gmacvik wrote:
In 1980, Country A had a per capita gross domestic product (GDP) that was $5,000 higher than that of the European Economic Community. By 1990, the difference, when adjusted for inflation, had increased to $6,000. Since a rising per capita GDP indicates a rising average standard of living, the average standard of living in Country A must have risen between 1980 and 1990.
Which one of the following is an assumption on which the argument depends?
(A) Between 1980 and 1990, Country A and the European Economic Community experienced the same percentage increase in population.
(B) Between 1980 and 1990 the average standard of living in the European Economic Community fell.
(C) Some member countries of the European Economic Community had, during the 1980s, a higher average standard of living than Country A.
(D) The per capita GDP of the European Economic Community was not lower by more that $1,000 in 1990 than it had been in 1980.
(E) In 1990, no member country of the European Economic Community had a per capita GDP higher than that of Country A.
1980:
GDP per capita for A - GDP per capita for EEC = 5000
1990:
GDP per capita for A - GDP per capita for EEC = 6000
Higher the GDP per capita, higher the standard of living.
Conclusion: Country A's standard of living increased from 1980 to 1990.
Note that we are given that the diff in the GDPs per capita increased. This can happen in multiple ways:
- If A's GDP per capita increases by 1000, but EEC's stays the same.
- If EEC's GDP per capita decreases by 1000, but A's stays the same.
- If A's GDP per capita decreases by 500, but EEC's decreases by 1500.
... and so on...
Think of the numbers on the number line. Diff between them is 5000.
________________ EEC ____________________(5000) _________________A_______
How can you increase it to 6000? In many ways.
________________ EEC ____________________(5000) _________________A_______
________________ EEC ____________________(6000) ____________________________A________
or
________________ EEC ____________________(5000) _________________A_______
_________EEC ____________________________(6000) _________________A_________
or
________________ EEC ____________________(5000) _________________A_______
___EEC ____________________________(6000) _________________A_________
or many other ways.
To conclude that A's standard of living has increased, we are assuming that A's GDP has increased and that is why the diff between them has increased. What if A's GDP per capita actually stayed the same or decreased but EEC's GDP per capita decreased by 1000 or more? (cases 2 and 3 above). Then we cannot say that A's GDP per capita must have increased.
We are assuming that EEC's GDP per capita did not decrease by more than 1000.
Hence (D) is correct.
The population increase/decrease over this period is irrelevant. We are comparing GDP per capita.
Think about it this way:
Factory A made 200 chairs yesterday.
Factory B made 300 chairs yesterday.
Can I say factory B is more productive? That depends on how many workers work in each factory.
Say if 10 workers work in factory A and 20 workers work in factory B, then factory A is more productive. It produces 20 chairs per worker.
So to measure productivity, we need to compare chairs per person made, not just chairs.
Now if I say that today factory A made 25 chairs per worker and factor B made 22 chairs per worker, can I say that factory A is more productive? Sure. It made higher number of chairs per worker. Does it matter how many total chairs each made and how many workers each party had? No. All that is already accounted for in arriving at chairs per person.
_________________
Karishma
Veritas Prep GMAT Instructor
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