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Last year Company X experienced an unexpectedly steep drop in profits.

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Re: Last year company X experienced an unexpected steep drops in [#permalink]
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vineetgupta wrote:
Last year company X experienced an unexpected steep drops in profits.To offset this loss,company X should reduce its workforce by 10%.Doing so will allow the company to save a great deal in payroll expenditures.Company X will therefore be able to recoup the losses.

The argument above assumes that
A. The amount saved in payroll expenditures will exceed the amount lost in profits.
B. The amount saved in payroll expenditures will equal the amount lost in profits.
C. Reducing Company X's workforce will not cause the company to reduce productivity.
D. Company X has no reserve funds to offset its losses.
E. Company X has not at sometime in the past reduced its workforce.

Please give reasons for ur choices...
There are 2 inherent assumptions to Policy Proposal or GOAL/Target(FORMAT: To achieve goal, this policy shall be adhered) questions: 1) Implementation of Policy will achieve the goal. Link 2) Implementation of Policy will not impact other aspects of Goal.

It is the second of the inherent assumptions that gets reflected in Choice C.

To add to this, I feel that loss in stimulus talks about only one year of loss, whereas the conclusion(Last line: "Company X will therefore be able to recoup the losses.") and target is to recoup ie recover for losses of multiple years, and not a single year. A and B will attempt to recoup company only for this year's loss, but will not help in recouping from upcoming losses, if the employees are lost.
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Last year Company X experienced an unexpectedly steep drop in profits. [#permalink]
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Hi ,
I thought conclusion is "Company X will therefore be able to recoup the losses. " and then chose A option
Sometimes i am not able to figure out the conclusion.
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Re: Last year Company X experienced an unexpectedly steep drop in profits. [#permalink]
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Praetorian wrote:
Last year Company X experienced an unexpectedly steep drop in profits. To offset this loss, Company X should reduce its workforce by 10%. Doing so will allow the company to save a great deal in payroll expenditures. Company X will therefore be able to recoup its losses.

The argument above assumes that

A. The amount saved in payroll expenditures will exceed the amount lost in profits.

B. The amount saved in payroll expenditures will equal the amount lost in profits.

C. Reducing Company X's workforce will not cause the company to reduce productivity.

D. Company X has no reserve funds to offset its losses.

E. Company X has not at sometime in the past reduced its workforce.

Imo C.

This is a very easy question if we see this question from real world scenario but things get muddy when the scope is only the argument. This case demands us to use real world knowledge of market and productivity. A good question to practice since it does not directly affects the conclusion.
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Re: Last year Company X experienced an unexpectedly steep drop in profits. [#permalink]
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If we negate option B-
The amount saved in payroll expenditures will NOT BE equal the amount lost in profits then wouldn't it break the argument? Shouldn't B correct answer?
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Re: Last year Company X experienced an unexpectedly steep drop in profits. [#permalink]
shreyasawhney wrote:
If we negate option B-
The amount saved in payroll expenditures will NOT BE equal the amount lost in profits then wouldn't it break the argument? Shouldn't B correct answer?

Even I have the same question. mikemcgarry , abhimahna , VeritasKarishma . Can anybody pls enlighten?
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Last year Company X experienced an unexpectedly steep drop in profits. [#permalink]
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shreyasawhney wrote:
If we negate option B-
The amount saved in payroll expenditures will NOT BE equal the amount lost in profits then wouldn't it break the argument? Shouldn't B correct answer?

Here is my attempt, I hope it helps.

I also faced a similar thing at the beginning but then this is what I finally understood.

When we negate option B does it break down the conclusion?

Is it necessary for the conclusion to hold true?

Negating option B, it will not equal the amount lost in profits. Well what if it doesn’t? Maybe the amount saved in payroll expenditures saves more than what is lost? Maybe the amount saved does not cover what is lost? Can we say for sure it will recoup the losses?

When we negate option C, it will reduce productivity and if it does then how can we recoup the losses? We are already losing more.

Posted from my mobile device
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Re: Last year Company X experienced an unexpectedly steep drop in profits. [#permalink]
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The other reason to eliminate A and B is that A, and B are clearly stated in the argument, so they are not assumption needed. Remember that assumption is the infor not stated in the argument but is needed for the author to draw the conclusion
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Re: Last year Company X experienced an unexpectedly steep drop in profits. [#permalink]
Praetorian wrote:
Last year Company X experienced an unexpectedly steep drop in profits. To offset this loss, Company X should reduce its workforce by 10%. Doing so will allow the company to save a great deal in payroll expenditures. Company X will therefore be able to recoup its losses.

The argument above assumes that

Company X will reduce 10% of its workforce to offset the drop in profits. (Offset the drop ....which means the drop in profit can be covered by the reduction in workforce.)

Conclusion: Company X will recoup its losses by doing this procedure.

Predicted Answer: Reducing the workforce should not impact revenue or production.

POE :

A. The amount saved in payroll expenditures will exceed the amount lost in profits. Irrelavent, Because primise mentions that this procedure will offset the drop in profits

B. The amount saved in payroll expenditures will equal the amount lost in profits. Irrelavent, Because primise mentions that this procedure will offset the drop in profits

C. Reducing Company X's workforce will not cause the company to reduce productivity. Hmm, If prodctivity is reduced it further impacts the profit that is not accounted.

D. Company X has no reserve funds to offset its losses. Irrelavent

E. Company X has not at sometime in the past reduced its workforce.Irrelavent

IMO C.
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Re: Last year Company X experienced an unexpectedly steep drop in profits. [#permalink]
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Re: Last year Company X experienced an unexpectedly steep drop in profits. [#permalink]
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