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Productivity

by GmatKiss » Tue May 15, 2012 7:30 am
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.
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by Birottam Dutta » Tue May 15, 2012 9:15 am
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

IMO, it is A! If the firm continues to achieve productivity gains, then it can continue to keep selling the products at reduced prices and thereby the workers of that firm will derive the benefit of higher real wages.

hope this is true!!
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by agarwalva » Tue May 15, 2012 5:04 pm
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

IMO C
Workers raise - is lost cost of product.
So if it is true that buy products made by the firm that employs them they will be benefited
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by alex.gellatly » Tue May 15, 2012 5:59 pm
I think it's C because the argument states that the workers gain higher real wages only with lower prices. We can concluded that the only way to get higher real wages is if prices are lower. The only answer which guarantees this is C. If the firm gains productivity and then lowers prices, the worker can see higher real wages if he/she buys lower priced goods. Then only firm we know to have lower priced goods is the firm in the argument.
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by Gaurav 2013-fall » Wed May 16, 2012 3:19 am
It should be C
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