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# One of the claims of laissez-faire economics

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One of the claims of laissez-faire economics  [#permalink]

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Updated on: 25 Oct 2018, 11:28
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One of the claims of laissez-faire economics is that increasing the minimum wage reduces the total number of minimum wage jobs available. In a recent study, however, it was found that after an increase in the minimum wage, fast-food restaurants kept on roughly the same number of minimum-wage employees as before the increase. Therefore, laissez-faire economics is not entirely accurate.

The essayist’s argument depends on assuming which one of the following?

(A) If laissez-faire economics makes an incorrect prediction about the minimum wage, then all the doctrines of laissez-faire economics are inaccurate.

(B) Minimum-wage job availability at fast-food restaurants included in the study was representative of minimum-wage job availability in general.

(C) No study has ever found that a business has decreased the number of its minimum-wage employees after an increase in the minimum wage.

(D) The fast-food restaurants included in the study did not increase the average wage paid to employees.

(E) The national unemployment rate did not increase following the increase in the minimum wage.

Source: LSAT

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Originally posted by Akela on 07 Jul 2017, 06:13.
Last edited by GMATNinjaTwo on 25 Oct 2018, 11:28, edited 2 times in total.
fixed typo in passage
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Re: One of the claims of laissez-faire economics  [#permalink]

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07 Jul 2017, 07:17
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Akela wrote:
One of the claims of laissez-faire economics is that increasing the minimum wage reduces the total number of minimumwage jobs available. In a recent study, however, it was found that after an increase in the minimum wage, fast-food restaurants kept on roughly the same number of minimum-wage employees as before the increase. Therefore, laissez-faire economics is not entirely accurate.

The essayist’s argument depends on assuming which one of the following?

(A) If laissez-faire economics makes an incorrect prediction about the minimum wage, then all the doctrines of laissez-faire economics are inaccurate.

(B) Minimum-wage job availability at fast-food restaurants included in the study was representative of minimum-wage job availability in general.

(C) No study has ever found that a business has decreased the number of its minimum-wage employees after an increase in the minimum wage.

(D) The fast-food restaurants included in the study did not increase the average wage paid to employees.

(E) The national unemployment rate did not increase following the increase in the minimum wage.

Source: LSAT

Dear Akela,

I'm happy to respond.

The LSAT Logical Reasoning questions are very similar to the GMAT Critical Reasoning questions, but the former are typically a notch or two harder (because it's VERY important for lawyers to understand arguments!) It's true that the LSAT LR provides excellent practice for building the kinds of analytical skills you need in GMAT CR, but not every LSAT LR argument has the feel of a GMAT CR argument. This one doesn't quite have the feel of a GMAT CR argument, but it's still a solid LSAT question.

We are looking for an assumption, so we can use, among other things, the Negation Test.

(A) If laissez-faire economics makes an incorrect prediction about the minimum wage, then all the doctrines of laissez-faire economics are inaccurate.
Way too extreme! One wrong prediction and we chuck the entire academic discipline in the garbage? An absurd overgeneralization. This is incorrect.

(B) Minimum-wage job availability at fast-food restaurants included in the study was representative of minimum-wage job availability in general.
Ah ha! This sound reasonable. If the fast-food restaurants included were not representative of the general economy, we wouldn't be able to draw a general conclusion from them. This is a promising choice.

(C) No study has ever found that a business has decreased the number of its minimum-wage employees after an increase in the minimum wage.
"No study ever"? Again, way too extreme. This is incorrect.

(D) The fast-food restaurants included in the study did not increase the average wage paid to employees.
Interesting. Let's take this as is. If the wage for the minimum-wage jobs went up, then the only way the average would stay the same is if other jobs, say middle managers, had their wages decrease. The conclusion of the argument is only about minimum wage jobs, so this piece of information brings in the effect on higher wage jobs, which is strictly irrelevant to the argument. This is incorrect.

(E) The national unemployment rate did not increase following the increase in the minimum wage.
The national unemployment rate depends on a thousand different factors. What happens with minimum-wage jobs in a single study is almost entirely irrelevant to large-scale shifts in the overall economy. Anything that happened or didn't happen in this study would be simply a rounding error in the movements of the larger economy. This is out-of-scope and incorrect.

The only possible answer is (B), the OA.

