GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c : Critical Reasoning (CR)

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sanjitscorps18

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

20 Jul 2022, 02:27

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Selta ---developing--> environment friendly variation (diesel)
Market --- needs --> electric vehicles
EV --more environmentally friendly --> diesel vehicles
EV ---profit margin--> diesel vehicles

A. Electric vehicles are not as environmentally friendly as generally thought, because they are charged by sources that burn diesel to generate electricity.
--> Doesn't explain why Selta chooses to develop the diesel variant

B. Selta’s management is led by people who are not very concerned about developing environmentally friendly technologies.
--> Doesn't explain the economic benefits when clearly EVs have higher profit margin

C. The R&D team in Selta has a thorough knowledge in development of diesel engines.
--> Irrelevant

D. Electric vehicles are practically maintenance free, whereas diesel vehicles need periodic maintenance including replacement of costly spare parts.
--> This would explain why Diesel is economically better for Selta. Continuous maintenance and selling parts would regularly bring in profits

E. The diesel vehicles can also incorporate the safety features typically available in electrical vehicles.
--> Safety is out of scope of the argument

IMHO Option D

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

20 Jul 2022, 03:02

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Selta is a middle sized automobile company, which is currently spending a lot in developing an environment friendly variation of its existing vehicle that runs on diesel.

However, the market now needs electric vehicles, which are more environmentally friendly than diesel vehicles, and hence the profit margin from selling electric vehicles is much higher than that from selling diesel vehicles.

Which of the following options, if true, gives an economic explanation for Selta's investments in the less profitable vehicle of the two mentioned in the passage above?

The correct answer will impact the statement in BOLD .

A. Electric vehicles are not as environmentally friendly as generally thought, because they are charged by sources that burn diesel to generate electricity. Incorrect. It doesn't matter whether Electric vehicles are environmentally friendly !!

B. Selta’s management is led by people who are not very concerned about developing environmentally friendly technologies. Out of scope.

C. The R&D team in Selta has a thorough knowledge in development of diesel engines. Out of scope.

D. Electric vehicles are practically maintenance free, whereas diesel vehicles need periodic maintenance including replacement of costly spare parts. Voila!! This is a legit reason as to why Selta company would still choose to stick with its plan of developing an environment friendly variation of diesel vehicle.

E. The diesel vehicles can also incorporate the safety features typically available in electrical vehicles. Incorrect.

IMO Option D

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

20 Jul 2022, 03:13

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Imo D

Selta is investing in a less profitable vehicle. We need to find an economic explanation for Selta's investment. Basically which gives Selta some profitability over the other vehicle investment.

A. Electric vehicles are not as environmentally friendly as generally thought, because they are charged by sources that burn diesel to generate electricity.
We don't need to dispute on what is already given in the argument. Argument says that electric vehicles are more environment friendly.

B. Selta’s management is led by people who are not very concerned about developing environmentally friendly technologies.
It shows that Selta has made a false decision to invest on the diesel vehicle because of its management.

C. The R&D team in Selta has a thorough knowledge in development of diesel engines.
Again doesn't give any economical reason of it's investment in diesel vehicles.

D. Electric vehicles are practically maintenance free, whereas diesel vehicles need periodic maintenance including replacement of costly spare parts.
Correct. It shows that the company will earn more profit through the diesel vehicles as they require periodic maintenance.

E. The diesel vehicles can also incorporate the safety features typically available in electrical vehicles.
Doesn't explain how diesel investment is better than the electrical vehicle investment.

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

20 Jul 2022, 04:11

I will go with Answer D.

Since it's less profitable to sell diesel vehicles, it can still be interesting to win on the long term regarding opex cost of maintenance.

Answer D

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

20 Jul 2022, 04:41

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Answer: D

Selta is a middle sized automobile company, which is currently spending a lot in developing an environment friendly variation of its existing vehicle that runs on diesel. However, the market now needs electric vehicles, which are more environmentally friendly than diesel vehicles, and hence the profit margin from selling electric vehicles is much higher than that from selling diesel vehicles.

Which of the following options, if true, gives an economic explanation for Selta's investments in the less profitable vehicle of the two mentioned in the passage above?

