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The difference in average annual income in favor of employees who have

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Joined: 03 Dec 2018
Posts: 169
Re: The difference in average annual income in favor of employees who have  [#permalink]

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New post 19 Feb 2019, 22:41
This is my reasoning for selecting A

Let's say a skilled employee in the 1980s earn 150$ and an unskilled employee earns 100$.
Let's consider there are 50 people with a degree and 50 people without a degree.

So A tells that some employees with degree took an unskilled job. Let this be 25 people of 50 people with a degree.

Therefore avg income of employees with a degree is (25*150$ +25*100$)/ 50 =125$
avg income of employees without a degree is 50*100$/50 =100$

So in the 1980's the difference between avg income of employees with a degree and without a degree is 125$-100$ =25 $

Let's move to 1990s.
We will assume that wage is still the same. (Let's say a skilled employee in the 1980s earn 150$ and an unskilled employee earns 100$.)

But now we will assume all the people with degree took a skilled job. And all the people without a degree took an unskilled job.

Therefore Avg income of employee with a degree is 50*150$/50 =150$
Avg income of employee without a degree is 50*100$/50 =100$

Therefore in the 1990's the difference between the avg income of an employee with a degree and an employee without a degree is 150$ -100$ =50$

It can be observed that the difference in avg income is doubled. And the reason is not "the increased competition between employers for employees with college degrees drove up income for such employees."

Experts correct me know if I am wrong.
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Re: The difference in average annual income in favor of employees who have  [#permalink]

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New post 19 Feb 2019, 22:45
This is my reasoning for selecting A

Let's say a skilled employee in the 1980s earn 150$ and an unskilled employee earns 100$.
Let's consider there are 50 people with a degree and 50 people without a degree.

So A tells that some employees with degree took an unskilled job. Let this be 25 people of 50 people with a degree.

Therefore avg income of employees with a degree is (25*150$ +25*100$)/ 50 =125$
avg income of employees without a degree is 50*100$/50 =100$

So in the 1980's the difference between avg income of employees with a degree and without a degree is 125$-100$ =25 $

Let's move to 1990s.
We will assume that wage is still the same. (Let's say a skilled employee in the 1980s earn 150$ and an unskilled employee earns 100$.)

But now we will assume all the people with degree took a skilled job. And all the people without a degree took an unskilled job.

Therefore Avg income of employee with a degree is 50*150$/50 =150$
Avg income of employee without a degree is 50*100$/50 =100$

Therefore in the 1990's the difference between the avg income of an employee with a degree and an employee without a degree is 150$ -100$ =50$

It can be observed that the difference in avg income is doubled. And the reason is not "the increased competition between employers for employees with college degrees drove up income for such employees."

Experts correct me know if I am wrong.
Manager
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Joined: 18 Aug 2012
Posts: 86
Re: The difference in average annual income in favor of employees who have  [#permalink]

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New post 13 Jun 2019, 07:54
How is A correct. we are assuming that employers are looking for only skilled workers.
And if A is correct, then please tell me that it is a 700 level question. If it is 600 level question then this hits my confidence level to the core :(
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The difference in average annual income in favor of employees who have  [#permalink]

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New post 06 Sep 2019, 23:58
could explain in simple way A and E ?
in E provide explanation i think it is correct/ A is about job supply and demand ....a little unclear what is purpose of question.
competition for income or competition for job or about supply or demand or about degree non degree or competition for increasing income :dazed

in A if people who have degree go toward unskilled work as a result we must see competition for unskilled job and therefore increasing wage for unskilled job !
this is undermine the conclusion that says only we have increase in degree job......yes I got my answer !
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The difference in average annual income in favor of employees who have   [#permalink] 06 Sep 2019, 23:58

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