Last Year Company X Experienced An Unexpectedly Steep Drop In Profits GMAT Critical Reasoning

Question: Last year Company X experienced an unexpectedly steep drop in profits. To offset this loss, Company X should reduce its workforce by 10%. Doing so will allow the company to save a great deal in payroll expenditures. Company X will therefore be able to recoup its losses.

The argument above assumes that:

1. The amount saved in payroll expenditures will exceed the amount lost in profits.
2. The amount saved in payroll expenditures will equal the amount lost in profits.
3. Reducing Company X's workforce will not cause the company to reduce productivity.
4. Company X has no reserve funds to offset its losses.
5. Company X has not at some time in the past reduced its workforce.

“Last year Company X experienced an unexpectedly steep drop in profits”- is a question of critical reasoning in a section of GMAT Verbal Reasoning. It examines the logical reasoning of the candidate in the test. The Critical Reasoning question type is used to measure critical business skills. GMAT Critical Reasoning questions assess a distinct set of qualities associated with logic. The students preparing for the GMAT will experience the argument analysis of Critical Reasoning for the first time to substantiate their logic.

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