Assessment 1 of 0

GMAT – Section 1: Test 1

Justice June 4, 2015

Integrated Reasoning (Questions 1-8)

Use the following to answer questions 1 through 8.

Data Set 1

The nation of Alberia has instituted a carbon-sharing system in order to limit the amount of carbon dioxide that is released from the nation’s industries and power plants. Under the system, each business that is subject to the new rules is given a maximum level of carbon dioxide that may be emitted each year based on the size of the particular business.

The equipment at Alberia’s various industrial plants vary greatly in age and efficiency at reducing greenhouse gases such as carbon dioxide. Retrofitting a plant with new equipment in order to comply with the new regulations can be very expensive. For this reason, the new rules allow for various industries to trade carbon credits at an established market rate. Specifically, industries that produce a level of carbon dioxide that is below their allotted allowance can sell their deficit, or carbon credit, to other companies that surpass their allotted allowance.

While the cost of expensive retrofits may be avoided by purchasing carbon credits, many businesses are nonetheless incentivized to undergo retrofitting for the purpose of gaining public favor. Over the past decade, the drive to make business more environmentally friendly has been largely driven by the citizens of Alberia, who view trading carbon credits as a way that businesses may circumvent meaningful improvements to their practices.

A study has shown that if the cost of retrofitting equipment is less than or equal to the cost of purchasing carbon credits for a twelve-year time period, assuming constant production and no change in the regulatory requirements, the industrial plants will choose to execute the retrofits. Otherwise, the plants will choose to continue to buy carbon credits.

Data Set 1

The nine largest power plants in Alberia are all currently producing levels of carbon dioxide (CO2) that exceed their allotment per the limits imposed by the national government. For each power plant, the table lists the type of power plant (by fuel), power output, allowed level of CO2 production, actual level of CO2 production, and the cheapest cost of retrofitting the plant to be in compliance with the imposed limits. Assume that the lowest cost retrofit does not result in a power plant having surplus carbon credits to trade. The current market rate at which carbon credits are being sold is €4 per ton of CO2.

Plant Name Source
Power Output
Yearly CO2
Actual Yearly
Lowest Cost
of Plant
Bay Line Hard
220 MW 378,000 tons 635,000 tons €9,500,000
Hillside Springs Natural
150 MW 258,000 tons 270,000 tons €1,200,000
Middle Valley #1 Brown
250 MW 430,000 tons 790,000 tons €12,500,000
Middle Valley #2 Fuel oil 90 MW 155,000 tons 217,000 tons €3,000,000
Parkerville Brown
130 MW 224,000 tons 411,000 tons €8,300,000
Roland Mines Hard
170 MW 292,000 tons 492,000 tons €11,000,000
South Island Natural
120 MW 206,000 tons 222,000 tons €2,000,000
Titanburg Brown
300 MW 516,000 tons 948,000 tons €15,500,000
Wyland Natural
190 MW 327,000 tons 361,000 tons €1,900,000

8th Grade ELA – Pre-test Assessment 5