explanation for the qus 105 and 107 of RC passage essay 32 from Retired GMAT Prep Verbal Guide
Question No.105: The author of the passage suggests which of the following about the advice that the consulting firms discussed in the passage customarily give to companies attempting to control costs? A. It often fails to bring about the intended changes in companies’ compensation systems. B. It has highly influenced views that predominate in prominent business journals. C. It tends to result in decreased labor rates but increased labor costs. D. It leads to changes in companies’ compensation practices that are less visible than changes to work processes would be. E. It might be different if the consulting firms were less narrowly specialized.
Question No.107: It can be inferred from the passage that the author would be most likely to agree with which of the following statements about compensation? A. A company’s labor costs are not affected by the efficiency of its work processes. B. High labor rates are not necessarily inconsistent with the goals of companies that want to reduce costs C. It is more difficult for managers to compare their companies’ labor rates with those of competitors than to compare labor costs. D. A company whose labor rates are high is unlikely to have lower labor costs than other companies. E. Managers often use information about competitors’ labor costs to calculate those companies’ labor rates.
105.
We know from the very first sentence that – “Many managers are influenced by dangerous myths about pay that lead to counterproductive decisions about how their companies compensate employees.”
The rest of the passage expands on this by presenting a myth. This myth is also propagated by compensation consulting companies for their own financial benefit. Hence, following their advise would be counterproductive. This is what A says by mentioning ‘fails to bring about the desired effect’.
107.
look at this sentence – “But labor costs and labor rates are not in fact the same: one company could pay its workers considerably more(high labor rates) than another and yet have lower labor costs if that company’s productivity were higher due to the talent of its workforce, the efficiency of its work processes, or other factors.”
B talks about this and is the correct answer.