GMAT Question of the Day - Daily to your Mailbox; hard ones only

 It is currently 26 May 2019, 20:18

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# Firms adopting profit-related-pay (PRP) contracts pay wages

Author Message
TAGS:

### Hide Tags

Manager
Joined: 07 Dec 2010
Posts: 96
Concentration: Marketing, General Management

### Show Tags

08 Jun 2011, 20:54
9
00:00

Difficulty:

25% (medium)

Question Stats:

75% (01:50) correct 25% (02:10) wrong based on 709 sessions

### HideShow timer Statistics

Firms adopting “profit-related-pay” (PRP) contracts pay wages at levels that vary with the firm’s profits. In the metalworking industry last year, firms with PRP contracts 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 that PRP contracts increase worker productivity, which of the following, if true, would most seriously weaken that argument?

(A) Results similar to those cited for the metal-working 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) Because introducing PRP contracts greatly changes individual workers’ relationships to the firm, negotiating the introduction of PRP contracts in complex and time consuming.

(D) Many firms in the metalworking industry have modernized production equipment in the last five years, and most of these introduced 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.
Manager
Joined: 07 Dec 2010
Posts: 96
Concentration: Marketing, General Management

### Show Tags

08 Jun 2011, 21:09
what actually we need to search for in choosing a correct answer for weaken question...
Please can u give me some explanation on this
Senior Manager
Status: 750+ or Burst !
Joined: 01 May 2011
Posts: 359
Location: India
Concentration: General Management, Strategy
GMAT 1: 670 Q48 V35
GPA: 3.5

### Show Tags

08 Jun 2011, 21:37
2
ruturaj wrote:
what actually we need to search for in choosing a correct answer for weaken question...
Please can u give me some explanation on this

There are a lot of things you can do.

Firstly, most important, find the conclusion of the argument.

For weaken questions you can attack the assumption underlying the argument.
OR

If you see a Cause-Event relationship prevailing, you can do the following:

1)Show alternate cause for the event
2)Show when cause takes place, event doesn't & vice-versa
3)Show reverse relation - Event affecting the cause
4)Show that the statistical data used for framing the argument and conclusion is incorrect.

For the above problem the option shows an alternate cause for the event thereby weakening the conclusion of the argument.

You will get a hang of all this when you practice more and analyse the answer choices- both correct and incorrect ones.
_________________
GMAT done - a mediocre score but I still have a lot of grit in me

The last 20 days of my GMAT journey
Retired Moderator
Joined: 20 Dec 2010
Posts: 1772

### Show Tags

09 Jun 2011, 01:41
4
ruturaj wrote:
what actually we need to search for in choosing a correct answer for weaken question...
Please can u give me some explanation on this

In addition to what akhileshgupta already mentioned, understanding and rephrasing may also help.

Conclusion: PRP contract increase productivity. (Note: Here conclusion is a part of the question. Many times it is the part of the passage, in which case you will have to locate the conclusion)
Weaken: PRP contract doesn't increase productivity; something else does or PRP contract decreases productivity by having some negative effect.

(A) Results similar to those cited for the metal-working industry have been found in other industries where
PRP contracts are used.
It means the productivity is seen in other industries as well. It is a positive of PRP, not negative.

(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.
This is just giving us a fact that is not connected and doesn't mention productivity.

(C) Because introducing PRP contracts greatly changes individual workers’ relationships to the firm,
negotiating the introduction of PRP contracts in complex and time consuming.
Something which is difficult/very complex to execute or understand is usually not a weakener. If none of the other options makes sense, then we can reluctantly choose these type of statement but in most cases, we can just ignore these.
(D) Many firms in the metalworking industry have modernized production equipment in the last five years,
and most of these introduced PRP contracts at the same time.
Here this statement presents a possibility that the productivity increase could be due to modern machines AND NOT due to PRP contracts. Thus, this is a weakening statement since it gives us an alternate cause of the effect.
----CORRECT WEAKENING STATEMENT

(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.
This is another fact which remotely suggests that PRP contract is good, not bad.

