PrepTest 151, Section 3, Question 19
Economist: The wages of many of the lowest-paid(77 more words not shown)
Which one of the following(7 more words not shown)
- AAll of the(30 more words not shown)
- BSome corporate executives(36 more words not shown)
- CNo corporate executives(37 more words not shown)
- DIf corporate executives(30 more words not shown)
- EIf such a(30 more words not shown)
Reading the argument
A cap on executive pay could make a cut to workers' pay less attractive. Suppose the lowest wage is $10 an hour. A 50-times rule would cap the executive's pay at $500 an hour. If the lowest wage falls, that ceiling falls too.
That doesn't automatically cut the executive's actual salary. An executive earning far below the ceiling might still have room for a raise. For example, going from ten times the lowest wage to fifteen times it would remain below the proposed limit. My first question is whether the cap would actually constrain the decisions the economist wants to change.
There could also be wider effects, such as companies elsewhere offering pay this rule wouldn't allow. But the argument's specific promise is protection from wage cuts. We don't need to settle every consequence of the policy to test that claim.
What we’re looking for
For the required assumption, I'd focus on whether this cap limits the pay changes being considered. That doesn't require an executive already to be at 50 times the lowest wage: a planned raise or a cut to the lowest wage could bring the cap into play.
Working the answers
- A
The conclusion concerns many low-paid employees, not all of them. It doesn't require every such employee to work under an executive already earning more than 50 times their wage. The policy could affect some companies without that universal condition holding.
- B
The argument doesn't require some relevant executives to be below the proposed ceiling already. They could all be above it, or their positions could vary. This particular description of current salaries isn't necessary to the claim that the law would prevent cuts.
- C
The economist isn't saying this law is the only way to get a pay increase. More fundamentally, the promised result is protection from cuts, not a guaranteed rise. Executives could raise wages for many other reasons while the proposed law still protected employees against this incentive to cut them.
- D
Removing one incentive doesn't mean executives would never change wages again. Other circumstances could lead them to raise pay or to cut it for a different reason. The argument needs protection against the described incentive, not a permanent freeze on every affected employee's pay.
- ECorrect
At least one executive must refrain from the cuts under the proposed law. If every executive still cut the lowest-paid employees' pay and benefits, the economist couldn't claim that the law protected many employees from cuts.
This is less specific than my initial question about when the pay ceiling becomes binding. It asks for a minimum behavioral result: someone actually doesn't make the cut. Merely changing an incentive isn't enough if the promised protection never follows. E doesn't prove that many employees are protected or establish every cause of the executive's decision; it gives a condition the economist's claim cannot do without.
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