If new working practices raise a firm’s productivity, will the firm respond by paying its workers more? Not in a competitive market. In such a market the firm, to gain a competitive edge, will reduce prices. The workers’ real wages, as measured by those wages’ purchasing power, will still rise because of lower prices.
In a competitive market which of the following, if true, ensures that the workers of a firm that achieved productivity gains will derive from these gains the benefit of higher real wages?
(A) The workers’ firm continues to achieve productivity gains.
(B) Other firms do not achieve comparable productivity gains.
(C) The workers buy products made by the firm that employs them.
(D) The workers prefer the new working practices over the old.
(E) The firm pays its workers at or above the industry’s average.
GMAT prep Question...plz help
This topic has expert replies
i think its a strengthen question and IMO answer would be C coz it states that if the workers purchase the product of the same company then they will indirectly get benefit form the reduction in the sales price as mentioned in the statements of the stimuli.
whats the OA?
whats the OA?
-
- Master | Next Rank: 500 Posts
- Posts: 211
- Joined: Thu Apr 09, 2009 12:17 pm
- Thanked: 12 times
- GMAT Score:680
(A) The workers’ firm continues to achieve productivity gains.
The fact that the workers are being productive does not ensure that they will benefit from reduced prices. Let's say they work for a computer company that will continue to operate very efficiently. This does not benefit the workers if the price of food- for example- goes up.
(B) Other firms do not achieve comparable productivity gains.
Other firms not doing well does increase the purchasing power of the employees.
(C) The workers buy products made by the firm that employs them.
If the company is operating efficiently and the workers are also customers, they can benefit from the efficiency by saving money, which stretches their purchasing power.
(D) The workers prefer the new working practices over the old.
Emotions don't affect purchasing power.
(E) The firm pays its workers at or above the industry’s average.
We aren't concerned with whether the workers are better off compared to other employees, we are concerned about whether they are better off in the future as compared to now.
The fact that the workers are being productive does not ensure that they will benefit from reduced prices. Let's say they work for a computer company that will continue to operate very efficiently. This does not benefit the workers if the price of food- for example- goes up.
(B) Other firms do not achieve comparable productivity gains.
Other firms not doing well does increase the purchasing power of the employees.
(C) The workers buy products made by the firm that employs them.
If the company is operating efficiently and the workers are also customers, they can benefit from the efficiency by saving money, which stretches their purchasing power.
(D) The workers prefer the new working practices over the old.
Emotions don't affect purchasing power.
(E) The firm pays its workers at or above the industry’s average.
We aren't concerned with whether the workers are better off compared to other employees, we are concerned about whether they are better off in the future as compared to now.
-
- Newbie | Next Rank: 10 Posts
- Posts: 2
- Joined: Thu Apr 30, 2009 6:44 am
- GMAT Score:560