Critical Reasoning

To increase profits, management should reinvest in employee training, product development, or market research. When management instead chooses to cut expenditures in these areas, a vicious cycle results. The cost-cutting causes a reduction in wages, employee skills, and product appeal. These effects in turn increase complaints and turnover among employees, increase customer dissatisfaction, and drease market share. Reduced sales and constricted profit margins cause a financial squeeze on the company, which in turn forces management to cut costs even more.

The vicious cycle described above could not result unless which of the following were true?

A. A drease in employee wages acts as a catalyst for employees to find ways to keep their jobs and appear better than their coworkers.

B. Some products lines bring in less revenue than their overall cost and, when discontinued, actually improve the bottom line.

C. When management cuts costs to increase profits, it does not take into adequate consideration the lost revenue that results from cost cuttiing.

D. Employee dissatisfaction only occurs as a result of reduced wages or decreased employee training.

E. Current customers do not differ with respect to the level of dissatisfaction that would case them to purchase products elsewhere.



























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Answer: C

Why C is right? How to use the method of "Assumption Negation Method" to apply to choice C in order to attach this problem?

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