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# Many companies have recently required their employees to pay

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Senior Manager
Joined: 21 Dec 2009
Posts: 490
Concentration: Entrepreneurship, Finance
Many companies have recently required their employees to pay  [#permalink]

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24 Nov 2012, 04:20
2
13
00:00

Difficulty:

45% (medium)

Question Stats:

68% (01:58) correct 33% (02:07) wrong based on 942 sessions

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Many companies have recently required their employees to pay an increasing percentage of the cost of health
insurance premiums. On average, the companies that instituted this change reported an 11 percent increase in
profits for the last fiscal year.

If, on the basis of the evidence above, it is argued that increasing the portion of health insurance costs
paid directly by employees increased a company's profitability, which of the following, if true, would most seriously
weaken that argument?

A: The increased cost of health insurance premiums at some companies led highly skilled employees of those
companies to move to competing firms with lower health costs.
B: Companies that have cut employee benefit costs in other areas such as retirement packages have also seen
increased profits.
C: Companies that increased the percentage of health insurance premiums paid directly by employees were just as
likely as other companies to give employees a raise during the last fiscal year.
D: Because employees often object to paying a large percentage of health insurance premiums, it can take a long time
to implement the changes.
E: On average, companies that did not increase the percentage of health insurance premiums paid by their employees
reported a 16 percent increase in profits for the last fiscal year.

why is wrong?

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Re: Many companies have recently required their employees  [#permalink]

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24 Nov 2012, 04:46
1
gmatbull wrote:
Many companies have recently required their employees to pay an increasing percentage of the cost of health
insurance premiums. On average, the companies that instituted this change reported an 11 percent increase in
profits for the last fiscal year.

If, on the basis of the evidence above, it is argued that increasing the portion of health insurance costs
paid directly by employees increased a company's profitability, which of the following, if true, would most seriously
weaken that argument?

A: The increased cost of health insurance premiums at some companies led highly skilled employees of those
companies to move to competing firms with lower health costs.
B: Companies that have cut employee benefit costs in other areas such as retirement packages have also seen
increased profits.
C: Companies that increased the percentage of health insurance premiums paid directly by employees were just as
likely as other companies to give employees a raise during the last fiscal year.
D: Because employees often object to paying a large percentage of health insurance premiums, it can take a long time
to implement the changes.
E: On average, companies that did not increase the percentage of health insurance premiums paid by their employees
reported a 16 percent increase in profits for the last fiscal year.

why is wrong?

Oh i selected A!!!

I felt E seems to give another fact like stated in conclusion/premise..
How come this will weaken the argument????

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Posts: 72
Re: Many companies have recently required their employees  [#permalink]

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24 Nov 2012, 14:48
1
gmatbull wrote:
Many companies have recently required their employees to pay an increasing percentage of the cost of health
insurance premiums. On average, the companies that instituted this change reported an 11 percent increase in
profits for the last fiscal year.

If, on the basis of the evidence above, it is argued that increasing the portion of health insurance costs
paid directly by employees increased a company's profitability, which of the following, if true, would most seriously
weaken that argument?

A: The increased cost of health insurance premiums at some companies led highly skilled employees of those
companies to move to competing firms with lower health costs.
B: Companies that have cut employee benefit costs in other areas such as retirement packages have also seen
increased profits.
C: Companies that increased the percentage of health insurance premiums paid directly by employees were just as
likely as other companies to give employees a raise during the last fiscal year.
D: Because employees often object to paying a large percentage of health insurance premiums, it can take a long time
to implement the changes.
E: On average, companies that did not increase the percentage of health insurance premiums paid by their employees
reported a 16 percent increase in profits for the last fiscal year.

why is wrong?

Losing talent is not the same as losing money. Hence it doesn't directly weaken the conclusion.

E is an example of effect happening (profit up) without cause (raising health insurance premiums) occurring.
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Joined: 16 Mar 2012
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Schools: Mays Business School - Class of 2016
Re: Many companies have recently required their employees  [#permalink]

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25 Nov 2012, 01:37
2
1
Premise: many companies that reqd. employees to pay higher ins. premiums -> Those companies increased profits averaging 11%

Task: Find an alternate reason that can lead to higher profits /or/ prove that substantial no. of companies that increased premiums didn't see inc. in profits

[A]: Some companies bla bla. The argument never said 'ALL' companies saw inc. in profits. Also, the argument is concerned only about premuims paid by employees regardless they are highly skilled or not.
[B]: Good for those companies! No bearing on the conclusion.
[C]: Giving a likely raise to employees has no bearing on profits. If you are thinking that giving out money to employees will decrease the profit/revenue, then you're thinking too far!
[D]: The event in the argument has already occured. This option states what 'can' happen. OUT
[E]: This states that ins. premiums paid are not the cause of profits, if anything, ins. premiums paid marginally decrease avg. profits (11% v/s 16% avg. profits).

