Multiple choice

If the coal mining companies in India are slower to adopt new mining technology than their foreign counterparts are, their mining costs will fall more slowly than their foreign counterparts’ costs will. But if their mining costs fall less rapidly than their foreign counterparts’ costs do, they will not be able to lower their prices as rapidly as their foreign counterparts can; and when a country’s mining companies cannot lower their prices as rapidly as their foreign counterparts can, that country gets pushed out of the global supply market. If the statements above are true, which one of the following must also be true on the basis of them?

  1. If the mining companies in one country raise their prices, it is because they have pushed their foreign counterparts out of the global market.

  2. If mining companies in one country have been pushed out of the global market, this shows that their foreign counterparts have adopted new technologies more rapidly than they have.

  3. If a country’s foreign rivals can lower their mining costs more rapidly than the country’s own mining companies can, then their foreign rivals must have adopted new mining technologies.

  4. If a country’s mining companies adopt new technologies at the same rate as their foreign counterparts, neither group will be able to push the other out of the global market.

  5. If a country’s mining companies can lower their mining costs as rapidly as their foreign counterparts can, this shows that they adopt new technology at least as fast as their foreign counterparts do.

Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

If the mining companies in a country are as fast as their foreign counterparts in lowering their costs, this shows that they are at least as fast as their rivals in adopting new technology keeping other things constant. Hence (5)