Logic Breakdown

Passage Summary: If we pass a law saying a boss can't make more than 50 times what their lowest worker makes, the boss won't want to cut the worker's pay anymore because it would also lower the boss's own maximum possible salary.

Conclusion: Enacting a maximum wage law tied to the lowest-paid employee's salary would stop executives from wanting to cut worker pay.

Reasoning: Currently, executives cut wages to increase profits and their own pay; a law capping their pay at a multiple of the lowest wage would remove the benefit of lowering that bottom-tier wage.

Analysis: The 'Gap' here is the assumption that executives are currently earning (or intend to earn) at least the maximum amount allowed by the proposed ratio. If an executive currently makes only 10 times what the lowest worker makes, they could still cut the worker's pay to boost profits without their own salary being capped by the '50 times' rule. The argument needs to assume that the law would actually act as a constraint on the executives in question.

Passage Stimulus

Passage Redacted

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19.

Which one of the following is an assumption the economist's argument requires?

Correct Answer
E
E is necessary. Negation test: If it’s false—i.e., if no executive would refrain from cutting pay even with the law—then the law fails to protect wages, undermining the economist’s claim that many low-wage employees would be protected from cuts.
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