Traditional economic theory and its partisans have long maintained

1.D
2.B
3.E
4.C

I took 11 mins. to answer this passage

According to the best of my ability, kindly find the answer explanations below.

1. The author of the passage would most likely agree with which of the following assertions about the minimum wage in the United States?

A. Unemployment of low-wage workers will invariably rise when wages are artificially inflated. => Author sides new theory so we can say artificially inflated wages would lead to more employment. This choice mentions opposite. INCORRECT
B. Minimum wage patterns in New Jersey have no demonstrable relevance to unemployment figures in Pennsylvania. => It is incorrect to say 'no demonstrable relevance' because some inference can be made. INCORRECT
C. Conventional economic theory makes no valid predictions about the connection between minimum wage increases and unemployment trends. => Conventional economic theory is about that relationship. INCORRECT
D. It is possible to find some correlation between worker productivity and wages earned. => Yes we can infer this as there is some correlation between worker productivity and wages earned. Para 1 line 2 directly mentions stating "a higher wage makes some workers’ wages higher than is justified by what they contribute to output (productivity)." CORRECT
E. Minimum wage increases will expand employment in all sectors of the economy by increasing employee productivity. => There are certain cases in which employment will expand and certain cases in which employment may not expand. Thus this choice is not infer able. INCORRECT


2. In the second paragraph, the author mentions the results of Card and Krueger's focus on New Jersey in order to

A. strengthen their contention that minimum wage levels in the Northeastern US are artificially low => Passage does not mention 'Northeastern'. INCORRECT
B. provide evidence for their conclusion that the reality of minimum wage hikes may sometimes contradict the results expected by traditional theory => Author mentions the results of Card and Krueger's to show contradiction. CORRECT
C. prove that Pennsylvania's low-wage employment suffered as a result of New Jersey's wage increase => Reason is common but the two events are mutually exclusive. They do not affect each other. INCORRECT
D. undermine the argument put forth by the Princeton economists that an inflation of minimum wages will result in loss of low-wage employment => This option means both Princeton economists undermine their own argument. INCORRECT
E. introduce an example of a beneficial minimum wage increase that can be used as a model for a new economic theory => Simply giving an example does not allow us to infer that it can be modeled. INCORRECT


3. It can be inferred from the passage that “traditional economic theory" (line 1)

A. is an accurate predictor of unemployment rates resulting from circumstances other than minimum wage increases => “traditional economic theory" only predicts the increase or decrease. It does not give accurate rates. INCORRECT
B. is under attack from many academic economists, who believe that minimum wages in the US should be raised => Just 2 economists can not be called many. Also, para 2 line 6 says "Rather than dismissing conventional wage theory completely, however, Card and Krueger interpret the data as an indication that the theory is merely incomplete."
These 2 facts, that
1. Card and Krueger do not dismiss the “traditional economic theory" and
2. Card and Krueger believe “traditional economic theory" is incomplete
tell us that Card and Krueger were not attacking rather wanted the theory to complete by filling the gaps for scenarios that traditional theory did not cover. Hence C is INCORRECT
C. provides an explanation for New Jersey's low-wage employment jump that is consistent with its predictions =>
“traditional economic theory": increasing the minimum wage will result in rise in unemployment. (from para 1 line 1-3)
New Jersey's example: an increase in minimum wage was followed by an increase in minimum wage employment at the higher rate. (from para 2 line 4)
Thus C is INCORRECT.
D. has been replaced with a more modern hypothesis that asserts that minimum wage hikes are necessary for a healthy economy => Two different views are presented. New may replace the traditional or may not replace. Also based on our knowledge given by the passage, we do not know what is a healthy economy. INCORRECT
E. may still provide an accurate prediction of the results of a minimum wage hike under conditions of low worker demand => If A leads to B is given, then we MAY infer not A leads to C. Because “traditional economic theory" partially takes into consideration minimum wage hike effect but does not specify the scenario of (low/high) worker demand, we can assume that it may predict results for low worker demand scenario. Hence E is best of 5. CORRECT


4. The passage suggests that immediately prior to the 1992 increase in the state minimum wage, some New Jersey employers were

