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The Scorpio Miser with its special high-efficiency engine costs more to buy than the standard Scorpio sports car. At current fuel prices, a buyer choosing the Miser would have to drive it 60,000 miles to make up the difference in purchase price through savings on fuel. It follows that, if fuel prices fell, it would take fewer miles to reach the break-even point.
Premise 1- Just for understanding, Lets take Cost of Efficient model = 15 Lakh and Cost of standard model = 10 Lakh
Difference in price = 5 Lakhs
Premise 2 - It takes 60,000 miles to make up for the difference of purchasing expensive model of Scorpio than a standard model.
To save the difference in cost (5 Lakhs), efficient model needs to run 60,000 miles.
It means,
the cost of driving a standard model 60,000 miles = cost of driving efficient model 60,000 miles + Rs 5 LakhConclusion - Stem says it would take less miles to break even if the fuel prices fell.
Flaw in the argument is that if fuel prices fell, then it would need even more miles to reach break-even point because the mileage( miles driven in 1 gallon of fuel) remains same for both the models. Lower fuel prices means needing more miles to compensate for the differnce in Cost price of the models (5 Lakh).
Which one of the following arguments contains an error of reasoning similar to that in the argument above?
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(A) The true annual rate of earnings on an interest-bearing account is the annual rate of interest less the annual rate of inflation. Consequently, if the rate of inflation drips, the rate of interest can be reduced by an equal amount without there being a change in the true rate of earnings
This says rate of earnings (E) = Rate of Interset(IT) - Rate of Inflation(I) , If rate of inflation is decreased and rate of inflation is also decreased by same amount then, there won't be any change in a rate of earnings. Well, it's true, there is no flaw in that reasoning.
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(B) For retail food stores, the Polar freezer, unlike the Arctic freezer, provides a consistent temperature that allows the store to carry premium frozen foods. Thus, if electricity rates fell, a lower volume of premium-food sales could justify choosing the Polar freezer
No information of the how much electricity is used by any of the freezer , difficult to conclude which is better .
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(C) With the Roadmaker, a crew can repave a mile of decayed road in less time than with the competing model, which is, however, much less expensive. Reduced staffing levels made possible by the Roadmaker eventually compensate for its higher price. Therefore, the Roadmaker is especially advantageous where average wages are low
Roadmaker compensates for its high price like a Scropio Miser (efficient model does) by reducing staff to the complete the road. But it is advisable to use the Roadmaker where average wages are low. The flaw here is If 10 high wage people are needed to build a road ,each needs wage of Rs 10 a day , total is Rs 100 but if 12 people of average wage (Rs8) are required then total would be Rs 96. Roadmaker should be deployed where average wage is high.Quote:
(D) The improve strain the Northland apple tree bears fruit younger and lives longer than the standard strain. The standard strain does grow larger at maturity, but to allow for this, standard trees must be spaced farther apart. Therefore, new plantings should all be of the improved strain
No flaw like mentioned in the stem. Improved strain is better and should be planted as standard strain would require more land to plant the same number of samplings.
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(E) Stocks pay dividends, which vary from year to year depending on profits made. Bonds pay interest, which remains constant from year to year. Therefore, since the interest earned on bonds does not decrease when economic conditions decline, investors interested in a reliable income should choose bonds
No flaw, bonds give constant interset and are reliable and investors intersted in reliable income should invest in Bonds.
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25 Apr 2019, 06:09
48%
(02:54)
wrong 
