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705-805 (Hard)|   Inference|      
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x97agarwal
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The goal of mining companies is to discover the richest, 05 Aug 2008, 23:03
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A
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!

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75% (hard)

Question Stats:

53% (02:02) correct 47% (02:02) wrong based on 237 sessions

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The goal of mining companies is to discover the richest, most accessible sources of the ore they mine. Their success in reaching this goal, however, is not the sole factor determining the financial success of failure of a particular company. Profits for mining companies are largely dependent on prices determined by the global supply of a given ore, not the amount of the ore supplied by any one company.

Which of the following inferences about mining companies is best supported by the information above?

(A) Discovery of a new source of ore could result in a financial loss for some mining companies.

(B) Mining companies should not invest in locating new sources of ore.

(C) Mining companies are consistently profitable as long as global supplies remain stable.

(D) Mining companies need to offset fluctuations in global supply by discovering new sources of ore.

(E) Mining companies cannot be profitable if the global supply of ore they mine increases.
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A
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nikhiljain05
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The goal of mining companies is to discover the richest, 06 Aug 2008, 00:10
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x97agarwal
1. The goal of mining companies is to discover the richest, most accessible sources of the ore they mine. Their success in reaching this goal, however, is not the sole factor determining the financial success of failure of a particular company. Profits for mining companies are largely dependent on prices determined by the global supply of a given ore, not the amount of the ore supplied by any one company.

Which of the following inferences about mining companies is best supported by the information above?

(A) Discovery of a new source of ore could result in a financial loss for some mining companies.

(B) Mining companies should not invest in locating new sources of ore.

(C) Mining companies are consistently profitable as long as global supplies remain stable.

(D) Mining companies need to offset fluctuations in global supply by discovering new sources of ore.

(E) Mining companies cannot be profitable if the global supply of ore they mine increases.
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I would go with (D) simply because the question says that to search for new ore could be 1 of the factor for financial success,So when the market is down then they can use this to offset the fluctuation.There needs to be some significance of the discovery of ore
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durgesh79
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The goal of mining companies is to discover the richest, 06 Aug 2008, 06:04
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good question. IMO A

B - extreme
C - no mentions of stability of global supply
D - goes against the argument... even if they find new sources .. there is no gurantee of financial sucess
E - qutes says the finding of new sources is not the sole factor... they can still make a profit due to other factors.....
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priyankurml
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The goal of mining companies is to discover the richest, 06 Aug 2008, 07:44
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IMO E
(A) Discovery of a new source of ore could result in a financial loss for some mining companies.
-- How discovery results financial loss? Financial success solely depends on profitability and global supply.

(B) Mining companies should not invest in locating new sources of ore.
-- Too extreme

(C) Mining companies are consistently profitable as long as global supplies remain stable.
-- profit depends on the price of global supply NOT just on the supply

(D) Mining companies need to offset fluctuations in global supply by discovering new sources of ore.
-- New source never offsets profit, as mentioned in stem
(E) Mining companies cannot be profitable if the global supply of ore they mine increases.
-- here we can say that profitability is not depending on the supply they mine.
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nmohindru
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The goal of mining companies is to discover the richest, 06 Aug 2008, 07:52
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x97agarwal
1. The goal of mining companies is to discover the richest, most accessible sources of the ore they mine. Their success in reaching this goal, however, is not the sole factor determining the financial success of failure of a particular company. Profits for mining companies are largely dependent on prices determined by the global supply of a given ore, not the amount of the ore supplied by any one company.

Which of the following inferences about mining companies is best supported by the information above?

(A) Discovery of a new source of ore could result in a financial loss for some mining companies.

(B) Mining companies should not invest in locating new sources of ore.

(C) Mining companies are consistently profitable as long as global supplies remain stable.

(D) Mining companies need to offset fluctuations in global supply by discovering new sources of ore.

(E) Mining companies cannot be profitable if the global supply of ore they mine increases.
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Between A) and E) I will chose E)
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jasonc
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The goal of mining companies is to discover the richest, 06 Aug 2008, 09:12
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Since it seems most people are stuck between A & E, I explain further why the answer is A), and why E is incorrect
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x97agarwal
1. The goal of mining companies is to discover the richest, most accessible sources of the ore they mine. Their success in reaching this goal, however, is not the sole factor determining the financial success of failure of a particular company. Profits for mining companies are largely dependent on prices determined by the global supply of a given ore, not the amount of the ore supplied by any one company.

Which of the following inferences about mining companies is best supported by the information above?

(A) Discovery of a new source of ore could result in a financial loss for some mining companies.
definitely supported - the key word is 'for SOME mining companies'. discovery of a new source of ore by 1 company will increase global supply => leading to POTENTIAL financial loss for some mining companies
(B) Mining companies should not invest in locating new sources of ore.

(C) Mining companies are consistently profitable as long as global supplies remain stable.

(D) Mining companies need to offset fluctuations in global supply by discovering new sources of ore.

(E) Mining companies cannot be profitable if the global supply of ore they mine increases.
the key here is 'cannot be' - this is an absolute statement, 1 counter case can prove this false.

mining companies Can be profitable if the global supply of ore they mine increases as long as either 1) the demand also increases or 2) their supply increase out grows the global supply increase.

Therefore this statement cannot be the answer
Between A) and E) I will chose E)
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x97agarwal
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The goal of mining companies is to discover the richest, 06 Aug 2008, 10:50
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OA is A.

Good explanation JasonC
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Mahendra98
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The goal of mining companies is to discover the richest, 17 Jul 2021, 12:50
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Can anyone explain the solution to this?
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Ozzy11100
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The goal of mining companies is to discover the richest, 18 Jul 2021, 03:15
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The answer is indeed A, but I disagree with the logic used by JasonC.

I don't believe that "some mining companies" refers to companies other than the one who discovered the ore. IMO, answer choice A clearly refers to the same company that discovered the ore.

The logic is as follows: Company X expends money to successfully discover new sources of ore -> The global supply of ore increases such that Company X cannot sell it's ore for a price that, at least, breaks-even on the cost of exploration -> The discovery of the ore thus results in a net financial loss for the Company X.

People may rush to discount my answer as one that relies on information external to the passage, but I believe it was Mike McGarry that said that the GMAT does assume some VERY BASIC business knowledge; I believe the fact that expenditures cost money, and the basic law of supply and demand fit into this category. Please correct me if I'm wrong about Mike's opinion on this.


I do totally agree with JasonC's explanation for the incorrectness of E, however!
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