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

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Manager
Joined: 07 Dec 2010
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Kudos [?]: 41 [0], given: 12

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08 Jun 2011, 20:54
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Question Stats:

78% (01:18) correct 22% (01:33) wrong based on 204 sessions

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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.
[Reveal] Spoiler: OA

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08 Jun 2011, 21:07
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. strengthen the argument
(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. we are talking abt employee productivity and COP
(C) Because introducing PRP contracts greatly changes individual workers’ relationships to the firm,
negotiating the introduction of PRP contracts in complex and time consuming. We are not interested in introducing PRP, we are interested in industries that already have PRP in place.
(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. Perfect !! it gives us an alternate explanation that it's not PRP but modern production equipments that raise productivity.
(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. Not worried on take home pay,

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Manager
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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

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Status: 750+ or Burst !
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08 Jun 2011, 21:37
1
KUDOS
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.
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09 Jun 2011, 01:41
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.

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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

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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.
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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

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18 Nov 2016, 05:19
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Re: Firms adopting profit-related-pay (PRP) contracts pay wages   [#permalink] 18 Nov 2016, 05:19
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