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Firms adopting "profit-related-pay"(PRP) contracts

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Firms adopting "profit-related-pay"(PRP) contracts [#permalink] New post 02 Aug 2011, 16:55
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116. Firms adopting "profit-related-pay"(PRP) contracts pay wages at level that vary with the firm's profits. In the metalworking industry last year, firms with PRP contract in place showed productivity per worker on average 13 percent higher than that of their competitors who used more traditional contracts.

If, on the basis of the evidence above, it is argued tha PRP contracts increase worker productivity, which of the following, if true, would most seriously weaken the argument?

a) Results similar to those cited for the metalworking industry have been found in other industries where PRP contracts are used

b) Under PRP contracts costs other than labor costs, such as plant, machinery, and energy, make up an increased proportion of the total cost of each unit of output.

c) Becasue introducing PRP contracts greatly changes individual workers' relationships to the firm, negotiating the introduction of PRP contracts is complex and time-consuming.

d) Many firms in the metalworking industry have modernized production equipment in the last five years, and most of these introduction PRP contracts at the same time.

e) In firms in the metalworking industry where PRP contracts are in place, the average take-home pay is 15 percent higher than it is in those firms where workers have more traditional contracts.
[Reveal] Spoiler: OA
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Re: A 12th OG problem, pls help to explain it.(5) [#permalink] New post 05 Aug 2011, 14:23
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tracyyahoo wrote:
116. Firms adopting "profit-related-pay"(PRP) contracts pay wages at level that vary with the firm's profits. In the metalworking industry last year, firms with PRP contract in place showed productivity per worker on average 13 percent higher than that of their competitors who used more traditional contracts.

If, on the basis of the evidence above, it is argued tha PRP contracts increase worker productivity, which of the following, if true, would most seriously weaken the argument?

a) Results similar to those cited for the metalworking industry have been found in other industries where PRP contracts are used

b) Under PRP contracts costs other than labor costs, such as plant, machinery, and energy, make up an increased proportion of the total cost of each unit of output.

c) Becasue introducing PRP contracts greatly changes individual workers' relationships to the firm, negotiating the introduction of PRP contracts is complex and time-consuming.

d) Many firms in the metalworking industry have modernized production equipment in the last five years, and most of these introduction PRP contracts at the same time.

e) In firms in the metalworking industry where PRP contracts are in place, the average take-home pay is 15 percent higher than it is in those firms where workers have more traditional contracts.

My question is "choice B", if labor costs are lower, then worker won't work harder any more, so the productivity is low which weaken the argument. Why B is not true?



I picked D........indeed is the correct answer: is the only that explain we can have other reasons to explain the workers productivity, that in the stimulus is linked only by the contracts
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Re: A 12th OG problem, pls help to explain it.(5) [#permalink] New post 05 Aug 2011, 20:59
+1 for D.

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Re: A 12th OG problem, pls help to explain it.(5) [#permalink] New post 05 Aug 2011, 21:07
D. The question asks to weaken the argument. In the argument, the increase in productivity is atttributed to the introduction of Profit Related Pay. Since we are to weaken the argument, any answer choice that provides an alternate explanation for the increased productivity would weaken the argument. In this case it is D.
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Re: A 12th OG problem, pls help to explain it.(5) [#permalink] New post 06 Aug 2011, 01:07
This is a casual argument. So if you can show another possibilty you weaken it. D suggest that productivity increased because of equipment. This gives us a reason to doubt that PRP caused productivity increases
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Re: A 12th OG problem, pls help to explain it.(5) [#permalink] New post 06 Aug 2011, 02:07
+1 D
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Re: A 12th OG problem, pls help to explain it.(5) [#permalink] New post 06 Aug 2011, 12:44
D...provides another reason why productivity increased instead of the one stated in the argument
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Re: A 12th OG problem, pls help to explain it.(5) [#permalink] New post 16 Dec 2012, 16:14
I picked D too, but I still wonder this... doesn't D require the assumption that modern equipments necessarily increase productivity, which the stimulus isn't necessarily implying. despite this, D still remains the best choice by POE. may be i am thinking too much. i think doing too many 700 level CRs back to back has made me second guess even the easier ones.

Detran wrote:
This is a casual argument. So if you can show another possibilty you weaken it. D suggest that productivity increased because of equipment. This gives us a reason to doubt that PRP caused productivity increases
Re: A 12th OG problem, pls help to explain it.(5)   [#permalink] 16 Dec 2012, 16:14
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