We are looking for an option which will explain how Selta will be able to generate more profits by developing an environment friendly variation of existing vehicle than by inventing in electric vehicle.

A. Electric vehicles are not as environmentally friendly as generally thought, because they are charged by sources that burn diesel to generate electricity. --> Incorrect. This provides an environment friendly explanation and not an economic explanation.

B. Selta’s management is led by people who are not very concerned about developing environmentally friendly technologies. --> Incorrect. goes against the premise that Selta is spending on developing environment friendly variation of existing vehicle.

C. The R&D team in Selta has a thorough knowledge in development of diesel engines. --> Incorrect. R&D teams knowledge is out of scope for economic explanation.

D. Electric vehicles are practically maintenance free, whereas diesel vehicles need periodic maintenance including replacement of costly spare parts. --> Correct. This provides an economic explanation on why Selta is investing on developing a variation when profit margin on electric vehicle is high. Profit on selling electric vehicle is one time deal whereas with environment friendly diesel vehicle Selta will be able to generate money on a regular periodic basis based on maintenance and replacement of spare parts. In long term, variation of diesel vehicle makes sense to generate more money.

E. The diesel vehicles can also incorporate the safety features typically available in electrical vehicles. --> Incorrect. Safety features are out of scope.

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

20 Jul 2022, 05:38

Selta is a middle sized automobile company, which is currently spending a lot in developing an environment friendly variation of its existing vehicle that runs on diesel. However, the market now needs electric vehicles, which are more environmentally friendly than diesel vehicles, and hence the profit margin from selling electric vehicles is much higher than that from selling diesel vehicles.

Which of the following options, if true, gives an economic explanation for Selta's investments in the less profitable vehicle of the two mentioned in the passage above?

A. Electric vehicles are not as environmentally friendly as generally thought, because they are charged by sources that burn diesel to generate electricity.
Additional information presented here..not concerned with economic explanation for pursuing diesel vehicles despite lower profit margins

B. Selta’s management is led by people who are not very concerned about developing environmentally friendly technologies.
Non attention of management regarding environment friendly technologies not an economic explanation for pursuing diesel vehicles despite lower profit margins

C. The R&D team in Selta has a thorough knowledge in development of diesel engines.
If R&D team in Selta has a thorough knowledge in development of diesel engines, and not in development of electric vehicles..it will involve much higher expenditure for hiring an experienced R&D team possessing a thorough knowledge in development of electric vehicles..Indded, provides an economic explanation for pursuing diesel vehicles

D. Electric vehicles are practically maintenance free, whereas diesel vehicles need periodic maintenance including replacement of costly spare parts.
Sale of vehicles is being discussed, not the maintenance costs..Out of scope..

E. The diesel vehicles can also incorporate the safety features typically available in electrical vehicles.
Irrelevant, since safety features will not contribute towards economic expanation..

Correct option is (C)

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

20 Jul 2022, 06:01

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Bunuel wrote:

Selta is a middle sized automobile company, which is currently spending a lot in developing an environment friendly variation of its existing vehicle that runs on diesel. However, the market now needs electric vehicles, which are more environmentally friendly than diesel vehicles, and hence the profit margin from selling electric vehicles is much higher than that from selling diesel vehicles.

Which of the following options, if true, gives an economic explanation for Selta's investments in the less profitable vehicle of the two mentioned in the passage above?

A. Electric vehicles are not as environmentally friendly as generally thought, because they are charged by sources that burn diesel to generate electricity.

B. Selta’s management is led by people who are not very concerned about developing environmentally friendly technologies.

C. The R&D team in Selta has a thorough knowledge in development of diesel engines.

D. Electric vehicles are practically maintenance free, whereas diesel vehicles need periodic maintenance including replacement of costly spare parts.

E. The diesel vehicles can also incorporate the safety features typically available in electrical vehicles.

This question was provided by GMAT Club
for the GMAT Club World Cup Competition

Compete, Get Better, Win prizes and more

Thank you sayantanc2k for the question!!!

Although demand is for electric vehicles and hence more profit as well, Selta is still spending a lot of money developing an environmentally friendly diesel engine car. Why? For what possible economic reason?
Let us examine the answer choices

A. Electric vehicles are not as environmentally friendly as generally thought, because they are charged by sources that burn diesel to generate electricity.

