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10 Mar 2024, 04:28
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E
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
45%
(medium)
Question Stats:
72% (02:16) correct
28%
(02:30)
wrong
based on 1097
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An executive of ZCCorp has proposed that the company buy PondGen, a small company that has developed an algae-based process to produce biodiesel fuel for cars and trucks. In support of the proposal, the executive notes that initial pilot projects show that the process may provide much more energy per acre than non-algae sources of biofuels, reducing the need for land. Also, the algae help absorb greenhouse gases, and ZCCorp already has close relationships with fuel distributors. The executive’s proposal advocates that, after buying the company, ZCCorp should invest heavily in PondGen’s process, in order to become a serious player in the biofuel market.
Which of the following would, if true, most strongly suggest that the executive’s proposal should not be adopted?
A. The energy yield provided by a given amount of PondGen’s fuel will not be significantly higher than that produced by the same amount of non-algae biofuel sources.
B. ZCCorp does not have extensive previous experience working with biofuel production.
C. ZCCorp does not currently own sufficient open land to support large-scale algae production.
D. Biofuel prices will probably not rise significantly in the near future.
E. No research and development effort has shown that PondGen’s process can produce fuel on an industrial scale.
GMAT-Club-Forum-4iekdbl5.png [ 116.25 KiB | Viewed 4172 times ]
Which of the following would, if true, most strongly suggest that the executive’s proposal should not be adopted?
A. The energy yield provided by a given amount of PondGen’s fuel will not be significantly higher than that produced by the same amount of non-algae biofuel sources.
B. ZCCorp does not have extensive previous experience working with biofuel production.
C. ZCCorp does not currently own sufficient open land to support large-scale algae production.
D. Biofuel prices will probably not rise significantly in the near future.
E. No research and development effort has shown that PondGen’s process can produce fuel on an industrial scale.
Attachment:
GMAT-Club-Forum-4iekdbl5.png [ 116.25 KiB | Viewed 4172 times ]
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10 Mar 2024, 05:02
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An executive of ZCCorp has proposed that the company buy PondGen, a small company that has developed an algae-based process to produce biodiesel fuel for cars and trucks. In support of the proposal, the executive notes that initial pilot projects show that the process may provide much more energy per acre than non-algae sources of biofuels, reducing the need for land. Also, the algae help absorb greenhouse gases, and ZCCorp already has close relationships with fuel distributors. The executive’s proposal advocates that, after buying the company, ZCCorp should invest heavily in PondGen’s process, in order to become a serious player in the biofuel market.
The executive's conclusion is basically that ZCCorp should buy PondGen and, after buying PondGen, should invest heavily in PondGen’s process.
Which of the following would, if true, most strongly suggest that the executive’s proposal should not be adopted?
We might get the impression that this question is a Strengthen question since the stem uses the language "most strongly suggest." However, it's actually a Weaken question since the correct answer will indicate that the proposal should NOT be adopted. In other words, the correct answer will weaken the case for the executive's conclusion.
A. The energy yield provided by a given amount of PondGen’s fuel will not be significantly higher than that produced by the same amount of non-algae biofuel sources.
This is not a reason not to adopt the proposal since, even if PondGen's fuel does not have an energy yield advantage, PondGen's process may have an advantage in that "it may provide much more energy per acre than non-algae sources of biofuels, reducing the need for land."
Eliminate.
B. ZCCorp does not have extensive previous experience working with biofuel production.
This is not a strong reason not to adopt the proposal because, as long as PondGen is a viable enterprise, and because "ZCCorp already has close relationships with fuel distributors," investing in PondGen could pay off for ZCCorp.
Eliminate.
C. ZCCorp does not currently own sufficient open land to support large-scale algae production.
This is not a reason not to adopt the proposal because, given everything said in the passage about "more energy per acre than non-algae sources of biofuels," the algae helping absorb greenhouse gases, and ZCCorp already having close relationships with fuel distributors., investing in land to produce biofuels by using PondGen's process could pay off.
Eliminate.
D. Biofuel prices will probably not rise significantly in the near future.
This choice doesn't cast doubt on the conclusion because, even if the prices won't rise, ZCCorp could benefit from getting into in the business of producing biofuels by buying and investing in a company whose process "may provide much more energy per acre than non-algae sources of biofuels."
Eliminate.
E. No research and development effort has shown that PondGen’s process can produce fuel on an industrial scale.
This is a reason not to adopt the proposal. After all, the proposal is basically to buy PondGen and then jump into investing heavily in PondGen's process "to become a serious player in the biofuel market."
So, if as this choice says, no research and development effort has shown that PondGen’s process can produce fuel on an industrial scale, adopting the proposal could be a big mistake. After all, it could turn out that PondGen's process cannot produce fuel on an industrial scale, in which case the entire investment would be lost.
Keep.
Correct answer: E
The executive's conclusion is basically that ZCCorp should buy PondGen and, after buying PondGen, should invest heavily in PondGen’s process.
Which of the following would, if true, most strongly suggest that the executive’s proposal should not be adopted?
We might get the impression that this question is a Strengthen question since the stem uses the language "most strongly suggest." However, it's actually a Weaken question since the correct answer will indicate that the proposal should NOT be adopted. In other words, the correct answer will weaken the case for the executive's conclusion.
A. The energy yield provided by a given amount of PondGen’s fuel will not be significantly higher than that produced by the same amount of non-algae biofuel sources.
This is not a reason not to adopt the proposal since, even if PondGen's fuel does not have an energy yield advantage, PondGen's process may have an advantage in that "it may provide much more energy per acre than non-algae sources of biofuels, reducing the need for land."
Eliminate.
B. ZCCorp does not have extensive previous experience working with biofuel production.
This is not a strong reason not to adopt the proposal because, as long as PondGen is a viable enterprise, and because "ZCCorp already has close relationships with fuel distributors," investing in PondGen could pay off for ZCCorp.
Eliminate.
C. ZCCorp does not currently own sufficient open land to support large-scale algae production.
This is not a reason not to adopt the proposal because, given everything said in the passage about "more energy per acre than non-algae sources of biofuels," the algae helping absorb greenhouse gases, and ZCCorp already having close relationships with fuel distributors., investing in land to produce biofuels by using PondGen's process could pay off.
Eliminate.
D. Biofuel prices will probably not rise significantly in the near future.
This choice doesn't cast doubt on the conclusion because, even if the prices won't rise, ZCCorp could benefit from getting into in the business of producing biofuels by buying and investing in a company whose process "may provide much more energy per acre than non-algae sources of biofuels."
Eliminate.
E. No research and development effort has shown that PondGen’s process can produce fuel on an industrial scale.
This is a reason not to adopt the proposal. After all, the proposal is basically to buy PondGen and then jump into investing heavily in PondGen's process "to become a serious player in the biofuel market."
So, if as this choice says, no research and development effort has shown that PondGen’s process can produce fuel on an industrial scale, adopting the proposal could be a big mistake. After all, it could turn out that PondGen's process cannot produce fuel on an industrial scale, in which case the entire investment would be lost.
Keep.
Correct answer: E
General Discussion
19 May 2025, 21:01
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MartyMurray
I had a doubt in eliminating option D,
when the prices of biofuel wont increase and the company after buying has to invest heavily in the process, it might indicate that it is not a very promising proposal as if they could have additional margin on sales then they can make profits however, prices dont seem to increase in future.
I had a doubt in eliminating option D,
when the prices of biofuel wont increase and the company after buying has to invest heavily in the process, it might indicate that it is not a very promising proposal as if they could have additional margin on sales then they can make profits however, prices dont seem to increase in future.
MartyMurray
