jabhatta2 wrote:
avigutman wrote:
Consider this analogy: you're in the market for a new car, and you're trying to decide between an electric vehicle and an internal combustion vehicle. Generally speaking, the former is more expensive than the latter, but you get savings over time because electricity is cheaper than fuel. For this analogy to work, let's ignore environmental and *cool* factors, and pretend that all you care about is finding out which option is more economical.
There's going to be a particular price of fuel at which the two options are equally economical. If the price of fuel is higher (all else being equal) you'll choose electric, and if the price of fuel is lower you'll choose internal combustion engine.
So, if we're told that the cost of electricity has dropped in the last decade, *all else being equal*, you'd expect the threshold to go down (i.e. even with a relatively low price of fuel, you'd still choose electric). But, surprise! turns out the threshold didn't decrease. Why??
Well, something must have 'balanced out' the effect of the drop in the cost of electricity. Perhaps the price of electric vehicles has increased? Perhaps the price of internal combustion vehicles has decreased?
Hi
avigutman - loved the analogy. tried to test the analogy when seeing if (A) is accurate or not accurate.
So, lets say - I own a fuel based car (Honda Civic). I will switch to an electric car (Tesla), if price of oil goes ABOVE 35 $ a barrel. Current price of oil per barrel is 20 $ a barrel
So, 35 $ a barrel is my threshold price to
switchover from Honda Civic to Tesla
Now, apparently per the premise -
-- It becomes cheaper to buy teslas - this should reduce the threshold price
But mysteriously, the threshold price HAS mysteriously stayed the same
So (A) explains it
If the price of OIL/Fuel decreases -- i keep my Honda Civic. Thats the equivalent of a 'HIGHER' threshold price
Thus, (A) explains why the Threshold Price has **stayed the same**
The reduced price to buy a TESLA has been compensated with the reduced price of oil
Once you've decided to use the price of oil as your threshold parameter,
jabhatta2, fluctuations in the price of oil don't change
that threshold.
If you decide to use the price of electricity as your threshold parameter,
then fluctuations in the price of oil would change the threshold.
Here's another analogy: my threshold weight for going on a diet is 175lbs. What might cause me to change that threshold? Maybe my doctor tells me that actually, for my height, I can weigh up to 200lbs and still be considered healthy. Maybe I gain muscle, and decide to increase my threshold as a result. Maybe I read a book about diet culture and realize that dieting won't make me happy.
On the other hand: if I step on the scale and see that my weight has changed, would
that change my threshold? What do you think,
jabhatta2?
I understand that the threshold is fixed. A reasonable answer would attribute the unchanged threshold to the improve efficiency in oil-plants. But the passage doesn't mention anything about HOW TO CALCULATE THE OIL-PLANTS EFFICIENCY. In common sense, one would naturally think about oil price as part of the oil-plants efficiency. Given that option C only mentions " Technological changes" that improves the efficiency of oil-fired power plants, it is assuming that Tech changes are the only thing in the fomula; therefore, the option is not persuasive for many people in this thread. If option C only says that oil-plants efficiency improved over the last decade, it would be much clearer.