A. paying their employees the same minimum rate that employers in Pennsylvania were paying => The states did not compare the minimum rate with each other that employers were paying . INCORRECT
B. experiencing economic difficulties and laying off minimum wage employees whose output was insufficient => This seems related to traditional view but New Jersey example is mentioned supporting results of new study. INCORRECT
C. lobbying for an increase in the minimum wage as a means to hire more workers and increase productivity => New Jersey employers wanted to hire workers they need so passage suggests that prominently then 'productivity'. INCORRECT
D. in some cases paying more than the mandated minimum wage because demand for low-wage workers was high => Before the increase employers wanted to hire workers they need, so employers were voluntarily exceeding legal limits. CORRECT
E. eliminating the wage structure that had been created under the discredited theories of traditional economists => Wage structure was maintained not eliminated. Para 2 line 2 : "The rise also causes a concomitant increase for workers who earn more than the minimum as employers try to maintain the structure of wage differentials among different groups and kinds of employees. ". INCORRECT

Understand the passage and create a map:
A conventional theory is presented and than refuted
Later, they tried to find a common ground (Rather than dismissing conventional wage theory completely, however, Card and Krueger interpret the data as an indication that the theory is merely incomplete)

1. The author of the passage would most likely agree with which of the following assertions about the minimum wage in the United States?

A. Unemployment of low-wage workers will invariably rise when wages are artificially inflated.
Mentioned but not fully supported
B. Minimum wage patterns in New Jersey have no demonstrable relevance to unemployment figures in Pennsylvania.
Not given
C. Conventional economic theory makes no valid predictions about the connection between minimum wage increases and unemployment trends.
opposite
D. It is possible to find some correlation between worker productivity and wages earned.
Given in the last paragraph.
E. Minimum wage increases will expand employment in all sectors of the economy by increasing employee productivity.
Not given

Answer D


2. In the second paragraph, the author mentions the results of Card and Krueger's focus on New Jersey in order to

A. strengthen their contention that minimum wage levels in the Northeastern US are artificially low
Not given
B. provide evidence for their conclusion that the reality of minimum wage hikes may sometimes contradict the results expected by traditional theory
Supported
C. prove that Pennsylvania's low-wage employment suffered as a result of New Jersey's wage increase
Not given
D. undermine the argument put forth by the Princeton economists that an inflation of minimum wages will result in loss of low-wage employment
Princeton economists are Card and Krueger
E. introduce an example of a beneficial minimum wage increase that can be used as a model for a new economic theory
New theory is not mentioned

Answer B


3. It can be inferred from the passage that “traditional economic theory" (line 1)

A. is an accurate predictor of unemployment rates resulting from circumstances other than minimum wage increases
too strong
B. is under attack from many academic economists, who believe that minimum wages in the US should be raised
Not given
C. provides an explanation for New Jersey's low-wage employment jump that is consistent with its predictions
Not given
D. has been replaced with a more modern hypothesis that asserts that minimum wage hikes are necessary for a healthy economy
Not given
E. may still provide an accurate prediction of the results of a minimum wage hike under conditions of low worker demand
Given in the last paragraph.

Answer E


4. The passage suggests that immediately prior to the 1992 increase in the state minimum wage, some New Jersey employers were

A. paying their employees the same minimum rate that employers in Pennsylvania were paying
Possible
B. experiencing economic difficulties and laying off minimum wage employees whose output was insufficient
Not given
C. lobbying for an increase in the minimum wage as a means to hire more workers and increase productivity
Not given
D. in some cases paying more than the mandated minimum wage because demand for low-wage workers was high
We don't know about high demand in New Jersey
E. eliminating the wage structure that had been created under the discredited theories of traditional economists[/box_in][/box_out][/align]
Not given

Answer A

Understanding the passage:

Paragraph 1:
Argument of Traditional economic theory(TET) & its supporters is put forth and all the reasoning behind it is explained. A new study that casts doubt on TET's applicability and expected outcome is introduced.

Paragraph 2:
Findings of the new study are explained and an example used in the study is explained. Researchers conclusion based on the analysis of the statistics did not dismiss TET but labelled it as incomplete and suggested a qualifier to it(that TET will still be applicable in "certain" situations and not in "certain" situations).

Question 1: Answer IMO D
1. The author of the passage would most likely agree with which of the following assertions about the minimum wage in the United States?

