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The Scorpio Miser with its special high-efficiency engine

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Director
Joined: 17 Dec 2005
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The Scorpio Miser with its special high-efficiency engine [#permalink]

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19 Jan 2006, 09:42
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.

Which one of the following arguments contains an error of reasoning similar to that in the argument above?

(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.

(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.

(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.

(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.

(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.

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Director
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19 Jan 2006, 11:11
B for me
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SVP
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19 Jan 2006, 12:54
Between A and C, I think C more resembles the reasoning in the question.

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Director
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19 Jan 2006, 13:43
Right on with Bhai..

but i think the faulty reasoning similar to the question is in A than in C.
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Manager
Joined: 18 Dec 2005
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19 Jan 2006, 19:19
A vote for C. I agree with Bhai.

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VP
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19 Jan 2006, 20:09
My money is also on C.
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Director
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19 Jan 2006, 21:48
Its between A and C.
C has the same kind of reasoning where in it compares 2 models, talks abt no of miles, and then brings in a new variable cost of fuel.

A also seems ok where in it talks abt variables, and then talks about the ambiguity of getting the same value when both variables are reduced.

I would go with C

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Current Student
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19 Jan 2006, 22:28

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Director
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20 Jan 2006, 02:38
OA is C

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20 Jan 2006, 02:38
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