Hi Geva could you give an estimated cost of new paper and the estimated cost of Recycled paper when the tipping point was 2.12$
i am still confused why the tipping point would not decrease if the cost of recycled paper were to decrease.
If (A) were true, then also the cost of new paper would decreas. So essentially (A) and (C) seems to be saying the same thing ie:The cost of new paper also decreased

Now, over time, recycling paper becomes more cost effective through technology, so we'd expect the tipping point to shift downward: for example, we'd expect it to be worth it to shift to recycling paper already at $1.5 per ream, because making recycled paper costs less now.

Hi Geva you mean to say the cost of recycled paper has come down to 1.5$ or you expect the tipping point to come down to 1.5 $

mundasingh123 wrote:Hi Geva could you give an estimated cost of new paper and the estimated cost of Recycled paper when the tipping point was 2.12$
i am still confused why the tipping point would not decrease if the cost of recycled paper were to decrease.
If (A) were true, then also the cost of new paper would decreas. So essentially (A) and (C) seems to be saying the same thing ie:The cost of new paper also decreased

The actual cost does. not. matter.
only the tipping point's location.

Think of decision between going to work by car or taking a taxi. it's cheaper to take the car, but the car has the added cost of a parking lot, which the taxi does not need.

If the parking is free, you take the car.
If the parking is say $10 an hour, it's worth it to pay the expensive price of the taxi, since the lack of parking costs makes it worth your while.

somewhere between $0 per hour and $10 per hour is your tipping point: the price of parking at which you decide to move from car to taxi. Let's say that this tipping point is at $2.2 per hour parking: less than that, you take the car, more than that you take the taxi.

Now let's pretend that the price of parking fluctuates daily. It doesn't change your tipping point: each morning, you will call the parking lot and ask for the price of parking:
if the attendant says "today we charge $3 per hours" you say "fine, that's more than $2.2, I'll take the cab today".
If the next day the attendant says "we have a special on parking: only $1 per hour" you say "great! - that's less than the $2.2 tipping point - I'll take the car".

The argument above doesn't concern the actual price - it concerns the change in the tipping point, the decision point of your car/taxi algorithm. The equivalent in our car/taxi dilema will be a drop in taxi rates, making it worth it to take the taxi when parking is only $1.5 per hour. You will still check the price of parking every day to see whether you're taking the ca or taxi - the only thing that's changed is your decision point.

If it turns out that the tipping point did not change despite the drop in taxi prices - which only means that you're still using $2.2 as your benchmark to decide on your daily action, and not $1.5 - this means that something must have also changed in the price of taking the car, to make it still worthwhile taking the car at the more expensive rate $2.2 per hour parking, and not at the cheaper $1.5. This is what C does.

A is trying to claim that the price of parking itself must be low, which bears absolutely no relevance to the question as to why the tipping point of your algorithm did not change.

Thanks Geva . It is one of the best explanations of dynamics between 2 different entities on BTG -so clear and easy to understand.I think this CR requires a good understanding of how the Tipping Point is influenced by changes in the entities else one will not be able to understand whats required to maintain the tipping point at the same level
This Explanation has made clear a lot of doubts that i had in my mind .
Now 1 final quest.
A says that the cost of unprocessed tree to make new paper has decreased
Doesnt this convey that the price of new paper has decreased

forgetneoiamtheone wrote:This is explain a paradox question from Princeton Review CAT.

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 decreased in the cost of recycling equipment have occured despite
increased 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 tree 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.

I do not fully agree with the OA C.

Please explain why your choice is the best. Thanks.

I received a PM asking me to comment.

Geva's explanation is great. Just one more point I would add.

Question: If the cost of producing recycled paper has decreased, why has the PPV -- the relationship between the price of recycled paper and the price of new paper -- stayed exactly the same?

When we're asked to resolve an apparent contradiction, the correct answer should affect both sides of the conflict.

Answer choice A addresses only one side of the conflict: the cost of producing new paper. This answer choice highlights a difference between new paper and recycled paper and thus could make the conflict worse. If the cost of trees has fallen dramatically, what are the chances that the PPV would stay exactly the same?

Answer choice C is safer because it addresses both sides of the conflict. If the innovations that have made the production of recycled paper more cost-efficient have also made the production of new paper more cost-efficient, then each side of the conflict is receiving the same cost benefit. Same reduction in cost = no change in PPV.

The correct answer is C.