First of all, does not give any economic explanation and secondly, it is irrelevant because question is about Selta and their investment, not about electric vehicles' environmental friendliness. ELIMINATE

B. Selta’s management is led by people who are not very concerned about developing environmentally friendly technologies.

Again, nothing economic in here and also incorrect because Selta is developing an environment friendly diesel engine. ELIMINATE

C. The R&D team in Selta has a thorough knowledge in development of diesel engines.

They might but nothing mentioned here about their knowledge on electric engines and also nothing about economics. ELIMINATE

D. Electric vehicles are practically maintenance free, whereas diesel vehicles need periodic maintenance including replacement of costly spare parts.

HERE! Selta is developing environment friendly diesel engines to keep in norm with environment and also safeguarding their future income from after sales maintenance. Electric vehicles might give initial extra profit but since they require no maintenance, they will not bring in sustained revenue, which diesel engines will. ANSWER

E. The diesel vehicles can also incorporate the safety features typically available in electrical vehicles.

It is a point but not economic in nature and irrelevant to the question asked. ELIMINATE

Answer - D

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

20 Jul 2022, 06:11

Selta is a middle sized automobile company, which is currently spending a lot in developing an environment friendly variation of its existing vehicle that runs on diesel. However, the market now needs electric vehicles, which are more environmentally friendly than diesel vehicles, and hence the profit margin from selling electric vehicles is much higher than that from selling diesel vehicles.

Which of the following options, if true, gives an economic explanation for Selta's investments in the less profitable vehicle of the two mentioned in the passage above?

We need to answer the question on the basis that is economically good

A. Electric vehicles are not as environmentally friendly as generally thought, because they are charged by sources that burn diesel to generate electricity.
This seems to answer environmentally which is good

B. Selta’s management is led by people who are not very concerned about developing environmentally friendly technologies.
This is negative and bad for the company

C. The R&D team in Selta has a thorough knowledge in development of diesel engines.
Seems correct

D. Electric vehicles are practically maintenance free, whereas diesel vehicles need periodic maintenance including replacement of costly spare parts.
This is also opposite of whta we want

E. The diesel vehicles can also incorporate the safety features typically available in electrical vehicles.
No effect

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

20 Jul 2022, 06:16

A. Electric vehicles are not as environmentally friendly as generally thought, because they are charged by sources that burn diesel to generate electricity.--Correct

B. Selta’s management is led by people who are not very concerned about developing environmentally friendly technologies. Out of scope.OUT

C. The R&D team in Selta has a thorough knowledge in development of diesel engines.Out of scope.OUT

D. Electric vehicles are practically maintenance free, whereas diesel vehicles need periodic maintenance including replacement of costly spare parts.Out of scope.OUT

E. The diesel vehicles can also incorporate the safety features typically available in electrical vehicles.Out of scope.OUT

OA:A

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

20 Jul 2022, 06:38

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According to the passage the market needs electric vehicles, which are more environmentally friendly than diesel vehicles, and hence the profit margin from selling electric vehicles is much higher than that from selling diesel vehicles.
But we need to find something that can pushes the company to invest on the less profitable car,

A. Electric vehicles are not as environmentally friendly as generally thought, because they are charged by sources that burn diesel to generate electricity.
irrelevant, nothing to be related to the profits and margins, Wrong answer
B. Selta’s management is led by people who are not very concerned about developing environmentally friendly technologies.
that the management is not concerned about environmentally developed technologies is irrelevant to our objective which is something economic related to margin and profits, Wrong answer
C. The R&D team in Selta has a thorough knowledge in development of diesel engines.
irrelevant, nothing to be related to the profits and margins, Wrong answe
D. Electric vehicles are practically maintenance-free, whereas diesel vehicles need periodic maintenance including replacement of costly spare parts.
This is the correct answer
If the maintenance is free on electrical vehicles, then the company once saling cars, it she can't charge anything afterwards !
But if the vehicles need periodic maintenance including replacement of costly spare parts, then the buyer would come back to the company to pay for his replacement, and that could generate more money !
E. The diesel vehicles can also incorporate the safety features typically available in electrical vehicles.
safety is irrelevant here

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

20 Jul 2022, 07:57

Selta is a middle sized automobile company, which is currently spending a lot in developing an environment friendly variation of its existing vehicle that runs on diesel. However, the market now needs electric vehicles, which are more environmentally friendly than diesel vehicles, and hence the profit margin from selling electric vehicles is much higher than that from selling diesel vehicles.

