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# Innovations in production technology and decreases in the

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Innovations in production technology and decreases in the  [#permalink]

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13 Nov 2011, 05:35
3
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65% (hard)

Question Stats:

59% (02:13) correct 41% (02:41) wrong based on 442 sessions

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Innovations in production technology and decreases in the cost of equipment have made recycling paper into new paper products much more cost-efficient over the last twenty years. Despite these advances, though, the "point of price viability" (the price that new paper made from trees must reach to make recycled paper comparable in price) is unchanged at \$2.12 per ream of paper.

Which of the following, if true, most explains why the increased cost-efficiency of recycled paper has not lowered the point of price viability?

(A)The cost of unprocessed trees to make new paper has fallen dramatically.
(B)The decreases in the cost of recycling equipment have occurred despite increases in the cost of raw materials required to manufacture such equipment.
(C)Innovations in production technology have made it much more cost-efficient to produce new paper from trees.
(D)Most paper is made from the scraps and sawdust left after processing new trees for lumber, rather than directly from the trees themselves.
(E)When the price of planting new saplings to replace cut trees becomes more expensive, forests reserves not previously worth cutting become cost-effective to cut.

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13 Nov 2011, 08:24
1
Practicegmat wrote:
Innovations in production technology and decreases in the cost of equipment have made recycling paper into new paper products much more cost-efficient over the last twenty years. Despite these advances, though, the "point of price viability" (the price that new paper made from trees must reach to make recycled paper comparable in price) is unchanged at \$2.12 per ream of paper.

Which of the following, if true, most explains why the increased cost-efficiency of recycled paper has not lowered the point of price viability?

(A)The cost of unprocessed trees to make new paper has fallen dramatically. => Cost of raw material fallen, making the new paper decrease. However, the cost of recycle paper depends from the cost of new ones. Both 2 kinds simultaneously fallen. The gap of price not change.
(B)The decreases in the cost of recycling equipment have occurred despite increases in the cost of raw materials required to manufacture such equipment. => Cost of recycling make the cost of recycle paper decrease (in addition to advance tech). But the cost of raw material that make the recycle paper increases, making the cost recycle increase again. Cost of recycle is the same (we assume the rise and the reduce equal bicoz lacking of info).
(C)Innovations in production technology have made it much more cost-efficient to produce new paper from trees. => Yes, it is. This kind of innova also can make the new paper, so it decrease the cost of new parer. The gap between new and recycle is closer. Price do not change btw them
(D)Most paper is made from the scraps and sawdust left after processing new trees for lumber, rather than directly from the trees themselves. => out of scope
(E)When the price of planting new saplings to replace cut trees becomes more expensive, forests reserves not previously worth cutting become cost-effective to cut. => This answer make me very confuse because I am lack of understanding this stuff. But after carefully read again. I realize this choice wrong. Out of Scope

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13 Nov 2011, 09:27
I have a doubt regarding the wording of th question.

Does the passage mean to say that the price of paper manufactured from trees is low and it has to be increased little bit to match up with the price of the paper made by recycling.

Confusing..
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13 Nov 2011, 09:49
ksp wrote:
I have a doubt regarding the wording of th question.

Does the passage mean to say that the price of paper manufactured from trees (NEW PAPER) is low and it has to be increased little bit to match up with the price of the paper made by recycling.

Confusing..

Nope. The passage mean the machine that produce RECYCLE PAPER make the price of RP reduce. But not talking about the NEW PAPER (NP). The big surprise is the price of RP and NP is the same. SO, we have to find the answer that reduce the price of NP or the other factor that make the price of RP not change anymore.
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Re: Innovations in production technology and decreases in the  [#permalink]

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09 Sep 2013, 09:14
Practicegmat wrote:
Innovations in production technology and decreases in the cost of equipment have made recycling paper into new paper products much more cost-efficient over the last twenty years. Despite these advances, though, the "point of price viability" (the price that new paper made from trees must reach to make recycled paper comparable in price) is unchanged at \$2.12 per ream of paper.

Which of the following, if true, most explains why the increased cost-efficiency of recycled paper has not lowered the point of price viability?