Does all this make sense?
Mike
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Re: One of the claims of laissez-faire economics  [#permalink]

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08 Jul 2017, 06:58
2
mikemcgarry wrote:
Akela wrote:
One of the claims of laissez-faire economics is that increasing the minimum wage reduces the total number of minimumwage jobs available. In a recent study, however, it was found that after an increase in the minimum wage, fast-food restaurants kept on roughly the same number of minimum-wage employees as before the increase. Therefore, laissez-faire economics is not entirely accurate.

The essayist’s argument depends on assuming which one of the following?

(A) If laissez-faire economics makes an incorrect prediction about the minimum wage, then all the doctrines of laissez-faire economics are inaccurate.

(B) Minimum-wage job availability at fast-food restaurants included in the study was representative of minimum-wage job availability in general.

(C) No study has ever found that a business has decreased the number of its minimum-wage employees after an increase in the minimum wage.

(D) The fast-food restaurants included in the study did not increase the average wage paid to employees.

(E) The national unemployment rate did not increase following the increase in the minimum wage.

Source: LSAT

Dear Akela,

I'm happy to respond.

The LSAT Logical Reasoning questions are very similar to the GMAT Critical Reasoning questions, but the former are typically a notch or two harder (because it's VERY important for lawyers to understand arguments!) It's true that the LSAT LR provides excellent practice for building the kinds of analytical skills you need in GMAT CR, but not every LSAT LR argument has the feel of a GMAT CR argument. This one doesn't quite have the feel of a GMAT CR argument, but it's still a solid LSAT question.

We are looking for an assumption, so we can use, among other things, the Negation Test.

(A) If laissez-faire economics makes an incorrect prediction about the minimum wage, then all the doctrines of laissez-faire economics are inaccurate.
Way too extreme! One wrong prediction and we chuck the entire academic discipline in the garbage? An absurd overgeneralization. This is incorrect.

(B) Minimum-wage job availability at fast-food restaurants included in the study was representative of minimum-wage job availability in general.
Ah ha! This sound reasonable. If the fast-food restaurants included were not representative of the general economy, we wouldn't be able to draw a general conclusion from them. This is a promising choice.

(C) No study has ever found that a business has decreased the number of its minimum-wage employees after an increase in the minimum wage.
"No study ever"? Again, way too extreme. This is incorrect.

(D) The fast-food restaurants included in the study did not increase the average wage paid to employees.
Interesting. Let's take this as is. If the wage for the minimum-wage jobs went up, then the only way the average would stay the same is if other jobs, say middle managers, had their wages decrease. The conclusion of the argument is only about minimum wage jobs, so this piece of information brings in the effect on higher wage jobs, which is strictly irrelevant to the argument. This is incorrect.

(E) The national unemployment rate did not increase following the increase in the minimum wage.
The national unemployment rate depends on a thousand different factors. What happens with minimum-wage jobs in a single study is almost entirely irrelevant to large-scale shifts in the overall economy. Anything that happened or didn't happen in this study would be simply a rounding error in the movements of the larger economy. This is out-of-scope and incorrect.

The only possible answer is (B), the OA.

Does all this make sense?
Mike

Great explanation!
You mentioned that this question doesn't have the feel of a GMAT CR argument. Is it because it tests the principle behind the argument?
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Re: One of the claims of laissez-faire economics  [#permalink]

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08 Jul 2017, 07:19
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Akela wrote:
Great explanation!
You mentioned that this question doesn't have the feel of a GMAT CR argument. Is it because it tests the principle behind the argument?

Dear Akela,

I'm happy to respond.

I would say that this question, like many LSAT LR questions, leans toward formal logic, toward philosophical categorical statements ("If all these X are true, then Y is false"). I don't know how much classic philosophy you have read, say, Aristotle or Kant. The categorical statements in this LR question have the ring of classic philosophical writings, and the LSAT definitely leans in that direction.

