V24-26

Question

A subsidy, or government incentive, is a form of government expenditure aimed at stabilizing the economy. These subsidies can take various forms, including direct expenditures, tax incentives, soft loans, price support, and the provision of goods and services.
 
 The development of commercial solar power relied heavily on government support. Solar photovoltaic (PV) technology originated in the United States when Daryl Chapin, Calvin Fuller, and Gerald Pearson at Bell Labs demonstrated the silicon solar cell in 1954. The initial cells had an efficiency of only 4%, significantly lower than the 25% efficiency some modern cells achieve. Due to high costs, early developers sought alternative markets.
 
 The technology found a practical application in the aerospace sector, where the U.S. Army and Air Force identified solar PV as an ideal power source for earth-orbiting satellites. Hoffman Electronics was contracted to supply solar cells for the space exploration program, and the first commercial satellite, Vanguard I, launched in 1958 with both solar cells and chemical batteries. By 1965, NASA was using nearly a million solar PV cells. Early government demand and research support led to substantial cost reductions and performance improvements, with the price of PV cells dropping from $300 to $20 per watt between 1956 and 1973.
 
As a result of government involvement in solar PV development, 13 of the 14 top innovations in PV were developed with the help of federal dollars, nine of which were fully funded by the public sector.

Which of the following can be most reasonably inferred from the passage about the relationship between government involvement and innovation in solar PV technology?

A. Without government support, the development of solar PV technology would have been significantly delayed.
B. The majority of solar PV innovations were driven by private sector funding.
C. The government’s support for solar PV technology directly led to a decrease in its production costs.
D. Government incentives only supported the research, but private firms handled the production of solar PV cells.
E. The space exploration program provided a unique market for early solar PV technology, making its commercial adoption viable.

bb · Answer

Official Solution:

A subsidy, or government incentive, is a form of government expenditure aimed at stabilizing the economy. These subsidies can take various forms, including direct expenditures, tax incentives, soft loans, price support, and the provision of goods and services.
 
 The development of commercial solar power relied heavily on government support. Solar photovoltaic (PV) technology originated in the United States when Daryl Chapin, Calvin Fuller, and Gerald Pearson at Bell Labs demonstrated the silicon solar cell in 1954. The initial cells had an efficiency of only 4%, significantly lower than the 25% efficiency some modern cells achieve. Due to high costs, early developers sought alternative markets.
 
 The technology found a practical application in the aerospace sector, where the U.S. Army and Air Force identified solar PV as an ideal power source for earth-orbiting satellites. Hoffman Electronics was contracted to supply solar cells for the space exploration program, and the first commercial satellite, Vanguard I, launched in 1958 with both solar cells and chemical batteries. By 1965, NASA was using nearly a million solar PV cells. Early government demand and research support led to substantial cost reductions and performance improvements, with the price of PV cells dropping from $300 to $20 per watt between 1956 and 1973.
 
As a result of government involvement in solar PV development, 13 of the 14 top innovations in PV were developed with the help of federal dollars, nine of which were fully funded by the public sector.
 
 Which of the following can be most reasonably inferred from the passage about the relationship between government involvement and innovation in solar PV technology?

A. Without government support, the development of solar PV technology would have been significantly delayed.
B. The majority of solar PV innovations were driven by private sector funding.
C. The government’s support for solar PV technology directly led to a decrease in its production costs.
D. Government incentives only supported the research, but private firms handled the production of solar PV cells.
E. The space exploration program provided a unique market for early solar PV technology, making its commercial adoption viable.

A. Incorrect. This option is tempting but overstates the inference. The passage mentions cost reductions and performance improvements due to government involvement, but it doesn&rsquo;t state that the development of the technology would have been "significantly delayed" without it. This is taking it too far. 
 
 B. Incorrect. This is the opposite of what the passage suggests. The passage actually mentions that 9 of the 14 innovations were "fully funded by the public sector."
 
 C. Correct Answer.  The passage states that government demand and research support led to cost reductions in solar PV cells. 
 
D Incorrect. The passage doesn't specify that government incentives were only for research and excludes production involvement. This option presents an incorrect limitation of government support.
 
E. Incorrect. While the aerospace sector was an early adopter of the technology, the passage does not suggest that space exploration made the technology commercially viable. It only describes the sector as an early application. This is again taking the inference too far.

