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Difficulty: HardNecessary Assumption

Labor Economist: Analysts predict that integrating generative AI will cause severe workforce contraction because it executes routine tasks faster than humans. This ignores historical precedent. In the 1980s, spreadsheet software automated manual calculations but ultimately expanded accounting employment by reducing the cost of financial analysis, thereby catalyzing massive demand for such services. Therefore, generative AI will similarly yield a net employment expansion within adopting industries.

Which one of the following is an assumption required by the labor economist's argument?

  1. A
    The maintenance and optimization of generative AI systems will require more human labor than the technology initially displaces.
  2. B
    Technologies that do not execute routine cognitive tasks faster than human employees will not result in severe workforce contraction.
  3. The cost reductions achieved through the integration of generative AI will not be restricted to industries where lower prices are incapable of stimulating increased demand.Answer
  4. D
    Generative AI will lead to the creation of entirely new professional disciplines, thereby completely offsetting any initial job displacement.
  5. E
    The analysts predicting workforce contraction have mistaken a historical correlation between technological integration and job displacement for a causal relationship.

Answer

The cost reductions achieved through the integration of generative AI will not be restricted to industries where lower prices are incapable of stimulating increased demand.
The argument relies heavily on an analogy to spreadsheet software, where cost reductions led to a surge in demand that ultimately created more jobs. For this analogy to hold and guarantee a net employment expansion, it must be true that the industries adopting AI can actually experience increased demand when their service costs drop. If cost reductions are entirely restricted to industries where lower prices cannot stimulate demand (the logical negation of this option), the fundamental mechanism fails, and employment will not expand. Therefore, the argument depends on this assumption.

Step-by-Step Solution

1
Identify the argument's main conclusion.
Generative AI will yield a net employment expansion within the industries that adopt it.
This establishes the final claim that the author is trying to prove.
2
Identify the core premises supporting the conclusion.
Spreadsheet software expanded employment because the resulting cost reductions catalyzed massive demand for financial services.
The author uses an argument by analogy, relying on this historical precedent as the logical foundation.
3
Recognize the logical gap between the premise and conclusion.
The author assumes that the specific mechanism that worked for spreadsheets (lower costs leading to increased demand that outpaces job automation) will successfully apply to the modern industries adopting generative AI.
For an argument by analogy to hold, the relevant underlying conditions must be similar.
4
Apply the Negation Test to the options to find the logically necessary assumption.
Negating the correct option means cost reductions WILL be restricted to industries where lower prices CANNOT stimulate demand. This completely destroys the mechanism of the argument, invalidating the conclusion.
A necessary assumption is a statement that must be true for the argument to survive; if its negation destroys the argument, it is the correct answer.

Key Concept

Necessary Assumption (Defender/Bridge)
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Topics

Necessary Assumption

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