According to an official source close to the development, CCEA, headed by the Prime Minister, decided the government would absorb the losses that the power and fertilizer sectors, which are the only two consumers of gas, will face once the regulated gas price is increased. The decision to increase the gas price would cause an annual loss of $420Bn for the power sector dependent on gas, while the fertilizer subsidy would rise by $132Bn a year. On the other hand, the price increase will add $210Bn annually to the profits of public and private sector companies in the gas production sector.
Which of the following can be logically concluded on the basis of the above information?
A.CCEA, headed by the Prime Minister, has the power to increase the regulated gas price
B.The decision to increase the gas price overlooks the losses that will be incurred by the power and fertilizer sectors
C.The optimum price increase can be determined in such a way that the total losses incurred by the power and fertilizer sectors due to price increase is equal to the total profits made by the gas production sector due to price increase.
D.It would be economically wise for the government to provide direct subsidy to the companies in the gas production sector than increase their profits by increasing the gas price.
E.The total subsidies given to the power sector is greater than the total subsidies given to the fertilizer sector
OA D
Could someone explain me the OA a little better ...thanks !
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Happy to help! 
The first think I do with Critical Reasoning questions is look at the prompt and figure out what I have to do.
Premise: loss of $420 billion for power
Premise: loss of $132bn for fert.
Premise: profits for public and private companies in gas prod = $210 bn
So that's what we know. Now we need to logically complete all these ideas. Let's look at the OA to see why it is correct.
Just from looking at the numbers, the government is going to pay out more than it will gain from any increase in gas prices. Some economically the plan that is on the table right now is not great. There are going to be increases in gas prices, which is only going really benefit the gas industry. If the gas companies need to increase prices to offset costs, which is usually the reason that prices go up, then there might be a better way to approach this issue. The OA addresses this issue. It points out that the government could make a better economic decision. Instead of letting prices rise that will adversely affect the power and fertilizer sector. The government could avoid absorbing their losses, and subsidize the gas industry instead. In this way, we go directly to the potential problem and deal with it there instead of waiting to solve the problem down the line.
Does that make sense?
The other answer choices are either repetitions of stuff we already know (E), opposite of what we are told (B), stating an assumption (A), or off-topic and unrelated to the premises we are given (C).
I hope that his helps explain the problem a bit more!
Cheers!
The first think I do with Critical Reasoning questions is look at the prompt and figure out what I have to do.Alright, I know that I need to find a conclusion. I also know that there won't be a conclusion in the passage-just a collection of premises. Now I can dive into the passage and break it down into basic units of info.gmat_guy666 wrote:Which of the following can be logically concluded on the basis of the above information?
Premise: gov't to will pay power and fert. companies for any losses with gas prices increasegmat_guy666 wrote:According to an official source close to the development, CCEA, headed by the Prime Minister, decided the government would absorb the losses that the power and fertilizer sectors, which are the only two consumers of gas, will face once the regulated gas price is increased. The decision to increase the gas price would cause an annual loss of $420Bn for the power sector dependent on gas, while the fertilizer subsidy would rise by $132Bn a year. On the other hand, the price increase will add $210Bn annually to the profits of public and private sector companies in the gas production sector.
Premise: loss of $420 billion for power
Premise: loss of $132bn for fert.
Premise: profits for public and private companies in gas prod = $210 bn
So that's what we know. Now we need to logically complete all these ideas. Let's look at the OA to see why it is correct.
Just from looking at the numbers, the government is going to pay out more than it will gain from any increase in gas prices. Some economically the plan that is on the table right now is not great. There are going to be increases in gas prices, which is only going really benefit the gas industry. If the gas companies need to increase prices to offset costs, which is usually the reason that prices go up, then there might be a better way to approach this issue. The OA addresses this issue. It points out that the government could make a better economic decision. Instead of letting prices rise that will adversely affect the power and fertilizer sector. The government could avoid absorbing their losses, and subsidize the gas industry instead. In this way, we go directly to the potential problem and deal with it there instead of waiting to solve the problem down the line.
Does that make sense?
The other answer choices are either repetitions of stuff we already know (E), opposite of what we are told (B), stating an assumption (A), or off-topic and unrelated to the premises we are given (C).
I hope that his helps explain the problem a bit more!
Cheers!