Which of the following options, if true, gives an economic explanation for Selta's investments in the less profitable vehicle of the two mentioned in the passage above?

A. Electric vehicles are not as environmentally friendly as generally thought, because they are charged by sources that burn diesel to generate electricity.

B. Selta’s management is led by people who are not very concerned about developing environmentally friendly technologies.

C. The R&D team in Selta has a thorough knowledge in development of diesel engines.

D. Electric vehicles are practically maintenance free, whereas diesel vehicles need periodic maintenance including replacement of costly spare parts.

E. The diesel vehicles can also incorporate the safety features typically available in electrical vehicles.

The best answer is B

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

20 Jul 2022, 07:58

Selta is a middle sized automobile company, which is currently spending a lot in developing an environment friendly variation of its existing vehicle that runs on diesel. However, the market now needs electric vehicles, which are more environmentally friendly than diesel vehicles, and hence the profit margin from selling electric vehicles is much higher than that from selling diesel vehicles.

Which of the following options, if true, gives an economic explanation for Selta's investments in the less profitable vehicle of the two mentioned in the passage above?

A. Electric vehicles are not as environmentally friendly as generally thought, because they are charged by sources that burn diesel to generate electricity. Correct

it can be a reason for investing in less profitable diesel engine vehicle

B. Selta’s management is led by people who are not very concerned about developing environmentally friendly technologies. Incorrect

dont know about this

C. The R&D team in Selta has a thorough knowledge in development of diesel engines. Incorrect

may be true, but cat be a reason; it cant show a relation between loss and profit

D. Electric vehicles are practically maintenance free, whereas diesel vehicles need periodic maintenance including replacement of costly spare parts. Incorrect

it against Selta company

E. The diesel vehicles can also incorporate the safety features typically available in electrical vehicles. Incorrect

it cant explain why Selta company invest in less profitable car

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

20 Jul 2022, 08:03

Expert Reply

Bunuel wrote:

Selta is a middle sized automobile company, which is currently spending a lot in developing an environment friendly variation of its existing vehicle that runs on diesel. However, the market now needs electric vehicles, which are more environmentally friendly than diesel vehicles, and hence the profit margin from selling electric vehicles is much higher than that from selling diesel vehicles.

Which of the following options, if true, gives an economic explanation for Selta's investments in the less profitable vehicle of the two mentioned in the passage above?

A. Electric vehicles are not as environmentally friendly as generally thought, because they are charged by sources that burn diesel to generate electricity.

B. Selta’s management is led by people who are not very concerned about developing environmentally friendly technologies.

C. The R&D team in Selta has a thorough knowledge in development of diesel engines.

D. Electric vehicles are practically maintenance free, whereas diesel vehicles need periodic maintenance including replacement of costly spare parts.

E. The diesel vehicles can also incorporate the safety features typically available in electrical vehicles.

This question was provided by GMAT Club
for the GMAT Club World Cup Competition

Compete, Get Better, Win prizes and more

Thank you sayantanc2k for the question!!!

Official Explanation is pinned as BEST Reply HERE.

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

22 Jul 2022, 06:15

Expert Reply

Kinshook wrote:

Premise 1: Selta is a middle sized automobile company, which is currently spending a lot in developing an environment friendly variation of its existing vehicle that runs on diesel.
Premise 2: However, the market now needs electric vehicles, which are more environmentally friendly than diesel vehicles.

Conclusion: Hence the profit margin from selling electric vehicles is much higher than that from selling diesel vehicles.

Asked: Which of the following options, if true, gives an economic explanation for Selta's investments in the less profitable vehicle of the two mentioned in the passage above?

Quote:

A. Electric vehicles are not as environmentally friendly as generally thought, because they are charged by sources that burn diesel to generate electricity.

