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Technological improvements and reduced equipment costs have

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

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New post 22 Jan 2012, 07:16
C
good question

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

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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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New post 22 Apr 2012, 05:01
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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 hasnot 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 costsfor 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 economicallyviable.

Can someone explain this one...? :roll:

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New post 23 Apr 2012, 02:58

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New post 24 Apr 2012, 06:16
Its a cause effect CR. Its assumed that the improvement in efficiency of solar power conversion to electricity will have an effect that threshhold price for oil decreases. If we reverse the relation we should be fine to explain the paradox. Hence C.

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New post 26 Apr 2012, 12:22
Simplest explanation for A vs C:

Comparing cost per unit in both cases:

Case 1: Initially, cost of solar power per unit will be equal when price to which oil should rise = $35. So for 1 unit, lets say,

(cost of solar power) C1 = $35 (cost of oil equalized) + P1 (cost of production)

Case 2: even with new technology

(cost of solar power) C2 = $35 (cost of oil equalized) + P2 (cost of production)

Since cost of solar power has decreased, C2 < C1
hence P2 < P1
which means efficiency of production for oil plants has increased.


Even I selected the wrong one before :(

Its my first post... Kudos plz :wink:

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New post 26 Apr 2012, 12:44
IMO the option A talks about the sudden fall in the cost of oil , while the argument talks about the cost efficiency of solar energy in comparison for a longer duration.So option A is wrong as it takes into account the sudden fall and does not compare the prices for a longer perspective.
C takes into consideration that the changes have taken place gradually.

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New post 27 Apr 2012, 19:03
I take it as while the efficiency of oil powered power plants has increased while solar power has not is because it provides an answer to how both sides of the argument can be factually correct.
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New post 28 Nov 2012, 05:36
∆C unit= 1/E( Csolar - n*Cbarrel )

n = number of barrels used to generate E units of energy
Csolar = Cost to generate E units of Solar Power
Cbarrel = Cost of a barrel
∆C = Difference in costs between generation of solar power and generation of thermal power

for solar power to be economically viable
∆C unit = 0
Then Csolar = n*Cbarrel
Question says that although Csolar↓ ,But Cbarrel is still = $35, which means n has to come down. n is inversely proportional to efficiency.

Therefore, C

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New post 05 Feb 2013, 06:23
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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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Re: Technological improvements and reduced equipment costs have [#permalink]

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New post 05 Feb 2013, 11:11
fozzzy 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.


Have to choose between A & C. But, not sure how to prove which one is better or wrong is tough.
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New post 06 Feb 2013, 03:06
greatps24 wrote:

Have to choose between A & C. But, not sure how to prove which one is better or wrong is tough.


This is a pretty tough resolve the paradox question from what usually appears.
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New post 06 Feb 2013, 04:22
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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?

Economic viability = EV = threshold/difference between cost effectiveness of new solar power plants and new oil-fired power plants
tech improvements have made solar power plants more efficient. still, EV is unchanged at $35.

(A) The cost of oil has fallen dramatically. the argument compares EV only between new solar power plants and new oil-fired power plants and not old oil-fired power plants. but dramatic cost reduction in oil will lead to cost efficiency of old oil based power plants as well.
(B) The reduction in the cost of solar-power equipment has occurred despite increased raw material costs for that equipment. does not explains why EV has not changed. In fact, supports the fact that it should have changed.
(C) Technological changes have increased the efficiency of oil-fired power plants. correct - tech improvements increased the efficiency of both new solar power plants and new oil-fired power plants. Good enough reason for EV to be unchanged
(D) Most electricity is generated by coal-fired or nuclear, rather than oil-fired, power plants. irrelevant
(E) When the price of oil increases, reserves of oil not previously worth exploiting become economically viable does not explains why EV has not changed
.
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fozzzy wrote:
greatps24 wrote:

Have to choose between A & C. But, not sure how to prove which one is better or wrong is tough.


This is a pretty tough resolve the paradox question from what usually appears.


Let's use numbers to understand what's happening in the passage:

In the last decade,

Suppose, it used to cost $2 to produce one unit of energy from Solar power plants
We are given that price per barrel has to be minimum $35 for solar energy to be economically viable. What does economically viable means? It means that the cost of production of energy from solar power plant is not greater than the cost from oil run power plants.

So, at threshold level, cost per unit of energy from solar power plant = cost per unit of energy from oil power plant

Now, we are given that this threshold level is at oil price of $35 per barrel.

So, a barrel of oil should produce 17.5 units of energy (so that the cost is $2 per unit).

