The attached graph shows the year-over-year percent change in product

Question

Veritas Prep https://gmatclub.com/forum/download/file.php?mode=view&id=56447 The attached graph shows the year-over-year percent change in productivity and unit labor cost as measured by the Bureau of Labor Statistics across five years. Using the graph, please answer the questions that follow. A. On average businesses were GRAPH_1_PLACEHOLDER productive in 2008 than they were in 2007? A. More B. Less C. As B. On average, unit labor costs were GRAPH_2_PLACEHOLDER in 2010 than they were in 2005. A. Higher B. Lower C. Productivity increased for ______________ of the years graphed. A. 3 B. 4 C. 5 A, A and C 12WQ.jpg

yashikaaggarwal · Answer

Let the productivity before 2006 be X
And unit labour cost be Y

In 2006:
Productivity: X*100.9/100 = 1.009X
Unit labour cost: Y*102.75/100 = 1.0275Y

In 2007:
Productivity: 1.009X*101.6/100 = 1.025X
Unit labour cost: 1.0275Y*102.5/100 = 1.05Y

In 2008:
Productivity: 1.025X*101/100 = 1.036X
Unit labour cost: 1.05Y*102.25/100 = 1.08Y

In 2009:
Productivity: 1.036X*103.5/100 = 1.07X
Unit labour cost: 1.08Y*98.5/100 = 1.06Y

In 2010:
Productivity: 1.07X*103.6/100 = 1.1X
Unit labour cost: 1.06Y*98.6/100 = 1.05Y

A. On average businesses were ____MORE____ productive in 2008 than they were in 2007?
=> 2007 Productivity = 1.025X
=> 2008 Productivity = 1.036X (More)

B. On average, unit labor costs were ______HIGHER______ in 2010 than they were in 2005.
=> Unit Labour Cost in 2010 = 1.05Y {Higher}
=> Unit Labour Cost in 2005 = Y

C. Productivity increased for ______5______ of the years graphed.
=> Productivity has increased in all 5 years irrespective of any change percentage.

A. More
B. Higher
C. 5

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DiyaSouravi99 · Answer

@bunnel  karishma

7Amulya · Answer

Hi Bunuel,

Can you help me with 2nd question please.

KK12333 · Answer

@MartinMurray  Bunuel  Please help me explain this.

cheshire · Answer

Because the graph shows the percent change rather than isolated metric, if the graph is positive, the value will be greater than the year before.

For example: Unit Labor Costs: while it looks like they are decreasing for the first 3 year, they are actually increasing, just at a slower rate.
 
This is because percent change would create an equation that looks like this: 1.027*1.025*1.023...

While the % change is decreasing, the total value is still increasing, which is why  2008 is is still more productive than 2007,  despite having a smaller value. Therefore, Q1 is   More.

The same concept applies to the labor costs, we have to take the overall percent change year by year and see how it has changed.

Percent change of labor costs: 1*1.01*1.015*1.01*.985*.985 = +1.005 = positive number means   higher labor costs in 2010 than 2005

For the final question we don't need to calculate anything as productivity has been increasing annually. Since the number is positive for all 5 years on the graph, it has been   increasing for 5 years.

Bunuel · Answer

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The attached graph shows the year-over-year percent change in product

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