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# Technological improvements and reduced equipment costs have

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Senior Manager
Joined: 11 Feb 2007
Posts: 350

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Technological improvements and reduced equipment costs have [#permalink]

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15 Apr 2007, 23:58
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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.

The OA is C but can't A be the answer too?

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VP
Joined: 15 Jun 2006
Posts: 1124

Kudos [?]: 45 [0], given: 0

Schools: Chicago Booth
Re: CR - solar energy [#permalink]

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16 Apr 2007, 00:19
ricokevin wrote:
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.

The OA is C but can't A be the answer too?

C it is. A is not a correct answer, since the threshold of economic viability does not depend on a current oil price but on the comparison of the efficiency of solar powered plants and oil powered plants

Kudos [?]: 45 [0], given: 0

Senior Manager
Joined: 01 Jan 2007
Posts: 320

Kudos [?]: 25 [0], given: 0

Re: CR - solar energy [#permalink]

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16 Apr 2007, 00:59
ricokevin wrote:
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.

The OA is C but can't A be the answer too?

Well at frist i thought its A but after having analyizing the question very closely I think its C. because the cost of solar power has reduced and the economical viability remains constant at \$35. So that means i.e the price of the oil has fallen in the same proportion as the price of the solar equipments or the efficiency of the oil-fired power plants has increased. Now A says that the price of oil has fallen dramatically so thats not correct . so cross A and tick C which is now logically the correct answere

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VP
Joined: 07 Nov 2005
Posts: 1115

Kudos [?]: 53 [0], given: 1

Location: India

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16 Apr 2007, 20:44
C for me.

What we really need to hold on to from the question is that "the threshold of economic viability for solar power is unchanged at thirty-five dollars."
Now it says that the price per barrel of oil will have to rise beyond a certain level to make the Solar power plants viable.

This could have been because of increased demand of oil while the supply was constant. But D says that the efficiency of the oil plants has also increased, thereby increasing production from the same amount of inputs. This in turn keeps the price of oil from spiralling up as the demand from the Oil plants remains more or less the same.
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Trying hard to conquer Quant.

Kudos [?]: 53 [0], given: 1

VP
Joined: 07 Nov 2005
Posts: 1115

Kudos [?]: 53 [0], given: 1

Location: India

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16 Apr 2007, 20:47
A cannot be the answer since the fact that "the threshold of economic viability for solar power is unchanged at thirty-five dollars" has to hold true.
If we say that the price of oil has fallen dramatically, this would lead to a change in the economic viability of solar power plants (further reduce in this case).
_________________

Trying hard to conquer Quant.

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VP
Joined: 15 Jul 2004
Posts: 1438

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Schools: Wharton (R2 - submitted); HBS (R2 - submitted); IIMA (admitted for 1 year PGPX)

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17 Apr 2007, 07:53
buzzgaurav wrote:
C for me.

What we really need to hold on to from the question is that "the threshold of economic viability for solar power is unchanged at thirty-five dollars."
Now it says that the price per barrel of oil will have to rise beyond a certain level to make the Solar power plants viable.

This could have been because of increased demand of oil while the supply was constant. But D says that the efficiency of the oil plants has also increased, thereby increasing production from the same amount of inputs. This in turn keeps the price of oil from spiralling up as the demand from the Oil plants remains more or less the same.

COOL!!

Kudos [?]: 225 [0], given: 13

VP
Joined: 03 Apr 2007
Posts: 1339

Kudos [?]: 863 [0], given: 10

Re: CR - solar energy [#permalink]

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17 Apr 2007, 19:49
ricokevin wrote:
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.

The OA is C but can't A be the answer too?

C

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Manager
Joined: 23 Mar 2007
Posts: 171

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19 Apr 2007, 11:27
A and C seem close but C is better

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19 Apr 2007, 11:27
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# Technological improvements and reduced equipment costs have

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