks.
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Re: A new technique for extracting residues of oil from existing  [#permalink]

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New post 26 Jul 2010, 23:37
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nusmavrik wrote:
A new technique for extracting residues of oil from existing oil wells by using lignins, a by-product of papermaking, is profitable provided that oil prices are over 20 dollars a barrel. Since oil prices are rising, investors looking for companies with prospects for rapid growth in profits would be wise to invest in paper manufacturers, whose currently almost worthless by-product will soon be a profit-boosting commodity.


this argument can be easily narrowed down to B and E rest all are beyond the facts given in the argument.

B talks about rising cost, which need not essentially impact profitability. There4 B ruled out.

The scope of the argument is broadened from a new technique for extracting residues of oil, which is expected to be profitable if oil prices are 20$ a barrel(in premise) to investors looking to invest in paper manufacturing companies, whose worthless by-product will soon be a profit-boosting commodity(in conclusion). Thus there is a gap between the two. To weaken the argument we would need to attack the assumption. For example we could say profitability will be negatively impacted that if not as much of the new technique for extracting oil is significantly applied. Less demand in turn would affect the supply of Lignins. The by-product will soon be a nonprofit-boosting commodity. Consequently investors will not invest in paper manufacturing. E clarifies demand supply relation and attacks the assumption.
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Re: A new technique for extracting residues of oil from existing  [#permalink]

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New post 18 Jul 2018, 20:51
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).

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Re: A new technique for extracting residues of oil from existing &nbs [#permalink] 18 Jul 2018, 20:51
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