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# Technological improvements and reduced equipment costs have

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Manager
Joined: 02 Jul 2004
Posts: 218
Technological improvements and reduced equipment costs have [#permalink]

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12 Jul 2004, 08:22
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Skip this post if you are familiar with this question. OA and explanation will follow

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-tired, power plants.
(E) When the price of oil increases, reserves of oil not previously worth exploiting become economically viable.
Director
Joined: 13 Nov 2003
Posts: 960
Location: Florida

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12 Jul 2004, 13:39
see if you get the answer here: http://www.gmatclub.com/phpbb/viewtopic ... thirtyfive

else I will try to explain.
Senior Manager
Joined: 22 Jun 2004
Posts: 392
Location: Bangalore, India
Re: CR from ETS: solar energy [#permalink]

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12 Jul 2004, 23:49
I think it is E.
E explains that because of reserves of oil supply, the economic viability is feasible.
B is a close contestant though. However, it looks out of scope.

OlegC wrote:
Skip this post if you are familiar with this question. OA and explanation will follow

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-tired, power plants.
(E) When the price of oil increases, reserves of oil not previously worth exploiting become economically viable.

_________________

Awaiting response,

Thnx & Rgds,
Chandra

Senior Manager
Joined: 22 Jun 2004
Posts: 392
Location: Bangalore, India

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14 Jul 2004, 06:41
Hi dj * olegc,

I am awaiting the answer with explanation. Somehow, I am clueless on this.

dj wrote:
see if you get the answer here: http://www.gmatclub.com/phpbb/viewtopic ... thirtyfive

else I will try to explain.

_________________

Awaiting response,

Thnx & Rgds,
Chandra

Manager
Joined: 02 Jul 2004
Posts: 218

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14 Jul 2004, 07:20
C

the answer is official, the explanations are mine

I hope you agree that B and D are clearly out of scope

E: there is nothing in the passage that indicates that the price of oil increased, therefore we are not interested what the effects of this increase may be

A: tempting, but note that what we are concerned with is ECONOMIC VIABILITY which depends on how much oil HAS TO COST for powerplants to switch to solar energy. In other words, ACTUAL price of oil has no effect on the 35 threshhold, it may be below or above this threshhold but the threshhold itself can remain unchanged

C: because the efficiency has improved, powerplants now need LESS OIL to produce the same amount of energy (per month). Thus, they can now spend LESS MONEY on oil (per month). Despite the fact that solar energy is now more lucrative than before, so is conventional oil-energy. And while we could expect the threshhold to decrease, it did not move because there was no change IN BALANCE OF COMPARATIVE COST of solar energy and oil-energy

Thus, C is a valid explanation
Senior Manager
Joined: 22 Jun 2004
Posts: 392
Location: Bangalore, India

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14 Jul 2004, 07:38
Thanks Olegc. I need to improve my thinking. I could not correlate many things in the argument.

OlegC wrote:
C

the answer is official, the explanations are mine

I hope you agree that B and D are clearly out of scope

E: there is nothing in the passage that indicates that the price of oil increased, therefore we are not interested what the effects of this increase may be

A: tempting, but note that what we are concerned with is ECONOMIC VIABILITY which depends on how much oil HAS TO COST for powerplants to switch to solar energy. In other words, ACTUAL price of oil has no effect on the 35 threshhold, it may be below or above this threshhold but the threshhold itself can remain unchanged

C: because the efficiency has improved, powerplants now need LESS OIL to produce the same amount of energy (per month). Thus, they can now spend LESS MONEY on oil (per month). Despite the fact that solar energy is now more lucrative than before, so is conventional oil-energy. And while we could expect the threshhold to decrease, it did not move because there was no change IN BALANCE OF COMPARATIVE COST of solar energy and oil-energy

Thus, C is a valid explanation

_________________

Awaiting response,

Thnx & Rgds,
Chandra

14 Jul 2004, 07:38
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