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A recent spate of launching and operating mishaps with television sate

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A recent spate of launching and operating mishaps with television sate  [#permalink]

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A recent spate of launching and operating mishaps with television satellites led to a corresponding surge in claims against companies underwriting satellite insurance. As a result, insurance premiums shot up, making satellites more expensive to launch and operate. This, in turn, has added to the pressure to squeeze more performance out of currently operating satellites.

Which of the following, if true, taken together with the information above, best supports the conclusion that the cost of television satellites will continue to increase?


(A) Since the risk to insurers of satellites is spread over relatively few units, insurance premiums are necessarily very high.

(B) When satellites reach orbit and then fail, the causes of failure are generally impossible to pinpoint with confidence.

(C) The greater the performance demands placed on satellites, the more frequently those satellites break down.

(D) Most satellites are produced in such small numbers that no economies of scale can be realized.

(E) Since many satellites are built by unwieldy international consortia, inefficiencies are inevitable.


Official Guide for GMAT Verbal Review, 2nd Edition

Practice Question
Question No.: 32
Page: 127

Originally posted by vksunder on 09 Jul 2008, 19:57.
Last edited by Bunuel on 01 Oct 2018, 07:08, edited 3 times in total.
Edited the question.
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Re: A recent spate of launching and operating mishaps with television sate  [#permalink]

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New post 09 Jul 2008, 20:23
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vksunder wrote:
A recent spate of launching and operating mishaps with television satellites led to a corresponding surge in
claims against companies underwriting satellite insurance. As a result, insurance premiums shot up, making
satellites more expensive to launch and operate. This, in turn, has added to the pressure to squeeze more
performance out of currently operating satellites.
Which of the following, if true, taken together with the information above, best supports the conclusion that the
cost of television satellites will continue to increase?


The mishaps have already led to an increase in the cost of satellites. This has led to the current situation: 'pressure to squeeze more performance out of currently operating satellites.' Why would the costs go up even further? If squeezing more performance out of current satellites is likely to be lead to further increases in costs. Of the answer choices, B is irrelevant, A, D and E describe why satellites should be expensive, not why costs should increase. Only C describes why 'squeezing more performance out of currently operating satellites' is likely to lead to satellite breakdown, which, as the question stem has established, leads to an increase in costs.


vksunder wrote:
A. Since the risk to insurers of satellites is spread over relatively few units, insurance premiums are necessarily
very high.
B. When satellites reach orbit and then fail, the causes of failure are generally impossible to pinpoint with
confidence.
C. The greater the performance demands placed on satellites, the more frequently those satellites break down.
D. Most satellites are produced in such small numbers that no economies of scale can be realized.
E. Since many satellites are built by unwieldy international consortia, inefficiencies are inevitable.

Please support your answers with a brief explanation

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Re: A recent spate of launching and operating mishaps with television sate  [#permalink]

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New post 21 Mar 2012, 17:24
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I agree with the answer C here:

The conclusion is: [highlight]The cost of television satellites will continue to rise[/highlight]

In this case, the conclusion is actually in the question stem.

A. This only describes why the price of the satellites is high. It does not explain why the cost will continue to increase.

B. I felt that the cause of failure was irrelevant in this case because it doesn't explain why the costs of the satellites would increase.

C. This answer choice correctly explains the reason why costs will continue to increase - since the currently operating satellites would be squeezed for more performance, this also means that they are also very likely to break down quicker. Therefore, the cost of maintenance and returning them back to operation would increase the costs.

D. This answer choice only explains the production of the satellites itself. It could explain why the cost of the satellite is high, but not why the costs would continually increase.

E. Although the satellites are inefficient, this would not explain why the costs would continually increase.
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Re: A recent spate of launching and operating mishaps with television sate  [#permalink]

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New post 22 Jul 2013, 07:59
Though , choice C is the correct answer here. What i do not understand is how Choice E is irrelevant.

the satellites are built by unwieldy manufacturers,so inefficiencies are inevitable.

Now , it is not clear which inefficiencies the choice refers to.

It could be inefficiency in operation,leading to higher failures- in this case increasing costs.
It could be innefficient construction-not increasing costs.
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Re: A recent spate of launching and operating mishaps with television sate  [#permalink]

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New post 24 Jul 2013, 19:07
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12bhang wrote:
Though , choice C is the correct answer here. What i do not understand is how Choice E is irrelevant.

the satellites are built by unwieldy manufacturers,so inefficiencies are inevitable.

Now , it is not clear which inefficiencies the choice refers to.

It could be inefficiency in operation,leading to higher failures- in this case increasing costs.
It could be innefficient construction-not increasing costs.

Hi,

It doesn't really matter which inefficiencies we are talking about here.

The keyword in the conclusion is "increasing" - that the costs will continue to increase.

Option E does not say that the inefficiencies will continue to rise. It just says some inefficiencies will remain - so what - it does not mean that the costs will INCREASE. It just means that costs must remain high.

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Re: A recent spate of launching and operating mishaps with television sate  [#permalink]

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New post 06 Aug 2017, 10:20
The satellites are caught in a vicious cycle: mishaps led to more claims, more claims led to higher premiums, higher premiums made satellite use more expensive, higher expenses led to higher demands on satellite performance. Choice C closes the "circle" of issues here because, if satellites are going to fail more due to high performance demands, then there will be more claims, and the whole thing will start all over again.
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Re: A recent spate of launching and operating mishaps with television sate  [#permalink]

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New post Updated on: 09 Aug 2017, 22:59
Can someone explain options A, D and E in more detail.

Following is my understanding for these 3 options respectively,

A. Since the risk to insurers of satellites is spread over relatively few units, insurance premiums are necessarily very high.
As the insurance premiums are very high, satellites would be more expensive to launch and operate. But it does not support or provide any evidence to support the conclusion that the cost of satellites would continue to increase.

D. Most satellites are produced in such small numbers that no economies of scale can be realized.
First of all, meaning of economies of scale (As I was not aware of this meaning earlier),
Economies of scale are the reduction in the per unit cost of production as the volume of production increases. In other words, the cost per unit of production decreases as volume of product increases.
So, this option basically means that as satellites are produced in such small numbers that is the overall volume of production is so less that the cost per unit of production is still high. That is the satellites are still expensive. But this option does not cater to the conclusion that why the cost of satellites will continue to increase. Thus, this option statement is incorrect.

E. Since many satellites are built by unwieldy international consortia, inefficiencies are inevitable.
As per this option statement, inefficiencies are inevitable means the mishaps will still occur and claims will increase with higher insurance premiums thus more expensive satellites. But this option also fails to explain why the cost of satellites will continue to increase.
What do we actually mean in option E, when we mention unwieldy international consortia and does 'inefficiencies are inevitable' CORRELATES to 'mishaps will not stop happening'?

mikemcgarry chiranjeev
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The Moment You Think About Giving Up, Think Of The Reason Why You Held On So Long.
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Originally posted by vnigam21 on 06 Aug 2017, 10:45.
Last edited by vnigam21 on 09 Aug 2017, 22:59, edited 1 time in total.
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Re: A recent spate of launching and operating mishaps with television sate  [#permalink]

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