(A)The cost of unprocessed trees to make new paper has fallen dramatically.
(B)The decreases in the cost of recycling equipment have occurred despite increases in the cost of raw materials required to manufacture such equipment.
(C)Innovations in production technology have made it much more cost-efficient to produce new paper from trees.
(D)Most paper is made from the scraps and sawdust left after processing new trees for lumber, rather than directly from the trees themselves.
(E)When the price of planting new saplings to replace cut trees becomes more expensive, forests reserves not previously worth cutting become cost-effective to cut.

Hi,

Can someone explain this paradox question.??

THanks,
Jai
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Re: Innovations in production technology and decreases in the  [#permalink]

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09 Sep 2013, 11:13
2
jaituteja wrote:
Practicegmat wrote:
Innovations in production technology and decreases in the cost of equipment have made recycling paper into new paper products much more cost-efficient over the last twenty years. Despite these advances, though, the "point of price viability" (the price that new paper made from trees must reach to make recycled paper comparable in price) is unchanged at \$2.12 per ream of paper.

Which of the following, if true, most explains why the increased cost-efficiency of recycled paper has not lowered the point of price viability?

(A)The cost of unprocessed trees to make new paper has fallen dramatically.
(B)The decreases in the cost of recycling equipment have occurred despite increases in the cost of raw materials required to manufacture such equipment.
(C)Innovations in production technology have made it much more cost-efficient to produce new paper from trees.
(D)Most paper is made from the scraps and sawdust left after processing new trees for lumber, rather than directly from the trees themselves.
(E)When the price of planting new saplings to replace cut trees becomes more expensive, forests reserves not previously worth cutting become cost-effective to cut.

Hi,

Can someone explain this paradox question.??

THanks,
Jai

See if the explanations here help you. It is discussed in detail here.

technological-improvements-and-reduced-equipment-costs-have-146797.html
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Re: Innovations in production technology and decreases in the  [#permalink]

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03 Apr 2016, 11:39
oh damn..took some time to comprehend what the point of price viability is..
if the price of the new paper is not increasing, then the recycled one will not be used.
the point of price viability remained unchanged, although it is cheaper now than before to recycle.
it must be true then the price for new paper decreased
C tells exactly this thing.
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Innovations in production technology and decreases in the  [#permalink]

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12 Jun 2016, 08:12
1

The paradox that needs to be resolved is :-
Explain why the increased cost-efficiency of recycled paper has not lowered the point of price viability?
Essentially it is asking about relative difference between cost of recycled paper and fresh paper.

Premise 1 ) Recycled paper is cheaper now
Premise 2) Cost efficiency of recycled paper is still high.

What the Question is asking is the why the relative difference in price of recycled paper and new fresh paper has not reduced?

Imagine your parents give you and your brother a math quiz each week
In your First math test you scored 90/100 marks and were the topper. Your brother scored 89/100 marks and was the loser.
In your second Math test you scored only 80/100 marks BUT you will still the topper.
How can this happen? Your performance has gone down, but you still won !! ?
This can happen If your brother's performance has also gone down compared to the first test. He was behind you in first test and he has gone further down in this test.
Here's comes into play the concept of relativity. Your performance has gone down and relative to your performance your brother performance has also gone down.

This is exactly what is happening in the question.
Cost of recycled paper is down but it has still not fallen to the level to the fresh paper ? why??? because fresh paper cost has also fallen further down.
The relative difference between the two cost is still the same.

TWENTY YEARS AGO }}}}}}=====> RECYCLED PAPER 10\$ FRESH PAPER 6\$ DIFFERENCE 4\$
NOW AT CURRENT TIME}}}} ====> RECYCLED PAPER 8\$ FRESH PAPER 4\$ DIFFERENCE 4\$

What option matches this fact ?

(C) Innovations in production technology have made it much more cost-efficient to produce new paper from trees.

Therefore the price of new paper has also gone down and the gap between the two types of paper is not closed.

Innovations in production technology and decreases in the cost of equipment have made recycling paper into new paper products much more cost-efficient over the last twenty years. Despite these advances, though, the "point of price viability" (the price that new paper made from trees must reach to make recycled paper comparable in price) is unchanged at \$2.12 per ream of paper.

Which of the following, if true, most explains why the increased cost-efficiency of recycled paper has not lowered the point of price viability?