IMO, E wins!
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Re: Many companies have recently required their employees  [#permalink]

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26 Nov 2012, 07:02
1
Doh! I selected A without reading all of the options properly. Let that be a lesson to me...
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Re: Many companies have recently required their employees  [#permalink]

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05 Oct 2013, 06:07
Premise: many companies that reqd. employees to pay higher ins. premiums -> Those companies increased profits averaging 11%

Task: Find an alternate reason that can lead to higher profits /or/ prove that substantial no. of companies that increased premiums didn't see inc. in profits

[A]: Some companies bla bla. The argument never said 'ALL' companies saw inc. in profits. Also, the argument is concerned only about premuims paid by employees regardless they are highly skilled or not.
[B]: Good for those companies! No bearing on the conclusion.
[C]: Giving a likely raise to employees has no bearing on profits. If you are thinking that giving out money to employees will decrease the profit/revenue, then you're thinking too far!
[D]: The event in the argument has already occured. This option states what 'can' happen. OUT
[E]: This states that ins. premiums paid are not the cause of profits, if anything, ins. premiums paid marginally decrease avg. profits (11% v/s 16% avg. profits).

IMO, E wins!

can someone please explain why d is wrong it says implementing will take time so even if companies increased the premium it is yet not implemented and therefore the profits can not be attributed to premium increase "
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Re: Many companies have recently required their employees to pay  [#permalink]

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05 Oct 2013, 06:39
1
Hi,

D is wrong because it confuses time frames....

The statement is that for companies that have made the change Profits are up by 11%.

D is talking about the timeframe. This is irrelevant for the purposes of our argument, as in the example we are given the change has already happened.

Also - think about the question it is 'most seriously weakens' - that is clearly E. Even if the 'delay' was a factor, it would not be more serious than the problem posed by E.

James
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Re: Many companies have recently required their employees to pay  [#permalink]

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06 Oct 2013, 07:24
plumber250 wrote:
Hi,

D is wrong because it confuses time frames....

The statement is that for companies that have made the change Profits are up by 11%.

D is talking about the timeframe. This is irrelevant for the purposes of our argument, as in the example we are given the change has already happened.

Also - think about the question it is 'most seriously weakens' - that is clearly E. Even if the 'delay' was a factor, it would not be more serious than the problem posed by E.

James

thanks James thanks for replying .....i got it now + 1 for you
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Re: Many companies have recently required their employees to pay  [#permalink]

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08 Aug 2015, 11:44

Effect : Increased Profit

C-->E , Correct option should ruin this cause and effect relationship.

option E breaks the C&E relationship - "when cause was not there (i.e. No Increase in premium), Effect (Profit still increased) was still there".

+1 E
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Re: Many companies have recently required their employees to pay  [#permalink]

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12 Aug 2015, 12:26

The company x does some stuff that leads to another stuff. How it can be weakened by that company y doesn't do the same stuff and leads to same outcome stuff what company x got?
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Many companies have recently required their employees to pay  [#permalink]

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19 Aug 2015, 07:28
This is tested most frequently on GMAT with Assumptions, Strengthen and Weaken Questions.

A causes B

Premium given by employees (rather than by company itself) caused company's profit to increase to 11%(because company not paying that part)

To weaken - we can show A does not happens but B happens - then A is not the cause of B

This is perfectly done by answer choice E

Premium paid by employees did not increase - But Profits increase by more than 11% - 16% to be exact.

Another way to weaken such type of questions is:

C causes B
Or
A happens and B does not happen i.e. Premiums paid by employees increased but profits either stay flat or decreased.

Regards
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Re: Many companies have recently required their employees to pay  [#permalink]

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24 Aug 2015, 13:37
So, I need to weaken the argument's conclusion. If we can show another explanation( here,another unknown reason) for the Same effect, the argument will be less likely to be true. E shows exactly what we need. Maybe, there's another reason. maybe the cut cost decreases the profit, but increases( compare 11% and 16%)
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Re: Many companies have recently required their employees to pay  [#permalink]

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09 Sep 2017, 12:54
Many companies have recently required their employees to pay an increasing percentage of the cost of health insurance premiums. On average, the companies that instituted this change reported an 11 percent increase in profits for the last fiscal year.

If, on the basis of the evidence above, it is argued that increasing the portion of health insurance costs paid directly by employees increased a company's profitability, which of the following, if true, would most seriously weaken that argument?

A: The increased cost of health insurance premiums at some companies led highly skilled employees of those companies to move to competing firms with lower health costs. ISWAT - it might have an adverse effect down the line , but at present the company is still making profits
B: Companies that have cut employee benefit costs in other areas such as retirement packages have also seen increased profits. - Irrelevant - just because there is another method to reduce cost , it does not mean the increasing health insurance is not a viable method
C: Companies that increased the percentage of health insurance premiums paid directly by employees were just as likely as other companies to give employees a raise during the last fiscal year. - Irrelevant -
D: Because employees often object to paying a large percentage of health insurance premiums, it can take a long time to implement the changes. - Irrelevant - we are only concerned about once the plan is implemented
E: On average, companies that did not increase the percentage of health insurance premiums paid by their employees reported a 16 percent increase in profits for the last fiscal year. - Correct - So the increase in profit was not due increase in health insurance premium but due to some other factor

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Re: Many companies have recently required their employees to pay  [#permalink]

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01 Jan 2018, 09:31
E: On average, companies that did not increase the percentage of health insurance premiums paid by their employees
reported a 16 percent increase in profits for the last fiscal year.

This option shows that profit has actually decreased compared to profits of other companies.This is the right option
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Re: Many companies have recently required their employees to pay  [#permalink]

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07 Oct 2018, 11:30
In opiton e
Effect occurred without cause
Re: Many companies have recently required their employees to pay   [#permalink] 07 Oct 2018, 11:30
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