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# Technological improvements and reduced equipment costs have

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VP
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Technological improvements and reduced equipment costs have [#permalink]

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28 May 2008, 19:21
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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.

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Director
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Re: CR - Solar energy [#permalink]

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28 May 2008, 19:37
A

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Manager
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Re: CR - Solar energy [#permalink]

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28 May 2008, 21:44
C

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CEO
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Re: CR - Solar energy [#permalink]

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28 May 2008, 22:09
It seems to be A. Price of oil falls and it becomes cheaper to run Oil power plants hence the economic viability of solar power does not increase.

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Manager
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Re: CR - Solar energy [#permalink]

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29 May 2008, 01:59
bsd_lover wrote:
It seems to be A. Price of oil falls and it becomes cheaper to run Oil power plants hence the economic viability of solar power does not increase.

Can't you justify C for the same reason ...

Cost efficiency of oil run plants increases and it becomes cheaper to run Oil power plants hence the economic viability of solar power does not increase.

My point here is not that A is wrong, but how or why do you reach the conclusion that A is a better response ???

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Manager
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Re: CR - Solar energy [#permalink]

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29 May 2008, 03:21
Tech imp & red. equip cost -> convert solar to electric efficient.
threshold of eco. viability of solar unchanged at 35\$.

Oil fired power plants are more economical than solar power plants. We need to explain why this is the case despite the effiiciency gains. May be oil fired plants have other advantages or have more efficiency gains. Choice C stands out.

goalsnr 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.

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Manager
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Re: CR - Solar energy [#permalink]

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29 May 2008, 03:30
A is tempting. We dont know why oil powered plants are economical, we are assuming that low oil prices makes them more economical than solar power plants. This may or may not be true, what if other costs make it less economical.

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CEO
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Re: CR - Solar energy [#permalink]

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29 May 2008, 03:53
The reason why I didnt pick C was the following :
"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"

The calculations are based on the price of oil, not on the efficiency of the oil plants. Remember efficiency of the oil plants does NOT equate to cost efficiency.

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Director
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Re: CR - Solar energy [#permalink]

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29 May 2008, 05:15
goalsnr 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.

should be A. As the solar equipments are already cost-efficient than before , if the oil cost falls, then threshold will remain constant

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Manager
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Re: CR - Solar energy [#permalink]

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29 May 2008, 07:16
yavasani wrote:
A is tempting. We dont know why oil powered plants are economical, we are assuming that low oil prices makes them more economical than solar power plants. This may or may not be true, what if other costs make it less economical.

There is a slight problem with this...

we know that the price of oil is significant here ...
"the price per barrel to which oil would have to rise in order ..."

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Manager
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Re: CR - Solar energy [#permalink]

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29 May 2008, 09:18
goalsnr 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.

I choose C.

It explains why the price change per barrell of oil has remained constant, as both industries (solar power and oil power) have remained constant.

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Manager
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Re: CR - Solar energy [#permalink]

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29 May 2008, 10:12
A

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Manager
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Re: CR - Solar energy [#permalink]

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29 May 2008, 10:43
It is C.

As the passage states "Technological improvements and reduced equipment costs have made converting solar energy far more cost-efficient in the last decade", the reason for cost-efficiency of solar power has not decreased must be because of cost efficiency in oil fired plants.

(C) Technological changes have increased the efficiency of oil-fired power plants.

I acknowledge that A is equally strong but prefer C.

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Manager
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Re: CR - Solar energy [#permalink]

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29 May 2008, 11:47
Connects to the same topic -

cr-solar-energy-vs-fossil-fnergy-63625.html

They concluded C

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Manager
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Re: CR - Solar energy [#permalink]

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30 May 2008, 18:14
anirudhoswal wrote:
Connects to the same topic -

cr-solar-energy-vs-fossil-fnergy-63625.html

They concluded C

I answered the question because I didn't think I had seen it before...

Good thing my answers were consistant

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Director
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Re: CR - Solar energy [#permalink]

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30 May 2008, 18:49
C
The only way for this to happen is when oil factory has becoming increasingly efficient as well. Thus the threshold for solar to be economically viable has not changed. Since both of the method increased its efficiency.

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VP
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Re: CR - Solar energy [#permalink]

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31 May 2008, 09:06
goalsnr 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.

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?

To answer this we first of all need to understand the correlation between cost-efficiency and threshold of economic viability

cost-efficiency - being effective without wasting time or effort or expense
threshold of economic viability
- Economic viability. The assessment that increases in output produced
by a project using the least cost method will recover costs, provide
an additional required rate of return, and sustain effective
production in the face of uncertainty and risk.

From the above information we can simplify the question - Why Solar power is not economical than oil?
- May be because oil prices have reduced or oil using systems have become more effcient.

From the stimuli we know oil prices have not reduced - "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."

Therfeore , oil using systems have become more effcient.

C exactly states the bove reasoning.

OA is C

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Re: CR - Solar energy   [#permalink] 31 May 2008, 09:06
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# Technological improvements and reduced equipment costs have

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