This question is not asking you to spot the fault in the reasoning. Rather, if you look at the question stem it asks "the point made by the author is that the most common way of setting executives' salaries might not keep those salaries in bounds because...." You're looking for the answer choice that fills in the ..., which essentially means you're looking for the answer choice that explains the logic of the argument.
Answer (C) is correct because it explains the argument. The author tells us in the last sentence that most board members are also executives of other corporations and would benefit from setting high salaries. This means they may have a self-interest in setting high salaries. Answer C flags this as it says the means of setting executives salaries may not keep them low as other executives have an interest in setting them high.
NK848January 1, 2020
Yes, I understood the answer. I was rather interested in the comment in the explanation (not directly related to the answer choice) that there is a fault in the reasoning. I couldn't spot the fault. Could you please explain?
VictoriaJanuary 15, 2020
Hi @NK848
Happy to help!
The author is arguing that the expectation that the board of directors will prevent excessively large salaries is based on poor reasoning.
At first glance, there would seem to be no error in reasoning. Most corporations use their board of directors to set salaries and the primary mission of said board is to ensure the economic health of the corporation.
Based on the above information, it would be reasonable to expect that the board would prioritize the economic health of the corporation over the wallets of its executives.
However, the author also tells us that most members of a board of directors are also executives of a corporation themselves and that setting high salaries could benefit them directly by establishing a benchmark for executive salaries.
In this way, the reasoning used to conclude that we can expect the board to prioritize economic health over executive salaries is flawed because it would be against the self-interest of many of the board members to do so.
Hope this is helpful! Please let us know if you have any further questions.
