Critical Reasoning

Country Y uses its scarce foreign-exchange reserves to buy scrap iron for recycling into steel. Although the steel thus produced earns more foreign exchange than it costs, that policy is foolish. Country Y’s own territory has vast deposits of iron ore, which can be mined with minimal expenditure of foreign exchange.

Which of the following, if true, provides the strongest support for Country Y’s policy of buying scrap iron abroad?

(A) The price of scrap iron on international markets rose significantly in 1987.

(B) Country Y’s foreign-exchange reserves dropped significantly in 1987.

(C) There is virtually no difference in quality between steel produced from scrap iron and that produced from iron ore.

(D) Scrap iron is now used in the production of roughly half the steel used in the world today, and experts predict that scrap iron will be used even more extensively in the future.

(E) Furnaces that process scrap iron can be built and operated in Country Y with substantially less foreign exchange than can furnaces that process iron ore.

clear E

B too is a good contender which kills an alternative explanation, but E is more direct...

E is a clear winner.

IMO E as well.

(A) The price of scrap iron on international markets rose significantly in 1987 – if price of scrap iron on international markets rose significantly, it weakens rather than supports Country Y’s policy of buying scrap iron abroad

(B) Country Y’s foreign-exchange reserves dropped significantly in 1987 – - out of scope as the argument doesn’t address the quantity of foreign-exchange reserves and if Country Y’s foreign-exchange reserves dropped, probably it worth starting mining operations on country Y’s own territory. The latter weakens rather than supports Country Y’s current policy

(C) There is virtually no difference in quality between steel produced from scrap iron and that produced from iron ore. – if there is no difference in quality between steel produced from scrap iron and that produced from iron ore, it doesn’t matter for the country which strategy to follow

(D) Scrap iron is now used in the production of roughly half the steel used in the world today, and experts predict that scrap iron will be used even more extensively in the future– out of scope as it doesn’t matter in what amount scrap iron is and will be used.

(E) Furnaces that process scrap iron can be built and operated in Country Y with substantially less foreign exchange than can furnaces that process iron ore – CORRECT as if country Y buy can scrap iron for recycling into steel on international markets and technology facilities oriented on the usage of scrap iron cost less foreign exchange than do furnaces processing only iron ore, it would be more expensive for the country to change its policy than to continue the old one. The above provides the strongest support for Country Y’s policy of buying scrap iron abroad

IMO - E

When I read this question I actually thought it was D. The way I looked at it was if experts predict the use of scrap iron to increase in the future you would assume prices to go up. As a result, it would make more sense for Country Y to buy the relatively cheap scrap iron today before it gets more expensive and use their own cheaper sources later.

Whats wrong with my reasoning or am I thinking too much into it?

I like your reasoning Pelle and thats what I thought too but I would have still gone for E in the exam having acquainted myself with the GMAT type of questions. Your reasoning is very long term and strategic thinking
GMAT sometimes does not make sense but you gotta play along

I'm having trouble attacking this problem, even with some of the explanations. Is the conclusion in this argument on the 2nd sentence where it says "that policy is foolish"?

Can an expert provide insight on this question?

bigge2win wrote:I'm having trouble attacking this problem, even with some of the explanations. Is the conclusion in this argument on the 2nd sentence where it says "that policy is foolish"?

Can an expert provide insight on this question?

Yep. When in doubt, the conclusion can be found by asking "why?" On CR questions, there will always be evidence provided in support of a conclusion.

Why is the policy foolish? Because Country Y has iron deposits, so it doesn't need to buy scrap iron.

I meant I needed some more insight on the argument, not just the question I asked.

From what I read, it seems as though the policy of the country is opposed by the author and the question is asking to support the policy of the country. The conclusion says the policy is foolish, but the question is asking to find evidence that the policy is not foolish. Am I right?

What type of question is this exactly? To me, it looks like a strengthen a premise or weaken the conclusion (since a premise and the conclusion are opposing views). Or maybe it's a paradox question?

It's a strengthen question, but with misdirection. They want you to focus on the author's conclusion (that buying scrap iron is foolish), but the question stem itself asks you to add support to the country's course of action.

Although I got my answer correct, but I pre-assumed something different than given in the answer choice. Please check whether my pre-assumptions are also correct:

1. Time to bring scrap iron from abroad is less than that used to mine iron ore
2. Country Y has trade negotiations with the country from whom scrap iron is being purchased.

Thanks and Regards
Tushar