A. Unemployment of low-wage workers will invariably rise when wages are artificially inflated.
This is precisely what the author intends to refute by citing the study of Card and Krueger.
B. Minimum wage patterns in New Jersey have no demonstrable relevance to unemployment figures in Pennsylvania.
The author cites an increase in minimum wage employment at the increased wage rate in new Jersey. Is is possible that at least a little bit of this increase MIGHT have been contributed by Pennsylvanians securing jobs in New Jersey, attracted by the wage increase, thus altering Pennsylvania's unemployment figure.
C. Conventional economic theory makes no valid predictions about the connection between minimum wage increases and unemployment trends.
It's clear that the author agrees with Card and Krueger. And they argue that the conventional theory is just incomplete and thus its predictions are still valid in certain situations. So, the author should also agree with this.
D. It is possible to find some correlation between worker productivity and wages earned.
Last two sentences say that employers raise wage to "stabilize the workforce at a higher level of output performance(i.e. Productivity)". So, this indicates some correlation, at least. Also, employers need not, in this case, strictly correlate worker productivity and wages earned and may have some leeway. Even with this "leeway", some correlation can still be established.
E. Minimum wage increases will expand employment in all sectors of the economy by increasing employee productivity.
With Card and Krueger saying that TET is merely "incomplete" and will still hold true in certain situations, this statement above cannot be concluded/agreed by the author. Minimum wage increases MAY NOT expand employment in all sectors, in a place where demand for workers is so low.


Question 2: Answer IMO B
2. In the second paragraph, the author mentions the results of Card and Krueger's focus on New Jersey in order to

A. strengthen their contention that minimum wage levels in the Northeastern US are artificially low
The author only notes the wage increase in a State but whether such wages are low or whether it's artificial is never explained.
B. provide evidence for their conclusion that the reality of minimum wage hikes may sometimes contradict the results expected by traditional theory
True. Author says Card and Krueger's conclusion "casts doubt" on the predictions of traditional theory. In explaining their study, author cites New Jersey's case to provide evidence.
C. prove that Pennsylvania's low-wage employment suffered as a result of New Jersey's wage increase
This statement can be assumed true but not always true. Nevertheless, the author mentions New Jersey to bolster Card and Krueger's conclusion and to "cast doubt".
D. undermine the argument put forth by the Princeton economists that an inflation of minimum wages will result in loss of low-wage employment
No Princeton economist put forth such an argument.
E. introduce an example of a beneficial minimum wage increase that can be used as a model for a new economic theory
Neither the author nor the study states that a beneficial minimum wage increase that can be used as a model for a new economic theory


Question 3: Answer IMO E
3. It can be inferred from the passage that “traditional economic theory" (line 1)

A. is an accurate predictor of unemployment rates resulting from circumstances other than minimum wage increases
Unemployment rates resulting from circumstances other than minimum wage increases is never discussed in the passage.
B. is under attack from many academic economists, who believe that minimum wages in the US should be raised
"attack from many academic economists" is not indicated in the passage, especially, attack by those who want to raise minimum wage. So far, as per the passage, the author is only one that seems to "slightly" attack TET by saying "casts doubt". Perhaps, we can add Card and Krueger but that's not "many academic economists" though! Also, we don't know all 3 of them back minimum wage raise.
C. provides an explanation for New Jersey's low-wage employment jump that is consistent with its predictions
What happened in the case of New Jersey's low-wage employment jump is certainly inconsistent with TET's predictions.
D. has been replaced with a more modern hypothesis that asserts that minimum wage hikes are necessary for a healthy economy
No such modern hypothesis is indicated by the passage.
E. may still provide an accurate prediction of the results of a minimum wage hike under conditions of low worker demand
This is exactly why "Card and Krueger interpret the data as an indication that the theory is merely incomplete". The next sentence explains what happens in high worker demand conditions while the result of low demand condition can be implied.


Question 4: Answer IMO D
4. The passage suggests that immediately prior to the 1992 increase in the state minimum wage, some New Jersey employers were

A. paying their employees the same minimum rate that employers in Pennsylvania were paying
This is never suggested in the passage.
B. experiencing economic difficulties and laying off minimum wage employees whose output was insufficient
Again, this is never indicated of New Jersey employers. Only, the wage raise and the statistics of the outcome were presented. No information on the situation prior to increase is given.
C. lobbying for an increase in the minimum wage as a means to hire more workers and increase productivity
Though, the demand for more workers and for increasing productivity was indicated, whether some New Jersey employers were lobbying is unknown.
D. in some cases paying more than the mandated minimum wage because demand for low-wage workers was high
Correct. The study says raising the minimum wage will have no negative effect on employment in cases where demand for low-wage workers is high(in para 2). And this was deduced from the outcome of the raise in New Jersey. So, it can be inferred that some New Jersey employers were already paying more.
E. eliminating the wage structure that had been created under the discredited theories of traditional economists
It's unclear that New Jersey employers even cared about theories of traditional economists in general.

