Innovations in production technology and decreases in the

Question

Innovations in production technology and decreases in the cost of equipment have made recycling paper into new paper products much more cost-efficient over the last twenty years. Despite these advances, though, the "point of price viability" (the price that new paper made from trees must reach to make recycled paper comparable in price) is unchanged at $2.12 per ream of paper.

Which of the following, if true, most explains why the increased cost-efficiency of recycled paper has not lowered the point of price viability?

a) The cost of unprocessed trees to make new paper has fallen dramatically. 
b) The decreases in the cost of recycling equipment have occurred despite increases in the cost of raw materials required to manufacture such equipment. 
c) Innovations in production technology have made it much more cost-efficient to produce new paper from trees. 
d) Most paper is made from the scraps and sawdust left after processing new trees for lumber, rather than directly from the trees themselves. 
e) When the price of planting new saplings to replace cut trees becomes more expensive, forests reserves not previously worth cutting become cost-effective to cut.

saurabhmalpani · Answer

can somebody please explain I am kind of LOST. I am quite lost. So plz somebody explain. Saurabh Malpani

banerjeea_98 · Answer

Only way the diff can remain constant is for the cost of new paper to also decrease with recycled paper cost. C tells u that that the new production technology also reduces the cost of new paper.

saurabhmalpani · Answer

Thanks for reply but don't you think we have to provide a reason for the cost of paper not DROPING. I mean the question stem says that :

  Despite these advances, though, the "point of price viability" ( is unchanged at $2.12 per ream of paper  .

That means we have to provide a reason for the stabilty of the PRICE i.e provide a reason why the cost didn't not drop despite all advances.

I don't know if I am making much sense but ..if possible do help.

Thanks
Saurabh Malpani

banerjeea_98 · Answer

I am thinking of the ques as price diff instead of actual price of recycled or new paper.

HongHu · Answer

Hmmm yes it does make sense. I was thinking (C) too but now I believe it should be (B).

greenandwise · Answer

I say B. The reason for my choice is that the question asks specifically why the increased cost efficiency of recycled paper has not lowered the price viability. Both choice A and B point to reasons outside of the cost efficiecy of recycled paper, they point to cheap production costs of new paper. Only choice B points a matter related to the cost efficiency of recycled paper that makes it more expensive. Furthermore choice A and C pretty much are the same so I was able to rule them both out leaving B...but I could be dead wrong!

singh · Answer

(B) for me .... 

also, if C is correct then why not A, afterall that is also giving a reason why the tree price have dec. ..eventhough it is a extreme case but I believe in line with C

Innovations in production technology and decreases in the

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