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# Economist: Drastically cutting payroll costs by reducing

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Senior Manager
Joined: 05 May 2003
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Economist: Drastically cutting payroll costs by reducing [#permalink]

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19 Dec 2003, 08:05
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Economist: Drastically cutting payroll costs by reducing corporate staffs will bolster corporate profits and the national economy. The remaining employees will, by necessity, operate more efficiently and work additional overtime, in the absence of now-underutilized personnel. This increase in national productivity will cause new positions to spring up with the healthier economy, providing new openings for those who were made jobless.

Which of the following, if true, casts the most doubt on the economist's prediction above?

(A) If employees work longer hours, the additional hours will not be as productive as the regular hours these same employees have already worked.

(B) Most corporations are already at the minimum number of employees needed to effectively maintain their operations.

(C) Some economists predict that the national economy will substantially improve in the next two years even without drastic reductions in payroll costs.

(D) If corporations reduce the number of employees, the average number of employees per company will decrease.

(E) Many of the new positions in a restructured economy would be lower-paying than those lost during the restructuring.

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Manager
Joined: 12 Oct 2003
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19 Dec 2003, 08:22
I want to go with A

If the additional hours will not be as productive as the regular hours then the argument fails.

But thinking again, it might be ok that it is not AS PRODUCTIVE AS , because some work (which is less productive) may be better than no work and to compensate the decrease in productivity the workers may work for more hours.

B does not do it for me because even if "Most corporations are already at the minimum number of employees ", the remaining employees can work doubly hard and more overtime to cover up.

C is not good because considering time here is out of scope .. or is it!!

D and E are out of scope.

considering the other options I find A is 'best', but I have my doubts as stated above.

cant think straight or address this again because it is kinda difficult to sneak in a big answer on GMAT when you are at work

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Manager
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19 Dec 2003, 08:34
I would go with B.

B says -
Most corporations are already at the minimum number of employees needed to effectively maintain their operations.

Here, the key word is "effectively", not the fact that the number is at minimum.
If the number of employees are just enough to do the job "effectively", you cannot reduce the number further.

Option A says that, the hours will not be "as productive as" regular hours, nonetheless, the additional hours will be productive (even if less).

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Director
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19 Dec 2003, 08:55
will go with B
A) additional hrs will not be 'as productive', but surely will increase the productive hrs. author also confers this..
B)if most corporations are working with their minimum required workforce..if they lay-off, they will be compromising with the productivity.
C)out of scope
E)no mention of the wage range or anything. out of scope

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Manager
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19 Dec 2003, 09:11
I am not entirely convinced with A myself .. but have my doubts about B as well.

how will the efficiency be compromised if the workers that are not layed-off work extra hours and compensate the lack of labor .. this is in fact what is suggested by the author in the first place.

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Manager
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19 Dec 2003, 10:09

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Senior Manager
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19 Dec 2003, 13:59
Official explanation:
The conclusion in this argument is in the first sentence: reducing employees will increase profits and improve the economy in general. The author then explains how this will happen. Choice (B) undermines this line of thinking by pointing out that what the author suggests is wrong.
Source : Got it in one of the kaplan tests.

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CEO
Joined: 15 Aug 2003
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19 Dec 2003, 14:53
Geethu wrote:
Economist: Drastically cutting payroll costs by reducing corporate staffs will bolster corporate profits and the national economy. The remaining employees will, by necessity, operate more efficiently and work additional overtime, in the absence of now-underutilized personnel. This increase in national productivity will cause new positions to spring up with the healthier economy, providing new openings for those who were made jobless.

Which of the following, if true, casts the most doubt on the economist's prediction above?

(A) If employees work longer hours, the additional hours will not be as productive as the regular hours these same employees have already worked.

(B) Most corporations are already at the minimum number of employees needed to effectively maintain their operations.

(C) Some economists predict that the national economy will substantially improve in the next two years even without drastic reductions in payroll costs.

(D) If corporations reduce the number of employees, the average number of employees per company will decrease.

(E) Many of the new positions in a restructured economy would be lower-paying than those lost during the restructuring.

B is best.

if they are already at their minimum, they wont be able to cut costs by a reduction in the workforce.

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Re: Economist: Drastically cutting payroll costs by reducing [#permalink]

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17 Jan 2013, 21:40
Go to "B" Most corporations are already at the minimum number of employees needed to effectively maintain their operations.

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Re: Economist: Drastically cutting payroll costs by reducing   [#permalink] 17 Jan 2013, 21:40
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