Answer: C

bb · Answer

I think you have a valid concern. Kudos for that. 
While in my view, the inference was valid, I think if stressed and put under the microscope, it does indeed just isolate the demand from the rest, we can't with absolute confidence say that it was demand alone.

I will modify C to be more exact and accurate by actually making it more general: Government support led to a reduction in PV production costs.
Thank you for helping identify a weakness in the question. I have added 2 weeks of access to your account. 
-BB

nikitathegreat · Answer

What do we mean by commercial adoption viable in Option Choice E - Does that mean becoming profitable? And that is not stated in the passage? Or does it mean that it became commercial success that the other sectors start using the same? - The passage does mention that PV technology was used in Commercial Satellite and hence I marked ans choice E -----Hoffman Electronics was contracted to supply solar cells for the space exploration program, and the first commercial satellite, Vanguard I, launched in 1958 with both solar cells and chemical batteries.

Thanks

Thanks

SergejK · Answer

Also, do we know if government demand led DIRECTLY to the cost reduction? Could be indirectly, meaning not caused through the demand itself. We only know that it lead to cost reduction. However, I decided specifically against choice C as it inferred more information than the passage provides. I feel that this is an important distinction.

bb : I really think this question is  flawed  as the 3 viable answer choices (A, C, and E) all present an additional assumption and in my mind, E can somewhat be inferred as the viability COULD be a result of the government involvement. A stretch, however, less of a stretch than direct or indirect cost reduction as exactly such distinctions are important in many CR and RC questions in GMAT.

AvinashSh · Answer

I have another doubt : How are we assuming that reduction in costs (as written in the passage) necessarily means reduction in  Production Costs.  (written in option choice)
Reason used to eliminate A is that it overstates the conclusion when it tells us that, "  Without government support, the development of solar PV technology would have been significantly delayed." >> Which is true  
 But the same thing also applies to C when we assume that reduction in costs means reduction in production costs.

bb   Bunuel   KarishmaB

bb · Answer

Hello and thank you for the question.

The passage states "cost reductions". I feel it is accurate and OK to assume that it is reduction in production costs and not maintenance costs but I am open to suggestions if there are other costs that could be assumed here. What costs would they be?

bb · Answer

Hi  SergejK . I am sorry I missed your message.

Which assumption do you feel C requires?

catinabox · Answer

I agree with the assumption that cost reduction implies a reduction in production costs from efficiency improvements. The passage mentions that the cost of PV cells went down from $300/ W to $20 / W.

Although, yes, option C definitely needs to be made more general with 'government support' rather than just 'demand'.

bb · Answer

Thank you. I have updated C to include Government's support instead of Government's demand.

kartickdey · Answer

bb 
I ignored the option C because of one word: "directly"
in the passage it is stated: "Early government demand and research support led to substantial cost reductions and performance improvements" but in C it is stated that it "directly led". I could not infer from the passage that whether the impact was direct or indirect. As I have noticed in many other RC passages that this adverb "directly" generally is associated with wrong answer; so I ignored the option C

miag · Answer

Hi,

I can understand where you are coming from but in this case, the passage explicitly states: 
"Early government demand and research support  led to substantial cost reductions ..."
That language already establishes a  cause → effect relationship  between government involvement and cost reduction. There’s no intermediate cause introduced (like "eventually," "through unrelated factors," or "after market forces intervened" )

Hope this helps!

SanketPatil · Answer

Hi,

I am little confused, on how can cost reduction imply decrease in production cost, it just mean if an object was taking 50$, now government helped with 30$ and 20$ was applied from organisations own pocket. But if that is the case, the production cost is still 50$, nothing has changed. Can someone help me clarify my understanding, where am i going wrong?

bhanu29 · Answer

Hi,

You’re mixing up  subsidy price reduction  with  production cost reduction .
In the passage, it says:
Government demand and research support  led to cost reductions
 Price dropped from  $300 to $20 per watt 
This implies:
Government-funded innovation -> better technology -> cheaper to produce -> lower market price.
It is  not  describing the government paying part of a fixed $50 production cost.
So in this passage:
"Cost reduction" = actual decrease in production cost due to innovation and not difference payment.

Hope that helps!!

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