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Technological improvements and reduced equipment costs have

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Technological improvements and reduced equipment costs have [#permalink]

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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


y answer was A
[Reveal] Spoiler: OA

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New post 24 Mar 2012, 00:21
shikhar 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


y answer was A


Check this:
http://gmatclub.com/forum/technological-improvements-and-reduced-equipment-66673.html#p489267

Correct answer is C.
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Re: Technological improvements and reduced equipment costs have [#permalink]

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New post 18 Feb 2015, 08:35
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Technological improvements and reduced equipment costs have [#permalink]

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New post 10 Oct 2016, 04:50
shikhar 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


y answer was A



I think the main confusion is between A and C.

Given: threshold of economic viability for solar power = 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 = $35

To reach economic viability
Price of x unit of solar energy = Price of x unit of "oil energy" at the hypothetical rate that oil will have to rise to
Price of x unit of solar energy = Price of 1 barrel of oil that oil will have to rise to * amount of oil required to produce X units of energy

Now the first term in the above equation has decreased and the second term is constant at $ 35, so the third term has to decrease the keep the equation balanced.
=> efficiency of oil fired power plants has to increase. which is C

The second term is a hypothetical figure that is calculated based on the first and third term. It is not dependent on the current price of the oil. Hence A is wrong.
Technological improvements and reduced equipment costs have   [#permalink] 10 Oct 2016, 04:50
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