ANSWERS:
1. D
2. B
3. E
4. D




1. The author of the passage would most likely agree with which of the following assertions about the minimum wage in the United States?


Given what is written in the passage, the AUTHOR would most likely agree with the correct answer. Focus on what the author maintains as his viewpoint.

Also a MOST likely to be true answer can have a little ambiguity, it just needs to be the best out of five.

If you’ve kept a close look at the tone of the passage, the author objectively goes through passage and ONLY includes a personal anecdote in the end which is “This indicates that employers have some leeway in relating their employees’ wages to their productivity.”


A.Unemployment of low-wage workers will invariably rise when wages are artificially inflated.


The author has already presented findings from two Economists that this is a disputed presumption. The unemployment didn’t actually rise when the wages inflated.

B. Minimum wage patterns in New Jersey have no demonstrable relevance to unemployment figures in Pennsylvania.


The passage compares NJ and PENS as two states that enacted and didn’t enact minimum wage hikes and the conflicting results. So clearly the author must think there is SOME relative relationship, otherwise why compare?

C. Conventional economic theory makes no valid predictions about the connection between minimum wage increases and unemployment trends.

Remember the correct answer is something that the AUTHOR would agree with. The author doesn’t outright dismiss the conventional theory at all, just like the TWO economists didn’t.

D. It is possible to find some correlation between worker productivity and wages earned. CORRECT


The passage indicates that this conflicted finding by the two economists could’ve been due to high demand for the employees as it is, making employers willing to pay more anyway. So therefore higher wages CAN be paid for higher productivity as indicated by the line “This indicates that employers have some leeway in relating their employees’ wages to their productivity.”

E. Minimum wage increases will expand employment in all sectors of the economy by increasing employee productivity.


Untrue. We do not know that minimum wage increase increases productivity in general. The comparison is between min. wage and EMPLOYMENT


2. In the second paragraph, the author mentions the results of Card and Krueger's focus on New Jersey in order to


Role questions are easily answerable using a passage map ( attached ). Rephrase this as “ The author put this here to do what?”

A.strengthen their contention that minimum wage levels in the Northeastern US are artificially low

No such contention was made that the minimum wage levels are “artifically low”

B. provide evidence for their conclusion that the reality of minimum wage hikes may sometimes contradict the results expected by traditional theory CORRECT

True, New Jersey was mentioned as an INSTANCE of the conflicting findings of the two economists. (Written in the passage map)

C. prove that Pennsylvania's low-wage employment suffered as a result of New Jersey's wage increase

The two states were certainly compared however one state didn’t suffer because of the other for sure.

D. undermine the argument put forth by the Princeton economists that an inflation of minimum wages will result in loss of low-wage employment

This is false, the princeton economists never asserted this, this is asserted by the traditional wage theory the two economists THREW INTO QUESTION.

E. introduce an example of a beneficial minimum wage increase that can be used as a model for a new economic theory

No modelling of new theories is mentioned or hinted at in this passage. In fact the two economists didn’t make their own theory with the findings, insisting that the old theory isn’t wrong, but just incomplete (hinting that the old theory will be kept)


3. It can be inferred from the passage that “traditional economic theory" (line 1)


INFERENCE —> The answer choice MUST BE TRUE given what is written about TRADITIONAL ECONOMIC THEORY is true.

Let’s recap what was mentioned about Traditional Economic Theory ->
If min. wages are increased, unemployment will increase too. (Relates productivity and wages)
It was thrown into question by two economists and their findings
The two economists maintain that it isn’t wrong, just incomplete.


A.is an accurate predictor of unemployment rates resulting from circumstances other than minimum wage increases

Is it ? The two economists proved different results didn’t they? FALSE

B. is under attack from many academic economists, who believe that minimum wages in the US should be raised

No such attack or assertions by academic economists is mentioned. This is way beyond the scope of the passage

C. provides an explanation for New Jersey's low-wage employment jump that is consistent with its predictions

Traditional theory would’ve predicted that NJ’s employement would fall in response to the min wage HIKE. This is FALSE.

