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Re: Price and wage controls are the only way to control [#permalink]
I would go with D on this


bcoz price control + wage control = low profit

higher inflation = low profit
in order to low inflation we need price control,

if price control is in place,
wage control = less money = low profit, hence choice C is ruled out

D seems logical
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Re: Price and wage controls are the only way to control [#permalink]
price control + no wage control = more spending = more/constant profit
This cannot happen because these are mutually exclusive events.

no price control + no wage control = more/constant spending = more/constant profit

In both these cases wage is not controlled.

if there is inflation in these cases then itis not controlled.
But there may not be any inflation to begin with

It is possible that price controls are not in place and wage controls are in place . In this case people spend less but per item profit may be higher

Now (B) looks fine to me.
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Re: Price and wage controls are the only way to control [#permalink]
I am also leaning towards B, this could be a very tricky one.

Paul what is the OA?
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Re: Price and wage controls are the only way to control [#permalink]
Are you that anxious to know right away? :lol:
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Re: Price and wage controls are the only way to control [#permalink]
I'm stuck between A & D: from last statement its clear that since corp profits r not decreasing then wage controls r not in effect.........hence price control MAY be in effect, but what if inflation is there?? I guess I'll pick A........!!
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Re: Price and wage controls are the only way to control [#permalink]
according to the statement given ..a comapny cannot be in profit if there is wage control or price control under inflation ....so the only possibility seems to me is B
Pls the OA ...paul
baruna
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Re: Price and wage controls are the only way to control [#permalink]
Alright, OA is B. Nice discussion everyone.
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Re: Price and wage controls are the only way to control [#permalink]
Paul wrote:
Price and wage controls are the only way to control inflation. But wage controls limit worker spending, which, in turn, results in reduced corporate profits if price controls are in place.

Assume the above statements are true. Which of the following statements also must be true if corporate profits are not decreasing?
A) if there is inflation, wage controls are not in place
B) if there is inflation, it is not being controlled
C) workers have less money to spend
D) price controls are in effect
E) wage controls are in effect


A & B are very similar. A is bit weaker since it does not mention price control, hence it could be assumed to be in place.



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