(A)The cost of unprocessed trees to make new paper has fallen dramatically.
(B)The decreases in the cost of recycling equipment have occurred despite increases in the cost of raw materials required to manufacture such equipment.
(C)Innovations in production technology have made it much more cost-efficient to produce new paper from trees.
(D)Most paper is made from the scraps and sawdust left after processing new trees for lumber, rather than directly from the trees themselves.
(E)When the price of planting new saplings to replace cut trees becomes more expensive, forests reserves not previously worth cutting become cost-effective to cut.
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Re: Technological improvements and reduced equipment costs have  [#permalink]

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06 Aug 2017, 10:25
BrainLab wrote:
rohansherry wrote:
153. 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-fired, power plants.
(E) When the price of oil increases, reserves of oil not previously worth exploiting become economically
viable.

OA:C...pls explain the meaning of the sentence,

The latest developments in the CR area on GMAT is just annoying. It seems that the questions are just made more complex by language complexity. Old questions from OG13 were n times better than the new ones. Thanks GMAT, it's "very fair" towards non-native speakers.....

In this type of questions, we need to connect both parts of paradox sothat they can coexist. Answer choices that take only one part of the paradox into consideration are OUT.

(A) The cost of oil has fallen dramatically --> This one is the hardest one among the answer choices given. I'll just highlight one part of the argument The price per barrel to which oil would have to rise. I think the highlighted part is the key to eliminate (A). So, the mentioned price per barel is fixed/constant regardless of the oil price. Whether actual oil price is 1 or 20 it must rise to 35\$ (our fixed price)
(C) Technological changes have increased the efficiency of oil-fired power plants --> Derived on the answer choice by POE. I don't understand why this one is correct (may be bcs of poor english skills, but I know why the other answer choices are incorrect...

(B) The reduction in the cost of solar-power equipment has occurred despite increased raw material costs for that equipment. --> This info doesn't help us to resolve the paradox. It gives us just some useless info about what we already know.
(D) Most electricity is generated by coal-fired or nuclear, rather than oil-fired, power plants. --> It doesn't help us to resolve the paradox.
(E) When the price of oil increases, reserves of oil not previously worth exploiting become economically viable --> We are not interested in the change in price of oil (see expl. for answer choice A)

I disagree saying that the price per barrel oil would have to rise doesn't preclude that oil didn't drop in value over that time period. Since if it went from \$100 to \$65 the price it would need to rise is still \$35.
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Re: Technological improvements and reduced equipment costs have  [#permalink]

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06 Aug 2017, 10:28
happyface101 wrote:
People who are confused by why A isn't right, HERE IS YOUR ANSWER:

Read carefully again: "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"

Note, this is saying "price to which oil would have to rise" -- this means oil would have to rise TO \$35 for Solar to be cheaper than Oil-fired plants. This does not mean oil would have to rise BY \$35.

Example:
Solar Power Cost: \$50
Oil Power Cost: \$50 (Oil per barrel costs \$35 + Oil processing cost \$15)

Solar Power Cost (post technological improvement): \$40
Oil Power Cost: \$40 (Oil per barrel costs \$35 + oil processing cost \$X) -- note \$X MUST BE LOWER for total Oil Power cost to be \$40 AND oil per barrel to remain unchanged at \$35. So, \$X is \$5 -- oil processing cost is lower --> answer is C.

Kudos if this helps you!

So according to you we need to assume that oil price is a constant starting point. I am not buying it. I am moving on this is a bad question.
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Re: Technological improvements and reduced equipment costs have  [#permalink]

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07 Aug 2017, 03:53
SamBoyle wrote:

So according to you we need to assume that oil price is a constant starting point. I am not buying it. I am moving on this is a bad question.

Just to point out here - this is not a bad question. It is a high level Gmat Prep (official) question. So it might be worth your while to put in the effort to understand the solution. The logic is undeniable.
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Re: Technological improvements and reduced equipment costs have  [#permalink]

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07 Aug 2017, 05:22
rohansherry wrote:
153. 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.

Solar energy more cost efficient now BUT economic viability unchanged. WHY?

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?

Quote:
(A) The cost of oil has fallen dramatically.

Great to know, but isn't solar energy FREE of cost for about 12 hours a day? Then why would oil still be economically more viable? Maybe if we can produce more electricity per unit of oil, then it would make sense.