Now, coming to today,
Solar power sources have become very efficient. Therefore, let's suppose the cost of solar energy today is $1 per unit.

However, we are given that the threshold price level of barrel of oil is same i.e. $35.

This means that the same barrel oil must produce 35 units of energy for the costs of both solar energy and oil energy to remain same.

This means that the efficiency of oil power plants must have increased in same proportion as that of solar power plants.

Therefore, Option C is correct.

For completion sake, let's also look at option A. It says that the cost of oil has fallen - First of all, we are not concerned about cost of oil; we are concerned about price of oil to the power plants. Even if we say that the cost here refers to the price paid by the power plants, it is still irrelevant because when we are talking of a threshold price level of oil, we are referring to a hypothetical level below which solar energy would not be viable. We are not talking about actual price level; just as we are not talking about whether solar energy is economically viable in reality or not. We are just talking of conditions that are needed to make it economically viable.

I think this is pretty tough.

Hope I made some sense.

Let me know if some further clarification is required.

Thanks,
Chiranjeev
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New post 14 Feb 2013, 09:55
I would better guess and move on , then spend so much time on a question with the approach mentioned above . Not practical solution to eliminate A .

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New post 14 Feb 2013, 20:40
ishancrazee wrote:
I would better guess and move on , then spend so much time on a question with the approach mentioned above . Not practical solution to eliminate A .


Actually, you don't have to take numbers and analyze them to eliminate (A). Most probably, people who have explained why (A) doesn't work using numbers, didn't actually take numbers when they were looking for the answer themselves. You simply have to understand that the "threshold of economic viability" has nothing to do with the actual cost of oil. It depends on the difference between 'cost to create solar power' vs 'cost of convert oil to power'. The numbers have been taken to explain the perspective.
And as for guessing, this is a GMAT prep 700+ level question. At that level, all questions are a little tricky and make you think. You might need to take these questions seriously if you are aiming for 700+.
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New post 14 Feb 2013, 22:38
Answer is option C as the author compares new solar plant with the new oil fired plants. C provides the most logical explanation.

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New post 29 May 2013, 20:44
Of whatever reasons, I would not agree that we can prove A to be incorrect by putting numbers.

I eliminated A because it is too negative. The word "dramatically" means unexpected or sudden change. It is not practical to say "The cost of oil has fallen dramatically in the last decade". A decade is a longer period of time to say dramatic increase or decrease.

Threshold = Cost of Solar - Cost Of Oil (Assume Profit is same in both the cases)
T = S - O

Now since my T is constant, S and O should either increase or decrease together to same extent.
As per the premise, S has become "far more cost-efficient in the last decade", it doesn't use any strong word like "dramatically" , "extraordinarily" , "unexpectedly" etc, So O should keep pace with S.

In such case, C sounds a better option, as the reason for cost-efficiency is common.
A could be correct, had it been simply "The cost of oil has fallen"
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New post 03 Jun 2013, 03:04
ConnectTheDots wrote:
Of whatever reasons, I would not agree that we can prove A to be incorrect by putting numbers.

I eliminated A because it is too negative. The word "dramatically" means unexpected or sudden change. It is not practical to say "The cost of oil has fallen dramatically in the last decade". A decade is a longer period of time to say dramatic increase or decrease.

Threshold = Cost of Solar - Cost Of Oil (Assume Profit is same in both the cases)
T = S - O

Now since my T is constant, S and O should either increase or decrease together to same extent.
As per the premise, S has become "far more cost-efficient in the last decade", it doesn't use any strong word like "dramatically" , "extraordinarily" , "unexpectedly" etc, So O should keep pace with S.

In such case, C sounds a better option, as the reason for cost-efficiency is common.
A could be correct, had it been simply "The cost of oil has fallen"


Actually, ignoring an option because it is too 'extreme' is not the right approach. An option, even with 'never', 'all' etc could be true. It's all about the context. Usually, the contexts used in CR questions are real life and there are few absolutes in life hence, you might have heard that extreme answers are not correct. It is just a rule of thumb and may not always hold.

As for this option being extreme due to the presence of 'dramatic', I don't see how that word is a problem. If we are talking about multiple decades, oil price falling dramatically over the last decade could make sense. Say, if it is $100 a barrel for many decades and then falls to $50 a barrel over the last decade.

(A) is incorrect because the actual cost of oil is immaterial.
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Re: Technological improvements and reduced equipment costs have   [#permalink] 03 Jun 2013, 03:04

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