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Economist: During a recession, a company can cut personnel costs

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Economist: During a recession, a company can cut personnel costs  [#permalink]

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New post 17 Aug 2018, 02:45
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A
B
C
D
E

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  55% (hard)

Question Stats:

64% (01:27) correct 36% (01:56) wrong based on 171 sessions

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Economist: During a recession, a company can cut personnel costs either by laying off some employees without reducing the wages of remaining employees or by reducing the wages of all employees without laying off anyone. Both damage morale, but layoffs damage it less, since the aggrieved have, after all, left. Thus, when companies must reduce personnel costs during recessions, they are likely to lay off employees.

Which one of the following, if true, most strengthens the economist’s reasoning?

(A) Employee morale is usually the primary concern driving companies’ decisions about whether to lay off employees or to reduce their wages.
(B) In general, companies increase wages only when they are unable to find enough qualified employees.
(C) Some companies will be unable to make a profit during recessions no matter how much they reduce personnel costs.
(D) When companies cut personnel costs during recessions by reducing wages, some employees usually resign.
(E) Some companies that have laid off employees during recessions have had difficulty finding enough qualified employees once economic growth resumed.

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Economist: During a recession, a company can cut personnel costs  [#permalink]

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New post 17 Aug 2018, 03:41
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If the morale is the primary concern to decide between layoff people or decrease wages, then A is the best choice.

The others are out of scope or irrelevant.

Ask for further assistance.

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Re: Economist: During a recession, a company can cut personnel costs  [#permalink]

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New post 17 Aug 2018, 09:41
A indeed is best but D also has a point, since it has “some” it is out.


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Re: Economist: During a recession, a company can cut personnel costs  [#permalink]

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New post 17 Aug 2018, 18:54
aroraishita02 I marked Option D as it states that when companies cut personnel cost during recession by reducing wages, some employees usually resign so isn't it strengthening our conclusion? I was stuck between A and D. Eventually marked incorrect answer choice Option D :(
Also can you please post official explanation for this question
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Re: Economist: During a recession, a company can cut personnel costs  [#permalink]

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New post 17 Aug 2018, 18:56
Experts nightblade354 abhimahna daagh sir VeritasKarishma

Please guide . How can we eliminate Option D?
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Re: Economist: During a recession, a company can cut personnel costs  [#permalink]

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New post 25 Aug 2018, 10:05
vasuca10 wrote:
Experts nightblade354 abhimahna daagh sir VeritasKarishma

Please guide . How can we eliminate Option D?
Hi Vasuca10,

I would like to help you with this one.
I think you jumbled up the meaning of laying off and resigning. Laying off is not by choice. On the other hand resigning is by choice.

Think again about the conclusion now - - -> will surely clear the air.

Consider kudos if that helped :)

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Re: Economist: During a recession, a company can cut personnel costs  [#permalink]

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New post 25 Aug 2018, 10:16
Economist: During a recession, a company can cut personnel costs either by laying off some employees without reducing the wages of remaining employees or by reducing the wages of all employees without laying off anyone. Both damage morale, but layoffs damage it less, since the aggrieved have, after all, left. Thus, when companies must reduce personnel costs during recessions, they are likely to lay off employees.

Which one of the following, if true, most strengthens the economist???s reasoning?

(A) Employee morale is usually the primary concern driving companies??? decisions about whether to lay off employees or to reduce their wages.
(B) In general, companies increase wages only when they are unable to find enough qualified employees.
(C) Some companies will be unable to make a profit during recessions no matter how much they reduce personnel costs.
(D) When companies cut personnel costs during recessions by reducing wages, some employees usually resign.
(E) Some companies that have laid off employees during recessions have had difficulty finding enough qualified employees once economic growth resumed.
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Re: Economist: During a recession, a company can cut personnel costs  [#permalink]

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New post 26 Aug 2018, 07:50
Companies have 2 options during a recession:
1) Either layoff a few people without reducing the wages of the rest.
2) Reduce the wages of all without laying off anyone

As per the author both the situations damage the morale of employees but option 1 has a lesser impact, hence author concludes that whenever a company needs to reduce costs during a recession it is more likely to lay off employees.
Companies could take either of the 2 decisions as both would lead to a reduction of companies' personal expenses but they decide to go with option 1 as employees' morale is of prime importance to the companies and this is what option 'A' says.
Re: Economist: During a recession, a company can cut personnel costs &nbs [#permalink] 26 Aug 2018, 07:50
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