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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 26 Apr 2012, 12:22
1
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 :(

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

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

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New post 06 Feb 2013, 04:22
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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Re: Technological improvements and reduced equipment costs have [#permalink]

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New post 08 Feb 2013, 05:17
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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.

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

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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]

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New post 15 Oct 2013, 16:47
I will summarize Veritas' idea.
To be more economical, total costs of the solar-power plant are less than those of oil-fired plant.
Total costs of solar-power plant = Cost of sunlight (Zero) + Cost of infrastructure (called SP)
Total costs of oil-fired plant = Cost of oil + Cost of infra (called OF)
So we have: SP <= Cost of oil + OF; or SP - OF <= Cost of oil = Threshold
Past: SP - OF = 35 = Threshold
Present: because of the technological improvements, SP will decrease. If OF is unchanged, threshold will be decreased.
But Threshold (price of oil) is unchanged, so OF must be decreased with some reasons.
In all answers, we need find something which makes OF decrease.
The answer is C.
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New post 23 Mar 2014, 00:08
boeinz wrote:
How to kill 'A'?

Hi,A is incorrect. We are comparing two kinds of plants with the term "threshhold of viability for solar energy"which measures the difference. The price of oil at 35 dollars is just used to describe the difference. Oil of price is not the core issue, but the 35 dollars is. Here, the price of oil is a production element of fired plant. It is just a cost example of this kind of plant. Am I clear?
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New post 14 Jun 2014, 09:44
MICKEYXITIN wrote:
noboru wrote:
boeinz wrote:
How to kill 'A'?


Same here.
I agree with C; but A is also correct.
Could anybody clarify?

A is incorrect because the premise also said that the the price per oil barrel is unchanged (=$35). We cannot change the premise of the argument. A is counter-fact in saying that oil price has fallen.

Consider:-
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.
As per above statement
P = price per barrel of oil
dP = rise in price of oil required to make solar viable.

Argument says:-
"dP" is unchanged it does not comment anything about "P".
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Re: Technological improvements and reduced equipment costs have [#permalink]

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New post 04 Aug 2014, 00:51
manishpal77899 wrote:
reply by gmatdetroyer.i find it helpful.pls read it carefully...


let us say earlier it used to cost $50 to get 1 unit of power using solar power system....and one barrel of oil costing $20 produced 1 unit of energy using oil fired system....

oil wud have to rise to $50 per barrel so that we cud switch to solar power...or solar power wud have to fall to $20 to make the switch economically viable...

Now if Oil prices have fallen dramatically!!!
we were getting 1 unit from $20 of oil...lets say oil prices have fallen to $5 per barrel .... and now we are getting 1 unit from oil power for $5 ...

Also solar power has become more efficient...say now we are getting 2 units of energy from $ 50 using solar power...this means 1 unit for $25 ... in this case solar power wud have to fall to $5 or oil wud have to rise to $25 ....
SO you can see THRESHOLD HAS CHANGED....BUT ACCORDING TO STIMULI THRESHOLD REMAINS UNCHANGED...

sO wat wud have happened..??

now with increased efficiency..we can get 2 units of energy from solar power and it still costs us $50 ....

As the stimuli says the threshold remains the same....
wat if oil power plants have become efficient ... earlier we were getting 1 unit from $20 ...NOW WE GET 2 UNITS USING $20 ...???

in this case..either solar power drops to $20 or oil rises to $50 .... threshold remains the same...

Important thing in this question is THRESHOLD....thats wat makes it confusing....hope it helps...



But now you need to re-calculate the threshold values. Since efficiency has increased, we need to calculate threshold levels / unit of energy. In this case the new threshold will change which is counter to the argument.
So, the question is, how can we keep threshold constant when efficiency of solar based and oil-fired power plants has changed? :?:
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Re: Technological improvements and reduced equipment costs have [#permalink]

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New post 09 Apr 2015, 18:01
The questions is very straight forward -

Economical viability for solar power is "price per barrel to which oil has to rise in order for new solar power plants to be more economical than new oil fired power plants"

Although the unit for this viability is $/barrel.

The comparison really is between

[cost to produce electricity in new oil fired power plant]/[cost to produce electricity in new solar power plants]

Therefore, even if when denominator goes down, and simultaneously numerator is also going down (option C), the economical viability remains constant.

The $/barrel calculated from the above statement is not related to the actual cost of oil/barrel.
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Re: Technological improvements and reduced equipment costs have [#permalink]

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New post 03 Jun 2015, 09:59
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piyushksharma 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.


Converting solar energy directly into electricity , cost-efficient in the last decade due to -

1. Technological improvements
2. Reduced equipment costs


Contra -

Rise in Price/Barrel (Oil ) { Fixed at $35 }=> More economic Viability of new solar power plants compared to New Oil Fired Plants Plants.

Thus effectiveness of new solar power plants depends on Rise in Price of Oil.

When price of oil rises people will tend to shift from Oil based power plants to Solar Power Plants. This has not happened till now despite Cost-Efficient production process , since Price of Oil has remain the same at $35.

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. - Not true.
B. The reduction in the cost of solar-power equipment has occurred despite increased raw material costsfor that equipment. - Absolutely not true.
C. Technological changes have increased the efficiency of oil-fired power plants. - True + Reduced Equipment Cost
D. Most electricity is generated by coal-fired or nuclear, rather than oil-fired, power plants. - Out of scope.
E. When the price of oil increases, reserves of oil not previously worth exploiting become economically viable. - Out of scope.
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