Quote:
(B) The reduction in the cost of solar-power equipment has occurred despite increased raw material costs for that equipment.

This is good news, but it's irrelevant and doesn't help explain the discrepancy. OUT!

Quote:
(C) Technological changes have increased the efficiency of oil-fired power plants.
This looks good. If the tech changes have increased the efficiency of oil-fired power plants, it means these plants can produce more electricity per unit of oil. This would explain explain why the viability of solar plants has remained unchanged, as oil plants have become even more viable. KEEP!

Quote:
(D) Most electricity is generated by coal-fired or nuclear, rather than oil-fired, power plants.
This is irrelevant. OUT!

Quote:
(E) When the price of oil increases, reserves of oil not previously worth exploiting become economically viable.

We are concerned with the viability of new oil plants vs. new solar plants and not new reserves of oil. OUT!

Between A & C, C is definitely better.

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Re: Technological improvements and reduced equipment costs have  [#permalink]

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07 Aug 2017, 08:02
rohansherry wrote:
153. 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-fired, power plants.
(E) When the price of oil increases, reserves of oil not previously worth exploiting become economically viable.

OA:C...pls explain the meaning of the sentence,

Premise 1:Technological improvements and reduced equipment costs have made converting solar energy directly into electricity far more cost-efficient in the last decade

Conclusion: 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.

A Even if the price of oil has decreased we can not be sure that it has increased cost efficiency
B is irrelevant to the argument
C is correct as it gives us a reason why oil fired plants are still widely used more electricity per barrel of oil
D Out of scope
E Out of scope
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Re: Technological improvements and reduced equipment costs have  [#permalink]

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08 Aug 2017, 09:29
VeritasPrepKarishma wrote:
SamBoyle wrote:

So according to you we need to assume that oil price is a constant starting point. I am not buying it. I am moving on this is a bad question.

Just to point out here - this is not a bad question. It is a high level Gmat Prep (official) question. So it might be worth your while to put in the effort to understand the solution. The logic is undeniable.

Thanks for the response but actually it is a bad question because I score 90% on CR (you can even see that on your very own Veritas site I have an account) and there is only 1-2 questions I have seen that I think are bad and this is one of them. So I am not concerned to get this type of question wrong. if one comes up so be it. This isn't the norm.

The advice don't question the GMAT is correct. It is super unproductive to waste your time doing it. However, if you have done 400 CR questions and you only question 1-2 of them then I believe it's fine. The GMAT isn't flawless and can clearly make mistakes. Generally they are near flawless. This question sucks on so many levels.

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

Again if we start that solar technology costs the equivalent of \$145 per barrel. Let's say oil is \$110.

Technological improvements make solar now \$75 and oil is now \$40

C) Doesn't even make sense because we're talking about the solar price as measured per barrel of oil. I am happy to get this question wrong. And I would damage myself jumping through the mental gymnastics as you have to get to answer C.
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Re: Technological improvements and reduced equipment costs have  [#permalink]

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09 Aug 2017, 09:10
Also, to add this isn't to say C is wrong. However, the price of oil dropping dramatically is clearly going to have a bigger impact than increased efficiency.

Dropping dramatically implies a big drop 20-30% if not more? Improved efficiencies is very vague and can mean anything. In this case, I would be looking for the strong language of A over the weak language of C. It doesn't take a rocket scientist to figure that oil is a pretty big input cost of an oil plant!

Let me change the question to a more real world example to illustrate:

153. 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 powered cars (that is, the price per barrel to which oil would have to rise in order for gasoline to be more expensive than powered cars) is unchanged at \$1 per liter.

Which of the following, if true, does most to help explain why the increased cost-efficiency of solar powered cars has not decreased its threshold of economic viability?

