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07 Sep 2022, 01:30
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USA automotive companies are having a difficult time competing with car manufacturers in South Korea. USA manufacturers have decided that they must significantly lower the wages of their employees in order to compete with Korean manufacturers, because wages constitute approximately 30% of the cost of producing an automobile.
Which of the following, if true, provides the most compelling argument against lowering wages?
A] Lowering wages will cause the best workers to leave, lowering quality of the final product, which could lower sales.
B] Raw materials, such as steel, constitute 55% of the cost of an automobile.
C] US automakers have recently made inroads on foreign manufacturers and recaptured market share.
D] U.S. worker's wages are 25% higher than those of workers in South Korea.
E] U.S auto manufacturers recently increased their spending on advertising.
Which of the following, if true, provides the most compelling argument against lowering wages?
A] Lowering wages will cause the best workers to leave, lowering quality of the final product, which could lower sales.
B] Raw materials, such as steel, constitute 55% of the cost of an automobile.
C] US automakers have recently made inroads on foreign manufacturers and recaptured market share.
D] U.S. worker's wages are 25% higher than those of workers in South Korea.
E] U.S auto manufacturers recently increased their spending on advertising.
07 Sep 2022, 03:05
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USA automotive companies are having a difficult time competing with car manufacturers in South Korea. USA manufacturers have decided that they must significantly lower the wages of their employees in order to compete with Korean manufacturers, because wages constitute approximately 30% of the cost of producing an automobile.
Which of the following, if true, provides the most compelling argument against lowering wages?
We need to find the reason why USA manufacturers shouldn't lower wages. USA manufacturers are trying to cut costs to compete with Korean manufacturers
A] Lowering wages will cause the best workers to leave, lowering quality of the final product, which could lower sales. - Correct
Provides the negative consequence of lowering wages. This explains why USA manufacturers will be unable to compete with Korean manufacturers after lowering wages.
B] Raw materials, such as steel, constitute 55% of the cost of an automobile. - wrong
Just gives the proportion of raw material cost in the total of an automobile
C] US automakers have recently made inroads on foreign manufacturers and recaptured market share. - wrong
This is not a compelling argument against lowering wages. Korean manufacturers may still have an upper hand.
D] U.S. worker's wages are 25% higher than those of workers in South Korea. - wrong
Wage difference doesn't provide a compelling argument. The standard of living may be different in the two countries
E] U.S auto manufacturers recently increased their spending on advertising. - wrong
Not a compelling argument against lowering wages. Doesn't provide a reason why the wages should not be lowered
Which of the following, if true, provides the most compelling argument against lowering wages?
We need to find the reason why USA manufacturers shouldn't lower wages. USA manufacturers are trying to cut costs to compete with Korean manufacturers
A] Lowering wages will cause the best workers to leave, lowering quality of the final product, which could lower sales. - Correct
Provides the negative consequence of lowering wages. This explains why USA manufacturers will be unable to compete with Korean manufacturers after lowering wages.
B] Raw materials, such as steel, constitute 55% of the cost of an automobile. - wrong
Just gives the proportion of raw material cost in the total of an automobile
C] US automakers have recently made inroads on foreign manufacturers and recaptured market share. - wrong
This is not a compelling argument against lowering wages. Korean manufacturers may still have an upper hand.
D] U.S. worker's wages are 25% higher than those of workers in South Korea. - wrong
Wage difference doesn't provide a compelling argument. The standard of living may be different in the two countries
E] U.S auto manufacturers recently increased their spending on advertising. - wrong
Not a compelling argument against lowering wages. Doesn't provide a reason why the wages should not be lowered
wadhwakaran
Joined: 31 Mar 2022
Last visit: 22 Jul 2025
Posts: 260
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Location: India
Concentration: General Management, International Business
Schools: INSEAD Aug'24 intake Oxford Said'25 Judge '25 Imperial'25 HEC Sep'24 Intake LBS '26 ISB '27
GMAT 1: 700 Q50 V35
GPA: 2.8
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Schools: INSEAD Aug'24 intake Oxford Said'25 Judge '25 Imperial'25 HEC Sep'24 Intake LBS '26 ISB '27
GMAT 1: 700 Q50 V35
Posts: 260
Kudos:
247
07 Sep 2022, 03:22
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Premise: US companies are having difficult times in competing with Korean counterparts.
Author's Plan of Action: Reduce the wages of the workers as it constitutes 30% of the total cost.
Aim: Weaken the Author's Plan
What if reduction in wages lead to lowering the quality of the output which ultimately results in further reduction in sales.
A] Lowering wages will cause the best workers to leave, lowering quality of the final product, which could lower sales. In line with our reasoning, Correct
B] Raw materials, such as steel, constitute 55% of the cost of an automobile. Nowhere related to our argument, therefore, out of scope
C] US automakers have recently made inroads on foreign manufacturers and recaptured market share. Nowhere related to our argument, therefore, out of scope
D] U.S. worker's wages are 25% higher than those of workers in South Korea. What if other raw materials are costlier in US than in Korea, therefore, incorrect
E] U.S auto manufacturers recently increased their spending on advertising. Nowhere related to our argument, therefore, out of scope
Author's Plan of Action: Reduce the wages of the workers as it constitutes 30% of the total cost.
Aim: Weaken the Author's Plan
What if reduction in wages lead to lowering the quality of the output which ultimately results in further reduction in sales.
A] Lowering wages will cause the best workers to leave, lowering quality of the final product, which could lower sales. In line with our reasoning, Correct
B] Raw materials, such as steel, constitute 55% of the cost of an automobile. Nowhere related to our argument, therefore, out of scope
C] US automakers have recently made inroads on foreign manufacturers and recaptured market share. Nowhere related to our argument, therefore, out of scope
D] U.S. worker's wages are 25% higher than those of workers in South Korea. What if other raw materials are costlier in US than in Korea, therefore, incorrect
E] U.S auto manufacturers recently increased their spending on advertising. Nowhere related to our argument, therefore, out of scope
