Question: Hotco oil burners, designed to be used in asphalt plants, are so efficient that Hotco will sell one to the Clifton Asphalt plant for no payment other than the cost savings between the total amount the asphalt plant actually paid for oil using its former burner during the last two years and the total amount it will pay for oil using the Hotco burner during the next two years. On installation, the plant will make an estimated payment, which will be adjusted after two years to equal the actual cost savings.
Which of the following, if it occurred, would constitute a disadvantage for Hotco of the plan described above?
A) Another manufacturer’s introduction to the market of a similarly efficient burner
B) The Clifton Asphalt plant’s need for more than one new burner
C) Very poor efficiency in the Clifton Asphalt plant’s old burner
D) A decrease in the demand for asphalt
E) A steady increase in the price of oil beginning soon after the new burner is installed
“Hotco oil burners, designed to be used in asphalt plants, are so efficient”- is a GMAT critical reasoning topic. This GMAT critical reasoning includes a question with sets of five options. The candidates had to select the right option by analysing the question logically. The GMAT Critical Reasoning questions test the candidate’s skill in exploring, creating and assessing strategies and arguments. To respond to this question, the candidates must look for proof that would weaken the argument or the candidate must find logical flaws in the argument. The candidates would get 65 minutes in order to give answers to 36 MCQ questions in the critical reasoning section of the GMAT.
Answer: (E)
Explanation:
In order to answer this question, the candidate must go through the question first before reading the argument. The candidate must look for the implicit assumption and have to analyse it carefully in order to solve the question. The candidate needs to find an answer choice that illustrates a piece of information that would weaken the argument. The candidates must choose an answer choice that represents a fact that would strengthen the argument. This critical reasoning question asks the candidates to strengthen, weaken or assess the argument on the basis of cause-and-effect reasoning. The candidates need to select an option that illustrates an inference relevant to the discussion of the passage. For example, an answer option will eliminate a secondary cause. It might read: Hotco will experience loss if the difference Clifton plant spent in the last 2 years is close to what the company spent in the next 2 years.
Option (A): Wrong
The statement states that there emerges other manufacturers in the market to introduce their similar efficient burner. This statement is not relevant since there exists no comparison with different manufacturers. Therefore, the statement is incorrect.
Option (B): Wrong
This statement also does not support the causal claim of the argument of the passage. Therefore, the statement is irrelevant and thereby gets eliminated.
Option (C): Wrong
The statement argues about the very poor efficiency of the old burner of the Clifton Asphalt plant. This statement seems to sound true. However, no comparison of the efficiencies of new and old burners is mentioned in the passage. Therefore, option C is incorrect as it does not satisfy the argument of the passage.
Option (D): Wrong
This statement also does not support the claim of the passage. The passage does not mention any clue of what demand asphalt possesses to work with oil burners. Therefore, the statement is irrelevant and thereby get eliminated.
Option (E): Right
This statement depicts that there will be a steady increase in the rate of oil after the installation of the new burner. The company will have to spend more to buy its oil in the next two years. Therefore, it will reduce the difference in price and Hotco will get less oil in return. Hence, option E is the correct answer since it satisfies the argument of the passage.
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