In the 1970s there was an oversupply of college graduates. The oversu

Question

In the 1970’s there was an oversupply of college graduates. The oversupply caused the average annual income of college graduates to fall to a level only 18 percent greater than that of workers with only high school diplomas. By the late 1980’s the average annual income of college graduates was 43 percent higher than that of workers with only high school diplomas, even though between the 1970’s and the late 1980’s the supply of college graduates did not decrease.

Which of the following, if true, in the late 1980’s, best reconciles the apparent discrepancy described above?

(A) The economy slowed, thus creating a decreased demand for college graduates.

(B) The quality of high school education improved.

(C) Compared to the 1970’s, a greater number of high schools offered vocational guidance programs for their students.

(D) The proportion of the population with at least a college-level education increased.

(E) There was for the first time in 20 years an oversupply of job seekers with only high school diplomas.

ID 16598

bhaskar123 · Answer

I think the answer is E. E explains that oversupply of high school graduated must have caused the salary of high school graduates to decrease in 1980s. This decrease must be the reason why we have salary of college graduates at 43% greater than that of workers with only high school diplomas.. Say salary of College Grads (CG = 118) and High School Grads(HG=100). Now if HG goes down and CG remains same then it is possible to have 43% difference.

jpan · Answer

Discrepancy : Supply of college grads did not decrease but the income still went up by 43% compared to high school diploma holders.
A: Decreased demand for college grads => oversupply => income should not rise. So, A is eliminated.
B: Quality of high school grad improved => High school grads salary should increase. Assuming the college grad salary is same as 1970s, this should cause less than 18% gap between incomes. Eliminated.
C: Same reasioning as B.
D: Proportion of college grads increase => oversupply, assuming demand is same. Eliminated.
E: Oversupply of diplomas => Salaries of diploma holders goes down as presented in first sentence of the argument. If diploma salaries go down, even if college grad salaries remain same, the gap will be higher. E is the answer IMO.

Basshead · Answer

Supply vs demand.

In the 1970s, there was an oversupply of college grads; therefore the job market was oversaturated with college grads and their starting salary fell.

In the 1980s, the number of college grads remained the same but their salary was higher than what high school students were making (compared to the salary in 1970). Why?

E explains this discrepancy: there was an oversupply of high school graduates.

dhruva09 · Answer

Can anyone explain the rationale why not option C, because that also logically fits. Not denying E too is a logical option, just that C looks more forward and approachable.

GMATNinja · Answer

Choice (C) describes a benefit for  high school students  in the late 1980's. Increased access to vocational guidance programs should only IMPROVE job prospects and earnings of high school graduates.

All else being equal, we'd expect those programs to further DECREASE the difference between income levels of the two groups.

I hope that clears things up, but if not, let us know your thoughts on choice (C), and we'll do our best to help.

agrasan · Answer

(A) The economy slowed, thus creating a decreased demand for college graduates.
 Doesn't resolve , this option further deepens the discrepancy, we know that supply of college graduates remained unchanged, if demand decreased then it should have been a more punitive for college graduates' salary as compared to salary of only high school diplomas.

(B) The quality of high school education improved.
 Doesn't resolve , this option further deepens the discrepancy, this should have led to decrease in gap of salaries between college graduates and high school diplomas.

(C) Compared to the 1970’s, a greater number of high schools offered vocational guidance programs for their students.
 Doesn't resolve , what happened with vocational guidance program doesn't help us to resolve the increased salary gap between college graduates and high school diplomas.

(D) The proportion of the population with at least a college-level education increased.
 Doesn't resolve , knowing about the proportion doesn't help us to resolve the increased salary gap between college graduates and high school diplomas.

(E) There was for the first time in 20 years an oversupply of job seekers with only high school diplomas.
 Resolves , so what actually happened was decrease in salary of high school diplomas was due to their over-supply. 
We can understand using a short example: 
Let's say salary of a college graduate in 1970 was $100 which let's assume was also same in 1980
Salary of a high school in 1970 was $82 which fell to $53
We can see that we can't blame college graduates for this increased gap, rather it is due to high school diplomas only.

VerbalBot · Answer

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In the 1970s there was an oversupply of college graduates. The oversu

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