D. has been replaced with a more modern hypothesis that asserts that minimum wage hikes are necessary for a healthy economy

No it hasn’t. The the theory was never replaced as per the passage, thrown it to question or possibly altered.

E. may still provide an accurate prediction of the results of a minimum wage hike under conditions of low worker demand. CORRECT


Tricky But TRUE.

We can sort of understand as per the tone of the passage that the traditional economic theory isn’t being dismissed for some reason. So it must hold true somewhere.

As per the last paragraph “ In areas of the country where demand for workers is high, employers often voluntarily exceed the legal minimum in order to recruit the workers they need,”

So this new finding might actually be because the demand was high as it is, so the employers had no CHOICE but to “sweep them up” into the new wage bracket, thereby paying more.

If the demand didn’t exist, why would the employer bother paying more?




4. The passage suggests that immediately prior to the 1992 increase in the state minimum wage, some New Jersey employers were


This is specifically an inference question about the NJ example, the correct answer must be the MOST supported one by the passage.

A. paying their employees the same minimum rate that employers in Pennsylvania were paying


Tempting. What is being compared though?

NJ increased it’s wages, and the employment only increased.
Pennsylvania didn’t increase it’s wages, so their employment rate LAGGED BEHIND THAT OF NJ’s. ( So it could’ve fell, or stayed stagnant, all we know is that NJ’s increased.

In what possible way can we know if NJ’s and P’s min. wages were the same? There is no way to infer this.

B. experiencing economic difficulties and laying off minimum wage employees whose output was insufficient

We know nothing about the economic difficulties of NJ prior to 1992.

C. lobbying for an increase in the minimum wage as a means to hire more workers and increase productivity

Again we know nothing about the employers lobbying for higher minimum wage. This choice is also illogical, why would they need to LOBBY for increase in the min. wage if they want to hire workers at a higher wage? Can’t they just hire for the higher wage?

D. in some cases paying more than the mandated minimum wage because demand for low-wage workers was high CORRECT

Passage 2 contends that if the place in question has high demand for low wage workers anyway, then a min. wage hike wouldn’t have a negative impact on the employment at all.
We know for FACT that NJ’s employment soared after the min. wage hike.

It could be very possible that the demand for these workers was certainly high and could explain the sudden rise in employment.

E. eliminating the wage structure that had been created under the discredited theories of traditional economists


We do not know of these “discredited theories” by traditional economists. The one theory mentioned has not been discredited either. We also do not know what the wage structure was like before 1992 or whether it was being eliminated. This is certainly not supported.

Para1:

As per traditional economic theory:

Increasing the minimum wage would have a negative effect on the low wage employment in US.
Supporting argument: Increasing the wage makes some workers' wage higher than what they contribute to output.
This further leads to unemployment.

The new study by Princeton economists David Card and Alan Krueger casts doubt on the the extent to which the traditional economic theory is applicable.

Para2:

As per Card and Krueger's findings instead of being fired, the lowest wage workers swept up to the new minimum.
It increases the number of workers earning more than minimum.

Author cites the example of wage increase in New Jersey in 1992 which was followed by an increase in wage at the higher rate.
To support this point he gave the example of Pennsylvania which did not enact a higher rate and a lower minimum wage than New Jersey.

Card and Krueger did not dismiss the conventional theory completely but believed it is incomplete.
They gave the example that in areas with high demand for workers the employers often pay more than the legal minimum to recruit.
And this does not have any negative effect.
Giving a premium wage helps in stabilizing the workforce at a higher level of output.

The author finally concludes that employers relate the workers' wage to their productivity.

1. The author of the passage would most likely agree with which of the following assertions about the minimum wage in the United States?

A. Unemployment of low-wage workers will invariably rise when wages are artificially inflated.
B. Minimum wage patterns in New Jersey have no demonstrable relevance to unemployment figures in Pennsylvania.
C. Conventional economic theory makes no valid predictions about the connection between minimum wage increases and unemployment trends.
D. It is possible to find some correlation between worker productivity and wages earned.
Correct
E. Minimum wage increases will expand employment in all sectors of the economy by increasing employee productivity.

