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Q
uantitative
R
easoning &
P
roblem
S
olving
52
© 2014 Pacific Crest
Step
Explanation
5.
Implications of the number
and related issues (con’t)
What does the number possibly represent and imply?
(continued)...Profits have increased, but wages have not.
The corporate profits over this
period increased as a percentage of GDI while the wages have decreased as a percentage.
How can the percentage decrease if the wages are the same? Think about it this way:
If
corporate profits are 100 and wages are 20, wages are 20% of the profits. But if profits
are 200 and wages are still 20, wages are now only 10% of the profits. That is a decreased
percentage, even though the wages remained the same.
6.
Statement of what the number
means
Produce now a concrete statement of what the number
represents.
Of the income that business generates in America, the percentage of it that goes to pay
workers now is less than it used to be and, in fact, lower than it has ever been. Although
corporate profits have been increasing, workers’ wages have not been growing, therefore
the share of the GDI that their wages represent has decreased.
O
ops
! A
voiding
C
ommon
E
rrors
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Not recognizing the units within the number(s)
Example
: Mr. Johnson earns $20,000. That’s not enough for a family of three; they must just
barely be getting by.
Why?
This family is actually very affluent; $20,000 is what Mr. Johnson earns each month.
The unit has a very big impact in a context of what that number really means; 20,000
dollars-per-month is a lot more than 20,000 dollars-per-year, over any period of time.
●
Not understanding the magnitude of the number, especially large order of magnitude
Example
: Many people have experienced earthquakes that rated a 5 or 6 on the Richter scale
(such as the 6.0 earthquake that hit the Virginia/Washington D.C. area in 2011). How
many people have experienced an earthquake that rated a 10 to 12 on the Richter scale?
Why?
Is an earthquake that is rated at 12 on the Richter scale twice as bad as one that is rated
6? In fact, the equivalent of a 12.0 earthquake is the meteor that struck the Yucatan
Peninsula causing the extinction of the dinosaurs 65 million years ago. The approximate
amount of TNT (dynamite) required to cause the same energy as the 6.0 earthquake is
15 kilotons. For a 12.0 earthquake, it is 100 teratons...a billion times more powerful.
●
Not understanding the relative size between numbers (percentages and ratios)
Example
: Winning the lottery when at $450 million is a great return on investment; the ticket
only costs $2, but you can win $225 million for each dollar you spend!
Why?
What is the likelihood of actually winning? What is the payout? Does a percentage of
the prize have to be paid in taxes? And what are the chances of there being more than
one winner? There is a reason that lotteries are often referred to as a tax on people
who are bad at math.