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# An electric-power company gained greater profits and

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Senior Manager
Joined: 26 May 2009
Posts: 304
An electric-power company gained greater profits and [#permalink]

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25 Jun 2009, 23:49
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An electric-power company gained greater profits and provided electricity to consumers at lower rates per unit of electricity by building larger-capacity more efficient plants and by stimulating greater use of electricity within its area. To continue these financial trends, the company planned to replace an old plant by a plant with triple the capacity of its largest plant.
The company’s plan as described above assumed each of the following EXCEPT:
(A) Demand for electricity within the company’s area of service would increase in the future.
(B) Expenses would not rise beyond the level that could be compensated for by efficiency or volume of operation, or both.
(C) The planned plant would be sufficiently reliable in service to contribute a net financial benefit to the company as a whole.
(D) Safety measures to be instituted for the new plant would be the same as those for the plant it would replace.
(E) The tripling of capacity would not result in insuperable technological obstacles to efficiency.
Manager
Joined: 30 May 2009
Posts: 214

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26 Jun 2009, 08:32
D looks good to me. All other answer choices must have been assumed by the argument.
Senior Manager
Joined: 25 Mar 2009
Posts: 300

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26 Jun 2009, 13:44
Agree D seems like the correct choice.
Director
Joined: 05 Jun 2009
Posts: 805
WE 1: 7years (Financial Services - Consultant, BA)

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27 Jun 2009, 23:27
agree with D
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Manager
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27 Jun 2009, 23:37
acer2knight wrote:
An electric-power company gained greater profits and provided electricity to consumers at lower rates per unit of electricity by building larger-capacity more efficient plants and by stimulating greater use of electricity within its area. To continue these financial trends, the company planned to replace an old plant by a plant with triple the capacity of its largest plant.
The company’s plan as described above assumed each of the following EXCEPT:
(A) Demand for electricity within the company’s area of service would increase in the future.
(B) Expenses would not rise beyond the level that could be compensated for by efficiency or volume of operation, or both.
(C) The planned plant would be sufficiently reliable in service to contribute a net financial benefit to the company as a whole.
(D) Safety measures to be instituted for the new plant would be the same as those for the plant it would replace.
(E) The tripling of capacity would not result in insuperable technological obstacles to efficiency.

Hmm... doing this would be way too time consuming on the real test, but I'm going to apply negation to the assumptions:

A - If demand will NOT increase in the future, then there is no point in spending the money to generate electricity that people won't buy, so A is an important assumption.
B - If the expense of the plant replacement exceeds the efficiencies gained, than greater profits might not be achieved; this assumption is important too.
C - If the plant is NOT sufficiently reliable to contribute financially, then the replacement might not be worth the cost;
E - One of the major reasons for increased profits is increased efficiency, if tripling capacity canNOT be done efficiently, then again, the costs might exceed the benefits.

(D) seems to be the best answer here. Again, using negation: safety measures will NOT be the same for the new plant as for the old one. This alone does not undermine the plan; maybe the safety measures will be improved? If so, this could further improve efficiency & lower maintenance costs. Even if this argument fell apart, the company's plan will not automatically do so. So I would bet my GMAT score on (D) in a real test.

EDIT: in addition, all other choices refer directly to either financial profit or efficiency - the two reasons to which increased profit is directly attributed in the original info, (D) is the only one that does not refer to any of the two reasons.

Last edited by GMATaddict on 30 Jun 2009, 10:34, edited 1 time in total.
Manager
Joined: 24 May 2009
Posts: 102

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28 Jun 2009, 06:49
It's D for me too.
Manager
Joined: 14 May 2009
Posts: 141
Schools: AGSM '16

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28 Jun 2009, 07:16
I'd go with D too.
Re: Electricity   [#permalink] 28 Jun 2009, 07:16
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# An electric-power company gained greater profits and

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