2. In the second paragraph, the author mentions the results of Card and Krueger's focus on New Jersey in order to

A. strengthen their contention that minimum wage levels in the Northeastern US are artificially low
B. provide evidence for their conclusion that the reality of minimum wage hikes may sometimes contradict the results expected by traditional theory
Correct
C. prove that Pennsylvania's low-wage employment suffered as a result of New Jersey's wage increase
D. undermine the argument put forth by the Princeton economists that an inflation of minimum wages will result in loss of low-wage employment
E. introduce an example of a beneficial minimum wage increase that can be used as a model for a new economic theory

3. It can be inferred from the passage that “traditional economic theory" (line 1)

A. is an accurate predictor of unemployment rates resulting from circumstances other than minimum wage increases
B. is under attack from many academic economists, who believe that minimum wages in the US should be raised
Correct
C. provides an explanation for New Jersey's low-wage employment jump that is consistent with its predictions
D. has been replaced with a more modern hypothesis that asserts that minimum wage hikes are necessary for a healthy economy
E. may still provide an accurate prediction of the results of a minimum wage hike under conditions of low worker demand

4. The passage suggests that immediately prior to the 1992 increase in the state minimum wage, some New Jersey employers were

A. paying their employees the same minimum rate that employers in Pennsylvania were paying
B. experiencing economic difficulties and laying off minimum wage employees whose output was insufficient
C. lobbying for an increase in the minimum wage as a means to hire more workers and increase productivity
D. in some cases paying more than the mandated minimum wage because demand for low-wage workers was high
E. eliminating the wage structure that had been created under the discredited theories of traditional economists
Correct

1. The author of the passage would most likely agree with which of the following assertions about the minimum wage in the United States?

IMO C

A. Unemployment of low-wage workers will invariably rise when wages are artificially inflated.
[Opposite: Low wage workers were swiped up to the new minimum]
B. Minimum wage patterns in New Jersey have no demonstrable relevance to unemployment figures in Pennsylvania.
[Opposite to what is stated in the passage]
C. Conventional economic theory makes no valid predictions about the connection between minimum wage increases and unemployment trends.
[Yes. All the evidence shown in the passage is against the predictions done by the conventional economic theory.]
D. It is possible to find some correlation between worker productivity and wages earned.
[Opposite to what is given in the last line of the para]
E. Minimum wage increases will expand employment in all sectors of the economy by increasing employee productivity
[Quite the opposite to what is concluded in the passage]


2. In the second paragraph, the author mentions the results of Card and Krueger's focus on New Jersey in order to

IMO B

A. strengthen their contention that minimum wage levels in the Northeastern US are artificially low
[Northeastern US - Too narrow. Nothing mentioned in the passage]
B. provide evidence for their conclusion that the reality of minimum wage hikes may sometimes contradict the results expected by traditional theory
[Yes the author gave the actual facts to prove that the predictions by the traditional theory were not correct]
C. prove that Pennsylvania's low-wage employment suffered as a result of New Jersey's wage increase
[Not to prove anything for the Pennsylvania's low wage employment]
D. undermine the argument put forth by the Princeton economists that an inflation of minimum wages will result in loss of low-wage employment
[Card and Krueger's are themselves the Princeton economists. The New Jersey fact is providing support to their argument]
E. introduce an example of a beneficial minimum wage increase that can be used as a model for a new economic theory
[Author hasn't discussed the benefits of one wage theory over the other]


3. It can be inferred from the passage that “traditional economic theory" (line 1)

IMO B

A. is an accurate predictor of unemployment rates resulting from circumstances other than minimum wage increases
[Opposite to what is given]
B. is under attack from many academic economists, who believe that minimum wages in the US should be raised
[Correct]
C. provides an explanation for New Jersey's low-wage employment jump that is consistent with its predictions
[Opposite to what is given]
D. has been replaced with a more modern hypothesis that asserts that minimum wage hikes are necessary for a healthy economy
[Don't know yet just by reading this passage]
E. may still provide an accurate prediction of the results of a minimum wage hike under conditions of low worker demand
[No evidence to support this claim]

4. The passage suggests that immediately prior to the 1992 increase in the state minimum wage, some New Jersey employers were

IMO C

A. paying their employees the same minimum rate that employers in Pennsylvania were paying
[Can't say that rate were same]
B. experiencing economic difficulties and laying off minimum wage employees whose output was insufficient
[Not given in the passage]
C. lobbying for an increase in the minimum wage as a means to hire more workers and increase productivity
[Yes. The employers were trying to maintain the wage differentials for different groups/kinds of employees in order to hire more workers]
D. in some cases paying more than the mandated minimum wage because demand for low-wage workers was high
[These facts given in the passage are not for New Jersey]
E. eliminating the wage structure that had been created under the discredited theories of traditional economists
[Nothing mentioned in the passage]

