Critical Reasoning

Technological improvements and reduced equipment costs have made converting solar energy directly into electricity far more cost-efficient in the last decade. However, the threshold of economic viability for solar power (that is, the price per barrel to which oil would have to rise in order for new solar power plants to be more economical than new oil-fired power plants) is unchanged at thirty-five dollars.
Which of the following, if true, does most to help explain why the increased cost-efficiency of solar power has not decreased its threshold of economic viability?
(A) The cost of oil has fallen dramatically.
(B) The reduction in the cost of solar-power equipment has occurred despite increased raw material costs for that equipment.
(C) Technological changes have increased the efficiency of oil-fired power plants.
(D) Most electricity is generated by coal-fired or nuclear, rather than oil-fired, power plants.
(E) When the price of oil increases, reserves of oil not previously worth exploiting become economically viable.












OA C...

why is A wrong ??

IMO C

If the effeciency of the power plant with gas increases then there is no need for Solar power plants.

What about D - if D is true even that explains why economic viability has not decreased because most of the electricty is not generated by oil-fired power plants. In this case, is 'D' out of scope then? please clarify.

I too went for (A) but here is my thinking after seeing your answer.

The argument states that:
(1) The price of the oil has to increase by 35 dollars for the solar power plants to be economically viable.
and the argument also states that:
(2) this threshold level is unchanged.

Therefore something else should have changed, which keeps oil fired power plants more economically viable.

(C) states that "the efficiency of the oil fired power plants have increased", which is a possible solution.

I also prefer C to A,
When A state paralellism comparing with solar efficient improvement.
:-/

Mahalo wrote:I too went for (A) but here is my thinking after seeing your answer.

The argument states that:
(1) The price of the oil has to increase by 35 dollars for the solar power plants to be economically viable.
and the argument also states that:
(2) this threshold level is unchanged.

Therefore something else should have changed, which keeps oil fired power plants more economically viable.

(C) states that "the efficiency of the oil fired power plants have increased", which is a possible solution.

An "increased efficiency" of oil-fired power plant doesn't necessarily mean an improvement in cost, right? Choice A explicity states that oil prices have dropped. With COSTS being the prime concern for an energy source to be used, doesn't choice A make the the prospect of using solar energy less attractive (since oil, which is already cheaper, have become even "more" cheaper)?

Please explain.

let us say earlier it used to cost $50 to get 1 unit of power using solar power system....and one barrel of oil costing $20 produced 1 unit of energy....

oil wud have to rise to $50 per barrel so that we cud switch to solar power...or solar power wud have to fall to $20 to make the switch economically viable...

Now if Oil prices have fallen dramatically!!!
we were getting 1 unit from $20 of oil...lets say oil prices have fallen to $5 per barrel .... and now we are getting 1 unit from oil power for $5 ...

Also solar power has become more efficient...say now we are getting 2 units of energy from $ 50 using solar power...this means 1 unit for $25 ... in this case solar power wud have to fall to $5 or oil wud have to rise to $25 ....
SO you can see THRESHOLD HAS CHANGED....BUT ACCORDING TO STIMULI THRESHOLD REMAINS UNCHANGED...

sO wat wud have happened..??

now with increased efficiency..we can get 2 units of energy from solar power and it still costs us $50 ....

As the stimuli says the threshold remains the same....
wat if oil power plants have become efficient ... earlier we were getting 1 unit from $20 ...NOW WE GET 2 UNITS USING $20 ...???

in this case..either solar power drops to $20 or oil rises to $50 .... threshold remains the same...

Important thing in this question is THRESHOLD....thats wat makes it confusing....hope it helps...

reply by gmatdetroyer.i find it helpful.pls read it carefully...


let us say earlier it used to cost $50 to get 1 unit of power using solar power system....and one barrel of oil costing $20 produced 1 unit of energy....

oil wud have to rise to $50 per barrel so that we cud switch to solar power...or solar power wud have to fall to $20 to make the switch economically viable...

Now if Oil prices have fallen dramatically!!!
we were getting 1 unit from $20 of oil...lets say oil prices have fallen to $5 per barrel .... and now we are getting 1 unit from oil power for $5 ...

Also solar power has become more efficient...say now we are getting 2 units of energy from $ 50 using solar power...this means 1 unit for $25 ... in this case solar power wud have to fall to $5 or oil wud have to rise to $25 ....
SO you can see THRESHOLD HAS CHANGED....BUT ACCORDING TO STIMULI THRESHOLD REMAINS UNCHANGED...

sO wat wud have happened..??

now with increased efficiency..we can get 2 units of energy from solar power and it still costs us $50 ....

As the stimuli says the threshold remains the same....
wat if oil power plants have become efficient ... earlier we were getting 1 unit from $20 ...NOW WE GET 2 UNITS USING $20 ...???

in this case..either solar power drops to $20 or oil rises to $50 .... threshold remains the same...

Important thing in this question is THRESHOLD....thats wat makes it confusing....hope it helps...

agent47 wrote:IMO C

If the effeciency of the power plant with gas increases then there is no need for Solar power plants.

can anyone explain each of the options in detail ?

A. Consider the oil price has fallen drastically. if the impact is only with oil price then why the comparison is made with the new -oil fired plants. We have to take care of that our answer do not act against any of the premises.