Q10 - The increase in the price of jet fuel

[Jake_Albertane]

I feel stupid for not understanding this. I chose the right answer through process of elimination and now am reviewing the questions but I don't get it.

I'm understanding: the price of fuel increased because there was a sharp decrease in the supply of the fuel available compared to the demand. (This is basic supply demand idea)

Now... the amount of fuel available is larger today than it was last time. Why?

What does the increase of demand have to do with the amount of fuel being available..?

[timmydoeslsat]

So we know that the increase in the price of jet fuel is caused by a sharp decrease over the past year in the supply of jet fuel relative to demand.

The relative to demand part may be what you are missing here.

Over the past year, there was a sharp decrease in supply relative to demand. So we know that the demand was falling in that year.

We are told that there is a larger supply. We know that the demand must have went up.

[maryadkins]

Now... the amount of fuel available is larger today than it was last time. Why?

What does the increase of demand have to do with the amount of fuel being available..?

It doesn't need to have anything to do with it. This is an inference question, so the pieces of the argument don't need to (and often won't) tie neatly into a coherent argument structure. Think of them as independent statements. You're going to choose an answer choice that must be true based on any one (or a combination) of these statements.

As for why the overall amount could have gone up, timmydoeslsat gave a good explanation. Suppose demand and supply used to be even--we'll give them each a value of 10 (and we won't even use units, here). But then demand skyrocketed to 1,000. Even if supply grew to 500 (remember, the available supply only decreased relative to demand), it would still not match demand. So overall supply can be much larger than it used to be but still have decreased relative to demand... if demand has gone up.

(A) Yes! Demand has gone up.
(B) This is out of scope. It also gives a reason why demand might not have gone up.
(C) We are told nothing about the number of airlines.
(D) Irrelevant.
(E) Same as (D), we know nothing about petroleum.

[1191893369]

Suppose demand and supply used to be even--we'll give them each a value of 10 (and we won't even use units, here). But then demand skyrocketed to 1,000. Even if supply grew to 500 (remember, the available supply only decreased relative to demand), it would still not match demand. So overall supply can be much larger than it used to be but still have decreased relative to demand... if demand has gone up.

Thank you Mary for your clear explanation.
But I cannot see the inference that the increase is continuing today. Since I assume the increase in the price was only during the last year.

Can we infer that the price is still increasing from first sentence " the increase ... is due to... ." because of the present tense ?

[dahee.suh]

But I cannot see the inference that the increase is continuing today. Since I assume the increase in the price was only during the last year.

Can we infer that the price is still increasing from first sentence " the increase ... is due to... ." because of the present tense ?

I think the present tense (IS due to) is definitely an indicator that we are talking about the current increase in price. Also, the current increase in price is due to sharp decrease of jet fuel relative to demand OVER the past year, not DURING. To me, OVER means the decrease happened in the past and continued right up to the present, which also indicates that currently, there is an increase in the price of jet fuel.

[roflcoptersoisoi]

Although the LSAT is not meant to be esoteric and or advantage people that studied a particular field this question is a prime example where having even a rudimentary knowledge of economics and the laws of supply and demand are extremely helpful.

The stimulus is saying that there was a increase in the price of jet fuel because the supply of the latter relative to its demand has decreased. This is all in spite of the fact that total supply of jet fuel has increased.

If total supply of jet fuel has increased but it's supply relative to demand has decreased than it must be true that there has been an even greater increase in demand, if not there would be an excess supply of oil, and or there would have been no change in the the supply relative to demand.

We can illustrate this using basic math.

Last year:

Supply of jet fuel last year:
100 gallons

Demand for jet fuel last year:
200 gallons

Supply relative to demand last year: 100:200 or 0.5

Let's say that this year:

Supply of jet fuel this year:
150 Gallons (Supply increased by one half)

Demand for jet fuel this year :
Would necessarily have to increase by more than one half for the supply relative to demand to decrease.

Let's increase demand of jet fuel by 3 quarters. 200 x 0.75 = 150. Therefore 200+ 150 = 350

Demand for jet fuel this year: 350 Gallons

Supply relative to demand this year: 150 : 350 or 0.42