Labor costs are the dominant expense of doing business

Question

Labor costs are the dominant expense of doing business in all but a few endeavors. For most jobs, the variation in individual work-related performance is likely to be greater than the range in compensation; additionally, it is possible to maintain productivity and work quality while decreasing labor costs.

Which of the following must be true on the basis of the statements above?

A. Employers should be more concerned about employee productivity
B. Some employers would be willing to accept employee performance output less than that at the higher range of an employee productivity.
C. No employer should expect an organization's employees to operate at maximum productivity
D. Some employees work at output levels less than at their maximum.
E. Labor costs need to be curtailed to improve the vitality of a nation's economy.

Chets25 · Answer

It is D..since it says that the employee productivity is greater than variation in compensation.

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Lucy Phuong · Answer

Inference question. I chose D. The following is my approach:

A. what employers SHOULD DO cannot be inferred from stimulus. Hence, as per my personal observation, options mentioning "A should do B..." are usually wrong. OUT.

B. Nowhere in the above question could this prediction be inferred. OUT.

C. Another suspicious "SHOULD". Why on earth  "No employer should expect an organization's employees to operate at maximum productivity"  ??? Even in real life, "maximum productivity" is good, why don't we expect it? Also, "no employee" expression is too extreme. OUT.

D.  " the variation in individual work-related performance  is likely to be greater than the range in compensation" . When working performance is varied, we can absolutely understand that while some employees reach maximum level of output, some work at less than that maximum level. CORRECT.

E. "nation's economy"??? Totally out of scope. OUT.

Gnpth · Answer

Labor costs are the dominant expense of doing business in all but few endeavors. For most jobs, the variation in individual work-related performance is likely to be greater than the range in compensation; additionally, it is possible to maintain productivity and work quality while decreasing labor costs.

Which of the following must be true on the basis of statements above?

A. Employers should be more concerned about employee productivity.

B. Some employers would be willing to accept employee performance output less than that at the higher range of an employee productivity.

C. No employee should expect an organization’s employees to operate at maximum productivity.

D. Some employees work at output levels less than their maximum.

E. Labor costs need to curtailed to improve the vitality of a nation’s economy.

arvind910619 · Answer

Imo D

But i am still unsure of the answer .
Please post official explanation

RanjanSury · Answer

According to the passage,

"For most jobs, the variation in individual work-related performance is likely to be greater than the range in compensation"  On the basis of this choice D must be true. Choices A and E is out of scope(need not be true). Choice C is extreme(need not be true). Choice B is interesting. In my opinion this statement isn't related to the passage and hence need not be true. Therefore D is the best choice here. However it would be useful to have a convincing explanation from the experts on choice B.

HG0815 · Answer

IMO OA is D

A. Employers should be more concerned about employee productivity
 -> irrelavant. should? Too extreme
B. Some employers would be willing to accept employee performance output less than that at the higher range of an employee productivity.
 ->: may be or not. We cannot assure. It is up to each emplyer's temper.
C. No employer should expect an organization's employees to operate at maximum productivity
 -> may be or not. We cannot assure this.
D. Some employees work at output levels less than at their maximum.
 -> Correct
 'it is possible to maintain productivity and work quality while decreasing labor costs.'
 = We can ssume that some employee would not do their best at work.
E. Labor costs need to be curtailed to improve the vitality of a nation's economy.
 -> nation's economy? Out of scope

amansuri · Answer

Can someone please explain the question stem and the logical approach to derive inference for this question.

Thanks

TheGraceful · Answer

I could narrow down to B and D. But could NOT differentiate. 
@EMPOWERgmatVerbal,@Sajjad1994,@nightblade354,@GMATNinjaTwo,  VeritasKarishma ,
Can someone please help?

sayan640 · Answer

MartyMurray   KarishmaB  
What's the reasoning to eliminate B and select D ?

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jaindevaditya · Answer

Passage Breakdown:
1.Labor costs are the dominant expense of doing business in all but a few endeavors.

This means that for most businesses, paying employees is the biggest cost. Only a few businesses might have other costs that are higher than labor costs.

2.For most jobs, the variation in individual work-related performance is likely to be greater than the range in compensation;

This suggests that employees' performance (how well they do their jobs) can vary widely. However, the difference in what they are paid is usually smaller. In other words, two people might be paid similarly but perform very differently in their jobs.

3.Additionally, it is possible to maintain productivity and work quality while decreasing labor costs.

This indicates that a company can reduce how much they spend on employees (labor costs) without negatively affecting the amount of work done (productivity) or the quality of that work.

Key Insights:
1.Performance Variation: Performance differences among employees can be larger than pay differences.

2.Reducing Costs Without Harm: A company can reduce labor costs but still keep up productivity and quality.

Question: "Which of the following must be true on the basis of the statements above?"

This question asks you to identify a conclusion that must be true based on the given statements. A correct answer will logically follow from the information provided in the passage. Let’s analyze each option.

Analyzing the Answer Choices:

A. Employers should be more concerned about employee productivity
This statement is a recommendation ("should be"), but the passage doesn't advise or suggest anything about what employers should do. The passage simply states facts about labor costs and productivity. Therefore, this choice is not necessarily true based on the passage.
B. Some employers would be willing to accept employee performance output less than that at the higher range of an employee productivity.
This choice suggests that some employers are okay with performance that isn't at the highest level. While the passage discusses differences in performance and mentions maintaining productivity with lower labor costs, it doesn't directly state that employers accept lower performance. This option is plausible but not something that must be true based on the passage.
C. No employer should expect an organization's employees to operate at maximum productivity
This option generalizes that no employer should expect maximum productivity, but the passage doesn't address employer expectations in this way. It doesn't say anything about what employers should or shouldn't expect, so this option isn't necessarily true.
D. Some employees work at output levels less than at their maximum.
The passage states that there is variation in work-related performance among employees, meaning some employees are more productive than others. This implies that some employees are not working at their maximum level of productivity. Therefore, this statement logically follows from the information provided and must be true.
E. Labor costs need to be curtailed to improve the vitality of a nation's economy.
This statement makes a broad claim about the economy, which goes beyond the scope of the passage. The passage discusses reducing labor costs in businesses, but it doesn't make any claims about the national economy. Therefore, this option is not necessarily true.
Conclusion:
Option D is the correct answer because it directly follows from the information given in the passage. The passage mentions that performance varies among employees, which implies that not all employees are working at their maximum productivity. This is something that must be true based on the statements provided.

Tips for Tackling Critical Reasoning Questions:
Understand the Passage: Take your time to understand the argument. What is being claimed? What evidence is provided? What is the underlying logic?
Focus on What Must Be True: Pay close attention to the question prompt. If it asks for what "must be true," you are looking for something that is a logical necessity based on the passage, not just something that could be true.
Eliminate Incorrect Answers: Rule out answer choices that are out of scope, too strong, or that make assumptions not supported by the passage.
Paraphrase the Passage: Put the argument into your own words. This can help clarify complex ideas and make it easier to evaluate the answer choices.
Practice Regularly: Regular practice will help you recognize patterns in GMAT questions and improve your critical reasoning skills over time.
By understanding the argument's structure and carefully evaluating each option, you'll improve your ability to tackle similar questions effectively.

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Labor costs are the dominant expense of doing business

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