(A) The cost of oil has fallen dramatically. It used to be cost me \$2 to fill up my car now it costs me \$1. For Kilowatt Hours to fill up my car it costs me \$3 and now it costs me \$2. Still above my cost
(B) The reduction in the cost of solar-power equipment has occurred despite increased raw material costs for that equipment. Okay but a reduction still happened wrong!
(C) Technological changes have increased the efficiency of oil-fired power plants. Okay this would lower my cost. This answer looks good do. But efficiency isn't the same as a word like dramatic! Efficiency could mean 1% or 2% or 100%. It is a vague word implying anything greater than 0%
(D) Most electricity is generated by coal-fired or nuclear, rather than oil-fired, power plants. (unrelated as we are discussing a comparison between oil and solar only.
(E) When the price of oil increases, reserves of oil not previously worth exploiting become economically viable. Adds useless information about what happens when oil goes up clearly wrong.
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Re: Technological improvements and reduced equipment costs have  [#permalink]

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09 Aug 2017, 13:11
akshayk wrote:
rohansherry wrote:
153. 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.

Solar energy more cost efficient now BUT economic viability unchanged. WHY?

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?

Quote:
(A) The cost of oil has fallen dramatically.

Great to know, but isn't solar energy FREE of cost for about 12 hours a day? Then why would oil still be economically more viable? Maybe if we can produce more electricity per unit of oil, then it would make sense.

Quote:
(B) The reduction in the cost of solar-power equipment has occurred despite increased raw material costs for that equipment.

This is good news, but it's irrelevant and doesn't help explain the discrepancy. OUT!

Quote:
(C) Technological changes have increased the efficiency of oil-fired power plants.
This looks good. If the tech changes have increased the efficiency of oil-fired power plants, it means these plants can produce more electricity per unit of oil. This would explain explain why the viability of solar plants has remained unchanged, as oil plants have become even more viable. KEEP!

Quote:
(D) Most electricity is generated by coal-fired or nuclear, rather than oil-fired, power plants.
This is irrelevant. OUT!

Quote:
(E) When the price of oil increases, reserves of oil not previously worth exploiting become economically viable.

We are concerned with the viability of new oil plants vs. new solar plants and not new reserves of oil. OUT!

Between A & C, C is definitely better.

You're assuming far too much in A. No one knows what solar energy is in this fake world. You can't just make random real world assumption. Though, ironically, you're real world assumptions are super wrong and Solar is a lot more than oil. People following your advice of making assumptions that solar is free 10 hrs a day will hurt them from answering questions right. That's a bad way to think about the answer.

I love when people mindlessly write a solution that is based on the correct answer not logic. It helps no one.
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Re: Technological improvements and reduced equipment costs have  [#permalink]

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09 Aug 2017, 15:13
Samuelboyle96 wrote:
akshayk wrote:
rohansherry wrote:
153. 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.

Solar energy more cost efficient now BUT economic viability unchanged. WHY?

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?

Quote:
(A) The cost of oil has fallen dramatically.

Great to know, but isn't solar energy FREE of cost for about 12 hours a day? Then why would oil still be economically more viable? Maybe if we can produce more electricity per unit of oil, then it would make sense.

Quote:
(B) The reduction in the cost of solar-power equipment has occurred despite increased raw material costs for that equipment.

This is good news, but it's irrelevant and doesn't help explain the discrepancy. OUT!

Quote:
(C) Technological changes have increased the efficiency of oil-fired power plants.
This looks good. If the tech changes have increased the efficiency of oil-fired power plants, it means these plants can produce more electricity per unit of oil. This would explain explain why the viability of solar plants has remained unchanged, as oil plants have become even more viable. KEEP!

Quote:
(D) Most electricity is generated by coal-fired or nuclear, rather than oil-fired, power plants.
This is irrelevant. OUT!

Quote:
(E) When the price of oil increases, reserves of oil not previously worth exploiting become economically viable.

We are concerned with the viability of new oil plants vs. new solar plants and not new reserves of oil. OUT!

Between A & C, C is definitely better.

You're assuming far too much in A. No one knows what solar energy is in this fake world. You can't just make random real world assumption. Though, ironically, you're real world assumptions are super wrong and Solar is a lot more than oil. People following your advice of making assumptions that solar is free 10 hrs a day will hurt them from answering questions right. That's a bad way to think about the answer.

I love when people mindlessly write a solution that is based on the correct answer not logic. It helps no one.

Best of Luck with your GMAT prep! Cheers!
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Re: Innovations in production technology and decreases in the  [#permalink]

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01 Jan 2019, 09:21
Hello from the GMAT Club VerbalBot!

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Re: Innovations in production technology and decreases in the   [#permalink] 01 Jan 2019, 09:21
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