Q6 - The profitability of a business is reduced

[ohthatpatrick]

Question Type:
Necessary Assumption

Stimulus Breakdown:
Conc: Paying senior staff with stock options is not a wise policy.
Evid: Doing so dramatically increases the pay disparity between senior staff and other employees, and anything that undermines employee morale reduces a businesses profitability.

Answer Anticipation:
With Necessary Assumption, sometimes we want to solve for Missing Links, and sometimes we want to just debate the author via the Anti-Conclusion perspective.

This argument has a couple gaps that we could articulate:
"something that would reduce profitability of business" = "not a wise policy", and
"increasing the pay disparity" = "undermines employee morale".

Since this is an early question (Q6), it's likely just testing one of those language gaps.

Correct Answer:
A

Answer Choice Analysis:
(A) Looks good. If the pay disparities did NOT tend undermine morale, then the author has no reason offered to worry about giving the senior staff stock options.

(B) "Usually" - too extreme. From the first sentence, it appears that profitbability is reduced AT LEAST SOMETIMES from lower morale, but we can't say that lower morale is usually the cause.

(C) Unsupported comparison. Even though the author's gist is that paying senior staff stock options would ultimately lead to LESS profitability, that's comparing an individual business before/after offering stock options. The author doesn't provide enough detail for us to infer this cross-category comparison between businesses that do / don't offer stock options. It's possible that only the most successful businesses decide to offer stock options, so even though that would lower their profitability (according to the author's thinking), they might still be, on average, more profitable than less successful firms who never even reach the point of considering offering stock options.

(D) "Invariably" - too extreme. Also this is a fake opposite. The author is saying "increasing disparity -> lower morale -> lower profits", but that doesn't force the author to assume "reducing disparity -> higher morale -> higher profits".

(E) "Productive" - out of scope.

Takeaway/Pattern: Had we not seen either of the two predicted language gaps, we could have looked with fresh eyes at other ways to potentially weaken the argument, but if you "hear" a language shift, and it's an early question, it's normally worth checking the answer choices to see if you've already solved what they're fishing for.

#officialexplanation

[ttunden]

I didn't see an explanation for this question so I thought it would be good to participate and post one. So, here is my explanation.

This is a necessary assumption question. Our conclusion is the 2nd sentence, that paying senior staff with stock options is not a wise policy.

we support this conclusion with the difference in income between fixed salary employees and senior staff, as well as the 1st sentence which appears to be a general principle/statement.

Well, the main gap here or what the author must be assuming is that the income gap leads to low employee morale, or in other words undermines it. Thus this prephase is addressed in answer choice A


B- no, this is extreme because there could be a lot of things that lead to reduction in profitability. This is not required in order to derive our conclusion. It's not "usually" due to undermined employee moral
C- tempting. However, this statement is too extreme. All we know from the stimulus is that profitability is reduced by anything that undermines employee moral. We don't know what else would reduce profitability or increase profitability. We cannot assume this absolute statement. The author is not assuming this relative statement either.
D- nah, this is the opposite. too strong too with the "invariable." The author isn't assuming the opposite. This is not required for our author to derive his conclusion.
E- more productive?? out of scope. We aren't worried about employee productivity just stock options, employee moral, and profitability.

Hope this helps.

[tommywallach]

Thanks, TT!

[erikwoodward10]

Is A both a sufficient and a necessary assumption?

[BarryM800]

This is the rarest necessary assumption question, where the credited answer choice is a "most" statement - "tend to." Shouldn't it be a "some" statement instead - "at least sometimes undermine ..."? Can anybody elaborate why the "most" language is justified? Thanks!

[Laura Damone]

I'm with you, Barry. It's clearly the best answer, but I'm not 100% that it meets the bar of necessity. I'd prefer this answer with a weaker quantifier, or no quantifier at all.

[AbhistD667]

I'm with you, Barry. It's clearly the best answer, but I'm not 100% that it meets the bar of necessity. I'd prefer this answer with a weaker quantifier, or no quantifier at all.

I got this one correct in my timed section but while I was reviewing to see why C is wrong, I came up with the same logic that I thought while doing it timed. What I thought was that C overlooks the morale part of the argument thus it can't be the right part otherwise why would the author talk about it. Is my reasoning correct?

[Laura Damone]

In general, I'd caution you against eliminating answers based on what they don't say. Your prediction that the right answer will address morale is strong, but that doesn't mean the right answer needs to address it. Arguments can have lots of necessary assumptions: some that deal with the gap in reasoning you spotted, and others that don't. Instead, eliminate C based on what it does say. Do firms that pay in stock options need to be less profitable for this argument to work? No. Therefore C isn't necessary to assume.

The strategy of eliminating an answer because it fails to address a key concept only works for Sufficient Assumption questions. Since the task there is to make the argument valid, you do 100% have to address any new concept that the conclusion introduced that isn't dealt with by the premises.

Hope this helps!