1. The author of the passage would most likely agree with which of the following assertions about the minimum wage in the United States?
Given it is a specific question let's look at each option choices carefully

A. The unemployment of low-wage workers will invariably rise when wages are artificially inflated.
No author does not agree with this as the author introduced Princeton economists in the passage to mention that traditional the theory might be incomplete

B. Minimum wage patterns in New Jersey have no demonstrable relevance to unemployment figures in Pennsylvania.
The passage mentions that "The minimum wage employment in neighboring Pennsylvania, which did not enact a higher rate, lagged behind that of New Jersey" hence this cannot be the right answer

C. Conventional economic theory makes no valid predictions about the connection between minimum wage increases and unemployment trends.
The author only mentions that traditional theory might be incomplete but does not mention that it makes no valid prediction, this is too strong as an option


D. It is possible to find some correlation between worker productivity and wages earned.
The last line of the passage is "This indicates that employers have some leeway in relating their employees’ wages to their productivity." hence this is the correct answer choice

E. Minimum wage increases will expand employment in all sectors of the economy by increasing employee productivity.
This is too generic a statement and nowhere in the passage any support is provided for this


2. In the second paragraph, the author mentions the results of Card and Krueger's focus on New Jersey in order to
The passage mentions that "Their findings, however, indicate that just the opposite occurs" hence the point of mentioning result was to show that oppose of what traditional theory indicate can occur. Now let's look at the option choices

A. strengthen their contention that minimum wage levels in the Northeastern US are artificially low
This was not the intent of mentioning the results of the study

B. provide evidence for their conclusion that the reality of minimum wage hikes may sometimes contradict the results expected by traditional theory
This aligns with our analysis, and hence the correct answer choice

C. prove that Pennsylvania's low-wage employment suffered as a result of New Jersey's wage increase
This was not the intent of mentioning the results of the study

D. undermine the argument put forth by the Princeton economists that an inflation of minimum wages will result in loss of low-wage employment
This was not the intent of mentioning the results of the study

E. introduce an example of a beneficial minimum wage increase that can be used as a model for a new economic theory
This was not the intent of mentioning the results of the study


3. It can be inferred from the passage that “traditional economic theory" (line 1)
As it is specific question, let us directly look at the answer choices

A. is an accurate predictor of unemployment rates resulting from circumstances other than minimum wage increases
The passage mentions that the traditional theory might not be complete, so eliminate this

B. is under attack from many academic economists, who believe that minimum wages in the US should be raised
The passage never mentioned that the trad. theory is under attack from many economists. hence eliminate this

C. provides an explanation for New Jersey's low-wage employment jump that is consistent with its predictions
The traditional theory failed to provide the explanations, hence eliminate this

D. has been replaced with a more modern hypothesis that asserts that minimum wage hikes are necessary for a healthy economy
Same as A

E. may still provide an accurate prediction of the results of a minimum wage hike under conditions of low worker demand
Hope we like this one, as towards the end of the passage the author mentions " In areas of the country where demand for workers is high, employers often voluntarily exceed the legal minimum in order to recruit the workers they need, and under such circumstances, raising the minimum wage will have no negative effect on employment" and it could be only this portion that traditional theory does not explain but on the other side of the spectrum it may still provide accurate prediction, hence this is the correct answer




4. The passage suggests that immediately prior to the 1992 increase in the state minimum wage, some New Jersey employers were
As it is a specific question type let's directly look at the answer choices

A. paying their employees the same minimum rate that employers in Pennsylvania were paying
This is the correct answer choice

B. experiencing economic difficulties and laying off minimum wage employees whose output was insufficient
From nowhere in the passage this could be inferred

C. lobbying for an increase in the minimum wage as a means to hire more workers and increase productivity
From nowhere in the passage this could be inferred

D. in some cases paying more than the mandated minimum wage because demand for low-wage workers was high
From nowhere in the passage this could be inferred

E. eliminating the wage structure that had been created under the discredited theories of traditional economists
From nowhere in the passage this could be inferred

OA of this passage is posted: It is:

DBED

Excellent work by 800gal and ShellyB

Good work by c93liu Gaudapada and RohitSaluja.

And this comes to the end of this competition, Thank you to everyone who participated in this event. I will announce the winners tomorrow.

Good luck.

Hello from the GMAT Club VerbalBot!

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