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# Deregulation of electricity markets in the United States has

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Manager
Joined: 07 May 2008
Posts: 71
Deregulation of electricity markets in the United States has  [#permalink]

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23 May 2010, 10:31
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(N/A)

Question Stats:

73% (01:33) correct 27% (02:02) wrong based on 371 sessions

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Deregulation of electricity markets in the United States has resulted in supply disruptions and in higher prices for consumers. Properly understood, however, this phenomenon does not cast doubt on the economic principle that free-market competition is generally more efficient than state planning. Certain particularities of electricity as a commodity - including the impossibility of storing electricity, the inelasticity of demand for electricity, and the high barriers to entry for new producers - are peculiar obstacles to the creation of competitive electricity markets.

In the above argument, the two portions in boldface play which of the following roles?

A.The first is a historical claim that the author rejects; the second is the theoretical basis for his rejection of that claim.
B.The first describes an apparent exception to a theory that the author accepts as true; the second is that theory.
C.The first is the basis for the author's critique of conventional economics; the second is his summary of conventional economic thought.
D.The first describes an event that the author believes to be unusual; the second is the author's explanation of why this unusual event occured.
E.The first is a particular example of a broader trend; the second is that trend.
Manager
Joined: 25 May 2010
Posts: 128

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27 May 2010, 00:48
5
sh00nya wrote:
Deregulation of electricity markets in the United States has resulted in supply disruptions and in higher prices for consumers. Properly understood, however, this phenomenon does not cast doubt on the economic principle that free-market competition is generally more efficient than state planning. Certain particularities of electricity as a commodity - including the impossibility of storing electricity, the inelasticity of demand for electricity, and the high barriers to entry for new producers - are peculiar obstacles to the creation of competitive electricity markets.

In the above argument, the two portions in boldface play which of the following roles?

A.The first is a historical claim that the author rejects; the second is the theoretical basis for his rejection of that claim.
B.The first describes an apparent exception to a theory that the author accepts as true; the second is that theory.
C.The first is the basis for the author's critique of conventional economics; the second is his summary of conventional economic thought.
D.The first describes an event that the author believes to be unusual; the second is the author's explanation of why this unusual event occured.
E.The first is a particular example of a broader trend; the second is that trend.

Tip on Bold-face questions: Do not try to formulate a relationship between the two portions in bold!! Instead, your job is to track the relationship between each sentence/clause and the preceding sentence.

Thus, the first sentence (in bold) says that deregulation made the electricity market (specific) inefficient.

The second sentence (note the 'however') says that this specific case does not cast doubt on a general principle-- just the principle is in bold! Interpretation: The author is not critiquing the principle.

The remainder of the argument explains why the principle still holds despite the exceptional case.

If this helped, kindly give Kudos! For more CR tips, check out gmaxonline
##### General Discussion
Manager
Joined: 24 Jul 2009
Posts: 244

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23 May 2010, 11:37
1
sh00nya wrote:
Deregulation of electricity markets in the United States has resulted in supply disruptions and in higher prices for consumers. Properly understood, however, this phenomenon does not cast doubt on the economic principle that free-market competition is generally more efficient than state planning. Certain particularities of electricity as a commodity - including the impossibility of storing electricity, the inelasticity of demand for electricity, and the high barriers to entry for new producers - are peculiar obstacles to the creation of competitive electricity markets.

In the above argument, the two portions in boldface play which of the following roles?

A.The first is a historical claim that the author rejects; the second is the theoretical basis for his rejection of that claim.>>> First statement is not a "historical claim".
B.The first describes an apparent exception to a theory that the author accepts as true; the second is that theory. >>> IMO, Correct
C.The first is the basis for the author's critique of conventional economics; the second is his summary of conventional economic thought. >>> Nothing has been said about conventional economics
D.The first describes an event that the author believes to be unusual; the second is the author's explanation of why this unusual event occured. >>> Second is a generalization/theory
E.The first is a particular example of a broader trend; the second is that trend.>>> First is an unusual example..

OA plz.
Senior Manager
Affiliations: SPG
Joined: 15 Nov 2006
Posts: 302

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24 May 2010, 02:34
IMO C

A.The first is a historical claim that the author rejects; the second is the theoretical basis for his rejection of that claim. the first boldface is not rejected by the author
B.The first describes an apparent exception to a theory that the author accepts as true; the second is that theory. the first boldface is not an exception to a theory as author states that in the second sentence
C.The first is the basis for the author's critique of conventional economics; the second is his summary of conventional economic thought. Correct
D.The first describes an event that the author believes to be unusual; the second is the author's explanation of why this unusual event occured.
Close contender for Correct answer. However, I don't think the author finds the even unusual
E.The first is a particular example of a broader trend; the second is that trend.[/quote]
The first is not a trend
VP
Joined: 17 Feb 2010
Posts: 1121

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26 May 2010, 12:15
Is my analysis correct????

The theory is " free-market competition is generally more efficient than state planning" ===> meaning ==> state regulated (state planning) ==> no competition ==> hence less efficient

In U.S. ==> deregulation (no state regulation) has managed the competition (which is an exception to the theory)

Hence B.
Manager
Joined: 25 Aug 2011
Posts: 140
Location: India
GMAT 1: 730 Q49 V40
WE: Operations (Insurance)

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11 Oct 2011, 11:23
IMO it is B. The first theory is an exception to the theory generally accepted, which is the second statement
Director
Joined: 03 Aug 2012
Posts: 730
Concentration: General Management, General Management
GMAT 1: 630 Q47 V29
GMAT 2: 680 Q50 V32
GPA: 3.7
WE: Information Technology (Investment Banking)
Re: Deregulation of electricity markets in the United States has  [#permalink]

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02 Mar 2013, 09:36
1:45

B it is.

(1).No state planning leaded to => Supply disruption+Higher prices.
(2).However,acc. to thry "Free market + no State planning " = > is good for economy.

So, (1) is an exception to thry.

(2). Is that thry

Rgds,
TGC
Manager
Status: IF YOU CAN DREAM IT, YOU CAN DO IT
Joined: 03 Jul 2017
Posts: 203
Location: India
Re: Deregulation of electricity markets in the United States has  [#permalink]

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24 Nov 2017, 02:36
I have a trouble understanding this complete argument. Can someone help me understand this in some better. Thank you
Re: Deregulation of electricity markets in the United States has &nbs [#permalink] 24 Nov 2017, 02:36
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