By contrast, the GMAT CR is eminently practical, because the business world is practical. Business people don't care about philosophical statements. They care about where the rubber meets the road. They care about what motivates people to buy or sell, what causes money to change hands. The focus in most GMAT CR concerns real people making real choices, or real factors impinging on real decisions. In fact, the more you understand the push-and-pull of real world business decisions, the more the GMAT CR will make sense to you. See:
GMAT Critical Reasoning and Outside Knowledge

Does all this make sense?
Mike
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Re: One of the claims of laissez-faire economics  [#permalink]

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08 Jul 2017, 10:06
One of the claims of laissez-faire economics is that increasing the minimum wage reduces the total number of minimumwage jobs available. In a recent study, however, it was found that after an increase in the minimum wage, fast-food restaurants kept on roughly the same number of minimum-wage employees as before the increase. Therefore, laissez-faire economics is not entirely accurate.
Type - Assumption

(A) If laissez-faire economics makes an incorrect prediction about the minimum wage, then all the doctrines of laissez-faire economics are inaccurate. - Incorrect - too extreme as we are generalizing all based on one

(B) Minimum-wage job availability at fast-food restaurants included in the study was representative of minimum-wage job availability in general. - Correct - negate this and the argument falls apart

(C) No study has ever found that a business has decreased the number of its minimum-wage employees after an increase in the minimum wage. - Incorrect- No study is too extreme - even if atleast one study has found , it does not affect the argument

(D) The fast-food restaurants included in the study did not increase the average wage paid to employees. - Irrelevant - we are only concerned about minimum wage and not average wage

(E) The national unemployment rate did not increase following the increase in the minimum wage. - Out of scope - we are only concerned about min wage here

Answer B
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Re: One of the claims of laissez-faire economics  [#permalink]

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14 May 2018, 08:40
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Hope you guys got this one right! Feel free to post questions/thoughts. This question has also been included in the Assumption Mondays Revision Thread. Check back there next Monday for more questions!
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Re: One of the claims of laissez-faire economics  [#permalink]

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13 Oct 2018, 07:03
GMATNinja sir if we negate option c will it not weaken the conclusion?
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Re: One of the claims of laissez-faire economics  [#permalink]

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31 Oct 2018, 15:21
manjot123 wrote:
GMATNinja sir if we negate option c will it not weaken the conclusion?

I'd suggest that a better way of approaching choice (C) is to ask yourself, "Is negation really necessary for me to evaluate this choice?"

While negation can be a helpful tool, it can sometimes be very risky to use, because a lot of answer choices to assumption questions don't give us very clear places to negate the statement. Choice (C) is a great example of this:

Quote:
No study has ever found that a business has decreased the number of its minimum-wage employees after an increase in the minimum wage.

What could a negation of this statement look like?

At least one study has ever found that a business has decreased the number of its minimum-wage employees after an increase in the minimum wage.
No study has ever found that a business has not decreased the number of its minimum-wage employees after an increase in the minimum wage.
No study has never found that a business has decreased the number of its minimum-wage employees after an increase in the minimum wage.

This quickly becomes a headache. And we don't need the pain, because there's a much simpler reason for us to eliminate Choice (C).

mikemcgarry showed us the way in his great analysis of the answer choices. Rather than use the negation test, he recognized that choice (C) is just too extreme to accept.

The conclusion is, "Therefore, laissez-faire economics is not entirely accurate."

Does this conclusion require that no study has ever found that a business has decreased the number of its minimum-wage employees after an increase in the minimum wage?

Nope. We're told that fast-food restaurants (in general) kept roughly the same number of minimum-wage employees as before the increase. It's entirely possible that some fast-food restaurants hired slightly more minimum-wage employees, while others let some minimum-wage employees go. Knowing that at least one business could have decreased the number of its minimum-wage employees doesn't invalidate the conclusion.

Furthermore, the author points to just one study in the argument. The author draws on that study as a basis for saying that laissez-faire economics is not entirely accurate. These pieces line up nicely, but choice (C) is an extreme statement that isn't needed for us to connect the dots. Choice (B), on the other hand, connects dots that must be linked in order for us to accept the conclusion.

The takeaway here is that we need to pick an assumption that the argument itself is making.

Once you have a hammer, everything starts to look like a thumb. So keep negation in your tool belt, but don't let that tool take over what you're really trying to do with an assumption question. And if you see a simpler path to eliminating an answer choice, then take that simpler path and move on.

I hope this helps!
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Re: One of the claims of laissez-faire economics  [#permalink]

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Re: One of the claims of laissez-faire economics   [#permalink] 27 Dec 2019, 22:43
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