Oil analysts predict that

Answer choices

1. A

   No Impact2% picked this

   Improved automobile technology and new kinds of fuel for cars have enabled some drivers to

   This has nothing to do with the relationship between the price of oil and the pump price of gasoline.

   2%
2. B

   Opposite Impact4% picked this

   Gasoline manufacturers will not expand their

   A potential objection we'd have toward this prediction is, "Who says that if gas manufacturers have to pay 1/2 as much for oil that they'll pass this full savings onto the consumer? Maybe they'll choose to just increase their profit margin!" Since this rules out that possibility, it strengthens.

   4%
3. C

   Strengthens (if anything)2% picked this

   There are many different gasoline companies that compete with each other to provide the most

   Similar to (B), this makes it less likely that gas companies will just pocket the savings from reduced oil prices. They might be able to do that if they had a monopoly, but with so many companies competing, that will drive down gas prices, making the author's prediction more likely.

   2%
4. D

   No Impact15% picked this

   Studies in several countries show that the amount of gasoline purchased by consumers initially rises after the price

   This has nothing to do with the price of gasoline. It only talks about the quantity of gasoline sold.

   15%
5. E

   Correct77% picked this

   Refining costs, distribution costs, and taxes, none of which varies significantly with oil prices, constitute a large portion

   Why this is right

   Refining, distribution, and tax costs are significant portions of gasoline's price and don't vary with oil prices. Thus, even if the oil cost is halved, gasoline prices won't fall proportionally, as these other factors remain constant. This seriously weakens the analysts' prediction of a direct price drop by half. Let's say a gallon of gas costs $4 to the gas company, $1 - oil $1 - refining $1 - distribution $1 - taxes $4 total expenses So they sell the gas for $5 / gallon (in Los Angeles), so that they can profit $1. If the cost of oil gets cut in half, then now their expenses look like this: $0.50 - oil $1 - refining $1 - distribution $1 - taxes $3.50 total expenses The prediction was that the price of gas would fall by half, so now gas in LA would cost $2.50 / gallon? That doesn't make sense. The gas company would be losing money at that price point.

   Skill tested: Weaken · how this choice captures the argument's function is the move to repeat next time.

   77%