Since electric vehicles are charged by sources that burn diesel to generate electricity, they are not more environmentally friendly than environment friendly variation of diesel vehicle. Therefore, Selta's investments in the less profitable vehicle of the two seems economically justified.
Correct

Quote:

B. Selta’s management is led by people who are not very concerned about developing environmentally friendly technologies.

The statement does not provide economic explanation for Selta's investments in the less profitable vehicle of the two since environmentally friendly vehicles have higher profit margins. It shows management incapability to develop environmentally friendly technologies.
Incorrect

Quote:

C. The R&D team in Selta has a thorough knowledge in development of diesel engines.

The statement does not provide economic explanation for Selta's investments in the less profitable vehicle of the two since environmentally friendly vehicles have higher profit margins. Even if the R&D team in Selta has a thorough knowledge in development of diesel engines, it should adapt newer higher profitable and environmentally friendly technologies.
Incorrect.

Quote:

D. Electric vehicles are practically maintenance free, whereas diesel vehicles need periodic maintenance including replacement of costly spare parts.

The statement does not provide economic explanation for Selta's investments in the less profitable vehicle of the two since environmentally friendly vehicles have higher profit margins since diesel vehicles are not only less environmentally friendly, but also need more periodic maintenance, making them even less attractive technology to invest in.
Incorrect

Quote:

E. The diesel vehicles can also incorporate the safety features typically available in electrical vehicles.

The statement does not provide economic explanation for Selta's investments in the less profitable vehicle of the two since environmentally friendly vehicles have higher profit margins since it is concerned with safety features of the vehicles.
Incorrect

IMO A

Hi, be careful about what is asked in the question: "economic explanation of Selta's investments". Is A an economic explanation of Selta's investments?

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

22 Jul 2022, 06:21

Expert Reply

Eeekta wrote:

Confused between A & E

A. Electric vehicles are not as environmentally friendly as generally thought, because they are charged by sources that burn diesel to generate electricity. - this is negating the core argument about the degree to which EVs are environment friendly - strong contender for the correct answer

E. The diesel vehicles can also incorporate the safety features typically available in electrical vehicles. - this is the best choice, since, as per the statement, the company can incorporate the safety benefits of an EV in the diesel variants. My only doubt is if the 'safety' feature could be something other than what we are referring to.

Experts please help.

Please see the above comment:
https://gmatclub.com/forum/gmat-club-wo ... l#p3048022

You need an "economic explanation"!

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

08 Aug 2022, 09:27

Bunuel wrote:

Selta is a middle sized automobile company, which is currently spending a lot in developing an environment friendly variation of its existing vehicle that runs on diesel. However, the market now needs electric vehicles, which are more environmentally friendly than diesel vehicles, and hence the profit margin from selling electric vehicles is much higher than that from selling diesel vehicles.

Which of the following options, if true, gives an economic explanation for Selta's investments in the less profitable vehicle of the two mentioned in the passage above?

A. Electric vehicles are not as environmentally friendly as generally thought, because they are charged by sources that burn diesel to generate electricity.

B. Selta’s management is led by people who are not very concerned about developing environmentally friendly technologies.

C. The R&D team in Selta has a thorough knowledge in development of diesel engines.

D. Electric vehicles are practically maintenance free, whereas diesel vehicles need periodic maintenance including replacement of costly spare parts.

E. The diesel vehicles can also incorporate the safety features typically available in electrical vehicles.

This question was provided by GMAT Club
for the GMAT Club World Cup Competition

Compete, Get Better, Win prizes and more

Thank you sayantanc2k for the question!!!

I was between (A) and (D)
i think both are explanation why the company invest in the less profitable vehicle, but the difference is that (D) gives and economic explanation for the investments. If diesel cars need more maintenance and replacement of parts, then is more convenient for the company to invest on that type of cars, that would lead income in the future (due to maintenance) than only in electric cars that are profitable just at the sale and not after sale.

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

23 Aug 2023, 20:45

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Re: GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c [#permalink]

23 Aug 2023, 20:45

GMAT Critical Reasoning (CR) Questions

GMAT Club World Cup 2022 (DAY 7): Selta is a middle sized automobile c