Question

The primary purpose of the passage is to

• A. compare the effects of unionization on wages with its effects on fringe benefits
• B. discuss the reasons that unions sometimes support the substitution of fringe benefits for wages
• C. explain the tax incentives for employers to provide fringe benefits rather than wages
• D. argue that unions should oppose the substitution of fringe benefits for wages
• E. describe the factors that determine the value that workers place on fringe benefits
• A. It causes employers to prefer to pay workers in wages rather than fringe benefits.
• B. It provides an incentive for employers to increase the proportion of compensation paid as fringe benefits.
• C. It applies only to fringe benefits such as pensions and health insurance.
• D. It causes higher-income workers to place a lower value on fringe benefits than do lower-income workers.
• J. It is a recent development in economic policy.
• A. They are typically represented by unions.
• B. They place a higher value on fringe benefits than do higher-income workers.
• C. They are less likely than higher-income workers to prefer fringe benefits over wages.
• D. They are younger on average than higher-income workers.
• O. They are less likely than higher-income workers to be members of unions.
• A. Unions that represent higher-income workers are more likely to support the substitution of fringe benefits for wages than are unions that represent lower-income workers.
• B. Workers who receive a large proportion of their compensation in the form of fringe benefits are less likely to leave their jobs than are workers who receive a small proportion.
• C. The proportion of workers who belong to unions has decreased in recent years.
• D. The tax savings associated with fringe benefits are greater for employers than for employees.
• T. Unions are more likely to support the substitution of fringe benefits for wages in industries with high labor turnover.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
This is a primary purpose question, which asks for the main idea or the central theme of the passage. The best answer will encapsulate the overall focus of the text.
Step 2: Detailed Explanation:
The passage begins by setting up a puzzle: unions, which represent lower-income workers who prefer wages, often support the substitution of fringe benefits for wages.
The core of the passage is dedicated to resolving this puzzle. It offers two distinct explanations:
1. Unions consider the preferences of potential (younger, higher-income) members.
2. Fringe benefits help reduce labor turnover, which increases the union's bargaining power.
The passage is structured to present this contradiction and then explore the reasons behind it.
Option (A) is incorrect because the passage focuses on the union's stance on the wage/fringe benefit trade-off, not a general comparison of effects.
Option (C) and (E) are mentioned as background details but are not the main focus. The tax incentive is a premise, and worker valuation helps set up the puzzle, but neither is the primary purpose.
Option (D) is incorrect because the passage explains why unions support the substitution; it does not argue that they should oppose it.
Option (B) accurately describes the main thrust of the passage: explaining the "puzzling behavior" of unions supporting fringe benefits.
Step 3: Final Answer:
The primary purpose is to discuss the reasons behind a seemingly contradictory union strategy, making option (B) the correct choice.

Answer 2

Step 1: Understanding the Concept:
This is a detail-oriented question that asks for specific information explicitly stated in the passage about the tax treatment of fringe benefits.
Step 2: Detailed Explanation:
We need to locate the part of the passage that discusses tax treatment. The second and third sentences state: "Because the costs of providing fringe benefits are tax deductible for employers, fringe benefits are effectively subsidized by the government. This tax treatment creates an incentive for employers to increase the proportion of employee compensation that is paid in the form of fringe benefits."
Let's evaluate the options based on this text:
(A) This is the opposite of what the passage states. The tax treatment provides an incentive for fringe benefits, not wages.
(B) This directly paraphrases the third sentence of the passage. It is explicitly stated that the tax treatment "creates an incentive for employers to increase the proportion of employee compensation that is paid in the form of fringe benefits."
(C) The passage gives pensions and health insurance as *examples* ("such as"), not an exhaustive list. We cannot conclude that the treatment *only* applies to them.
(D) The passage states that higher-income workers place a *higher* value on fringe benefits, not lower.
(E) The passage does not provide any information about when this economic policy was developed, so we cannot confirm if it is "recent".
Step 3: Final Answer:
Based on the direct textual evidence, option (B) is the correct answer.

Answer 3

Step 1: Understanding the Concept:
This is an inference question that asks what the passage suggests about lower-income workers. We need to find the statement that is best supported by the text.
Step 2: Detailed Explanation:
The passage discusses the preferences of lower-income workers in contrast to higher-income workers. The key sentence is: "...higher-income workers are likely to prefer a greater proportion of their compensation in the form of fringe benefits than are lower-income workers."
Let's analyze this statement:
If higher-income workers are *more likely* to prefer fringe benefits, it logically follows that lower-income workers are *less likely* to prefer them. This means lower-income workers would, in turn, prefer wages.
Now let's review the options:
(A) The passage states "Unions, which typically represent lower-income workers...", so this is true, but let's check other options.
(B) This is the opposite of what the passage states. The passage suggests higher-income workers place a higher value on these benefits.
(C) This is a direct logical consequence of the key sentence. If higher-income workers are more likely to prefer fringe benefits, then lower-income workers are less likely to prefer them (and thus more likely to prefer wages). This aligns perfectly.
(D) The passage states that *potential* union members are "typically younger and higher-income than *current* members," not that lower-income workers in general are older. This is a misinterpretation.
(E) The passage implies the opposite: unions are composed of lower-income workers.
Comparing (A) and (C), both seem plausible. However, the contrast in preference for fringe benefits versus wages is a more central point to the passage's main argument than the fact that unions represent them. Option (C) captures the economic preference that creates the central puzzle of the passage. In the context of the question's focus on economic behavior, (C) is the stronger inference related to the passage's argument. The provided answer key is C, confirming this reasoning.
Step 3: Final Answer:
The passage directly supports the inference that lower-income workers are less likely than their higher-income counterparts to prefer fringe benefits over wages, making option (C) correct.

Answer 4

Step 1: Understanding the Concept:
This is a "strengthen the argument" question. We must first identify the specific argument—the "another explanation"—and then find the option that provides new, supporting evidence for it.
Step 2: Detailed Explanation:
The "another explanation" is: "...unions are willing to accept lower wages in exchange for fringe benefits because fringe benefits help to retain workers and reduce labor turnover, thereby increasing the union's bargaining power."
The core logic is: Fringe benefits \(\rightarrow\) Reduced turnover \(\rightarrow\) Increased union power.
We are looking for an option that reinforces this causal chain.
(A) This supports the general idea that income level affects preference for fringe benefits, but it doesn't strengthen the specific explanation about *labor turnover* and *bargaining power*.
(B) This provides direct evidence for the first link in the chain (Fringe benefits \(\rightarrow\) Reduced turnover). It says that workers with fringe benefits are less likely to leave. This is a strong contender.
(C) This is irrelevant to the explanation about why unions might choose a specific compensation strategy.
(D) This is background information already implied in the passage and doesn't add new support to the specific explanation about turnover.
(E) This option creates a direct correlation that supports the entire explanation. If the explanation is true (unions use fringe benefits to reduce turnover), then we would expect to see this strategy used most often where the problem of turnover is greatest (i.e., in industries with high labor turnover). This shows a real-world application of the theory, which strongly strengthens it.
Comparing (B) and (E): Option (B) strengthens one premise of the explanation (that benefits reduce turnover). Option (E) provides evidence that unions act in accordance with the entire explanation's logic. In strengthening questions, evidence of the theory being applied in practice (E) is often stronger than evidence for just one part of the theory's premise (B). The provided answer key is (E).
Step 3: Final Answer:
Option (E) provides the strongest support by showing a correlation that would be predicted by the "another explanation," thereby strengthening it.