_________________
Intern
Joined: 11 Feb 2011
Posts: 2
Location: bangalore, India
Schools: Stanford,MIT, Harvard, Kellogg, LBS, IESE, IE etc

### Show Tags

15 Jun 2011, 08:26
question is about productivity of worker.
C doesnot talk about productivity anymore
hencce C is not the the answer for sure
Director
Status: There is always something new !!
Affiliations: PMI,QAI Global,eXampleCG
Joined: 08 May 2009
Posts: 966

### Show Tags

15 Jun 2011, 08:38
There is a reasoning gap,demanding an explanation as to how the productivity has increased.
We need to attack this gap here.

C the argument focuses on productivity increase.C looses this focus and talks about side things.POE.

D gives an alternate reason for productivity increase and hence attacks the gap.

D it is.
Manager
Status: Single
Joined: 05 Jun 2011
Posts: 98
Location: Shanghai China

### Show Tags

02 Aug 2011, 17:55
2
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.
Board of Directors
Joined: 01 Sep 2010
Posts: 3390

### Show Tags

05 Aug 2011, 15:23
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
_________________
Manager
Joined: 13 Nov 2009
Posts: 78
Location: India
Concentration: Finance, Marketing
GPA: 4
WE: General Management (Insurance)

### Show Tags

05 Aug 2011, 22:07
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.
Intern
Joined: 21 Apr 2010
Posts: 23
GMAT 1: 710 Q48 V40

### Show Tags

06 Aug 2011, 02:07
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
_________________
Ps. Kudos are always welcomed ; )
Status: How can I crack Verbal
Joined: 12 May 2011
Posts: 152
Location: India
Concentration: General Management, Finance
GMAT 1: 700 Q51 V32
GPA: 3

### Show Tags

06 Aug 2011, 13:44
D...provides another reason why productivity increased instead of the one stated in the argument
Intern
Joined: 07 May 2011
Posts: 25

### Show Tags

16 Dec 2012, 17:14
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
SVP
Joined: 06 Sep 2013
Posts: 1660
Concentration: Finance

### Show Tags

14 Oct 2013, 08:15
ruturaj wrote:
Firms adopting “profit-related-pay” (PRP) contracts pay wages at levels that vary with the firm’s profits. In
the metalworking industry last year, firms with PRP contracts 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 that PRP contracts increase worker productivity, which of the following, if
true, would most seriously weaken that argument?
(A) Results similar to those cited for the metal-working 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) Because introducing PRP contracts greatly changes individual workers’ relationships to the firm,
negotiating the introduction of PRP contracts in complex and time consuming.
(D) Many firms in the metalworking industry have modernized production equipment in the last five years,
and most of these introduced 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.

Hey guys, just wanted to clarify something that might be useful to some of you. Hopefully
So why is answer B wrong. In B it is taking about total costs. Remember we are interested in productivity
Productivity = Output/Total Cost. Therefore it is not comparable unless we are given some form of output to imply this.
Hence the correct answer is (D) because it is an alternate cause of effect weakening the statement, as many of you correctly pointed out.

Keep that in mind, and good luck in your prep!
Cheers
J
VP
Joined: 09 Mar 2018
Posts: 1004
Location: India

### Show Tags

25 Jan 2019, 00:49
ruturaj wrote:
Firms adopting “profit-related-pay” (PRP) contracts pay wages at levels that vary with the firm’s profits. In the metalworking industry last year, firms with PRP contracts 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 that PRP contracts increase worker productivity, which of the following, if true, would most seriously weaken that argument?

(A) Results similar to those cited for the metal-working 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) Because introducing PRP contracts greatly changes individual workers’ relationships to the firm, negotiating the introduction of PRP contracts in complex and time consuming.

(D) Many firms in the metalworking industry have modernized production equipment in the last five years, and most of these introduced 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.

This argument mentions that

PRP contracts is the reason for increased productivity.

We can find another reason for this causality, we can weaken that claim

This is correctly done in D

Which says Modernized production equipment, is the correct reason.
_________________
If you notice any discrepancy in my reasoning, please let me know. Lets improve together.

Quote which i can relate to.
Many of life's failures happen with people who do not realize how close they were to success when they gave up.
Re: Firms adopting profit-related-pay (PRP) contracts pay wages   [#permalink] 25 Jan 2019, 00:49
Display posts from previous: Sort by

# Firms adopting profit-related-pay (PRP) contracts pay wages

 Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.