The Scorpio Miser with its special high-efficiency engine costs more to buy than the standard Scorpio sports car. At current fuel prices, a buyer choosing the Miser would have to drive it 60,000 miles to make up the difference in purchase price through savings on fuel. It follows that, if fuel prices fell, it would take fewer miles to reach the break-even point.
Which one of the following arguments contains an error of reasoning similar to that in the argument above?
(A) The true annual rate of earnings on an interest-bearing account is the annual rate of interest less the annual rate of inflation. Consequently, if the rate of inflation drips, the rate of interest can be reduced by an equal amount without there being a change in the true rate of earnings.
(B) For retail food stores, the Polar freezer, unlike the Arctic freezer, provides a consistent temperature that allows the store to carry premium frozen foods. Thus, if electricity rates fell, a lower volume of premium-food sales could justify choosing the Polar freezer.
(C) With the Roadmaker, a crew can repave a mile of decayed road in less time than with the competing model, which is, however, much less expensive. Reduced staffing levels made possible by the Roadmaker eventually compensate for its higher price. Therefore, the Roadmaker is especially advantageous where average wages are low.
(D) The improve strain the Northland apple tree bears fruit younger and lives longer than the standard strain. The standard strain does grow larger at maturity, but to allow for this, standard trees must be spaced farther apart. Therefore, new plantings should all be of the improved strain.
(E) Stocks pay dividends, which vary from year to year depending on profits made. Bonds pay interest, which remains constant from year to year. Therefore, since the interest earned on bonds does not decrease when economic conditions decline, investors interested in a reliable income should choose bonds.
OA: after discussion
Scorpio MIser
This topic has expert replies
-
- Legendary Member
- Posts: 2326
- Joined: Mon Jul 28, 2008 3:54 am
- Thanked: 173 times
- Followed by:2 members
- GMAT Score:710
-
- Master | Next Rank: 500 Posts
- Posts: 258
- Joined: Thu Aug 07, 2008 5:32 am
- Thanked: 16 times
I will go with C.gmatmachoman wrote:The Scorpio Miser with its special high-efficiency engine costs more to buy than the standard Scorpio sports car. At current fuel prices, a buyer choosing the Miser would have to drive it 60,000 miles to make up the difference in purchase price through savings on fuel. It follows that, if fuel prices fell, it would take fewer miles to reach the break-even point.
Which one of the following arguments contains an error of reasoning similar to that in the argument above?
(A) The true annual rate of earnings on an interest-bearing account is the annual rate of interest less the annual rate of inflation. Consequently, if the rate of inflation drips, the rate of interest can be reduced by an equal amount without there being a change in the true rate of earnings.
(B) For retail food stores, the Polar freezer, unlike the Arctic freezer, provides a consistent temperature that allows the store to carry premium frozen foods. Thus, if electricity rates fell, a lower volume of premium-food sales could justify choosing the Polar freezer.
(C) With the Roadmaker, a crew can repave a mile of decayed road in less time than with the competing model, which is, however, much less expensive. Reduced staffing levels made possible by the Roadmaker eventually compensate for its higher price. Therefore, the Roadmaker is especially advantageous where average wages are low.
(D) The improve strain the Northland apple tree bears fruit younger and lives longer than the standard strain. The standard strain does grow larger at maturity, but to allow for this, standard trees must be spaced farther apart. Therefore, new plantings should all be of the improved strain.
(E) Stocks pay dividends, which vary from year to year depending on profits made. Bonds pay interest, which remains constant from year to year. Therefore, since the interest earned on bonds does not decrease when economic conditions decline, investors interested in a reliable income should choose bonds.
OA: after discussion
In stimulus Authori is saying
For Scorpio, if fuel prices fell, it would take fewer miles to reach the break-even point.
i.e Scorpio is in advantageous position, when fuel prices increased.
(This ie error of reasoning)
In C similar error reasoning exists.
Road Maker is in not in advantageous poistion when wages are down. If wages are down,
Cheap Road Maker is in advantageous position.. <Cheap RoadMaker cost + Wage rate* Extra workers --> Less >
-
- Legendary Member
- Posts: 1161
- Joined: Mon May 12, 2008 2:52 am
- Location: Sydney
- Thanked: 23 times
- Followed by:1 members
- sunnyjohn
- Master | Next Rank: 500 Posts
- Posts: 344
- Joined: Mon Sep 14, 2009 5:40 am
- Thanked: 28 times
- Followed by:3 members
- GMAT Score:700
S-Miser(Expensive, 60,000 drive) = SSC( cheap, 60,000 Drive)
Means, In 60,000 drive - we can save enough fuel,
so that
Cost of Saved Fuel = Cost of S-Miser - Cost of SSC
so If Fuel cost fall ==> we need to save more fuel ==> we need to drive more.
this is erroe in reasoning.
A) Rate of earning = rate of interest - rate of inflation.
if inflation rate drops ==> rate of interest should also be drop, to keep the difference constant.
C) Roadmaker( Expensive, less time ) = another model( cheap, more time)
so, Raodmaker should be choosen when wages are low ==> its actually opposite, we should choose when wages are high, only then
saved wages can compensate for high price of roadmaker.
so, IMO : C
Means, In 60,000 drive - we can save enough fuel,
so that
Cost of Saved Fuel = Cost of S-Miser - Cost of SSC
so If Fuel cost fall ==> we need to save more fuel ==> we need to drive more.
this is erroe in reasoning.
A) Rate of earning = rate of interest - rate of inflation.
if inflation rate drops ==> rate of interest should also be drop, to keep the difference constant.
C) Roadmaker( Expensive, less time ) = another model( cheap, more time)
so, Raodmaker should be choosen when wages are low ==> its actually opposite, we should choose when wages are high, only then
saved wages can compensate for high price of roadmaker.
so, IMO : C