#8 - Larew: People in the lowest income quintile had a much

[Administrator]

Complete Question Explanation

Point at Issue. The correct answer choice is (A)

This stimulus presents a potentially tricky numbers and percentages scenario:

Larew asserts that, because those with the least money saw a higher percentage increase in their average income, they got more benefit than the rich got from their increases.

Mendota disagrees, with a point that might best be seen in a hypothetical scenario:

If an average person from the bottom quintile earned $10000 ten years ago, and today earns $5000 more, that represents a 50% increase.

Meanwhile, a wealthy person who 10 years ago earned $500,000 saw an increase of only 10% increase, and is now earning $50,000 more than before.

Thus we can see that the wealthy person saw a smaller percentage increase, but the amount of their increase was, nonetheless, greater.

Only correct answer choice (A) accurately reflects this point of contention, and passes the Agree/Disagree test:. Larew believes that the change is prosperity is accurately measured by this comparison of percentage changes, whereas Mendota disagrees, pointing out that the absolute value of the change, dollar for dollar, is greater for the top quintile.

[olafimihan.k]

Could you explain why AC B is wrong?

[Francis O'Rourke]

Hi Olaf,

Answer choice (B) states that Larew and Mendota disagree over whether to measurements prosperity for the lowest quintile relative to the highest quintile, or not. This is actually something that they agree on.

Larew believes that we should compare the percent change between the highest and lowest. Mendota believes that we should compare the absolute income change in the highest and lowest quintiles. Both believe that we should measure the prosperity of the lowest group to the highest. They only differ in terms of how to compare the two groups.