Despite radical fluctuations during the previous decade, unit labor

Veritas Prep Official Solution

As evidenced by the phrase, “most helps to explain”, this is an “Explain the Paradox” question, a subtype of the Strengthen category. Several warning signs make it readily apparent that the Testmaker may be using statistics and ratios to hide the correct answer. The problem begins by defining unit labor costs as a ratio of two factors:


Unit Labor Costs = Labor Costs /Units Produced

The problem clearly states that the unit labor costs have stayed the same, but that labor costs have increased. Using the formula above, we can see that the only way for unit labor costs to remain constant in the face of increasing labor costs is to correspondingly increase the number of units produced, thus keeping the ratio the same. Once we cut through this mathematical trap set by the Testmaker, the answer is easy to find. We are looking for an explanation that shows us we have increased the number of units produced.

Answer choice “A” deals with the purchase prices of goods. This is a distraction unrelated to the ratio above, so we can eliminate it as a possible answer.

Answer choice “B” likewise focuses on information not include in the ratio above. The cost of raw materials can fluctuate without affecting the unit labor costs.

Answer choice “C” tells us that country Q produced more units – in fact, it tells us that the rate of increase in the units produced (per hour) is the same as the rate of increase in the labor costs (per hour).

If we were to substitute in these two parts into the equation above, the “per hour” factor would disappear out of the top and bottom of the equation. “C” clearly shows us how we could increase labor costs while still maintaining unit labor costs.

Answer choice “D” is completely extraneous. The economy can shift from manufacturing to service without affecting unit labor costs.

Answer choice “E” is a subtle trap answer designed by the Testmaker to trick you into subconsciously assuming information that is not explicitly stated. “E” tells us that workers with greater skill levels may be hired as hourly compensation increases. However, “greater skill levels” does not necessarily translate to “faster manufacturing.” Workers with greater skill levels do not necessarily work faster, so answer choice “E” does not necessarily bridge the logic gap.