A discount retailer of basic household necessities employs thousands of people and pays most of them at the minimum wage rate. Yet following a federally mandated increase of the minimum wage rate that increased the retailer's operating costs considerably, the retailer's profits increased markedly.
Which of the following, if true, most helps to resolve the apparent paradox?
(A) Over half of the retailer's operating costs consist of payroll expenditures; yet only a small percentage of those expenditures go to pay management salaries.
(B) The retailer's customer base is made up primarily of people who earn, or who depend on the earnings of others who earn, the minimum wage.
(C) The retailer's operating costs, other than wages, increased substantially after the increase in the minimum wage rate went into effect.
(D) When the increase in the minimum wage rate went into effect, the retailer also raised the age rate for employees who had been earning just above minimum wage.
(E) The majority of the retailer's employees work as cashiers, and most cashiers are paid the minimum wage.
[spoiler]OA: B[/spoiler]
I have answered this correctly, but I want to know why the options D and E are wrong.
Thanks.
Good CR_OG10!
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- gmat_perfect
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Hi!
What is the paradox?
Increase of the minimum wage rate caused considerable increase in the retailer's operating costs.
However, the retailer's profits increased markedly.
(A) it is out of scope
(B) This sentence introduces assumption that helps most to resolve the apparent paradox.
(C) It increases the discrepancy
(D) It increases the discrepancy because "the retailer also raised the age rate..."
(E) It does not resolve the apparent discrepancy. It provides evidence for higher retailer's operating costs.
Hope it helps!
Best,
Maciek
What is the paradox?
Increase of the minimum wage rate caused considerable increase in the retailer's operating costs.
However, the retailer's profits increased markedly.
(A) it is out of scope
(B) This sentence introduces assumption that helps most to resolve the apparent paradox.
(C) It increases the discrepancy
(D) It increases the discrepancy because "the retailer also raised the age rate..."
(E) It does not resolve the apparent discrepancy. It provides evidence for higher retailer's operating costs.
Hope it helps!
Best,
Maciek
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With a paradox question I usually narrow my focus a bit compared to what many others do. There seems to be usually one portion of the paradox that is a fact that can be accepted from the argument and does not need to be explained. The other portion of the paradox is the one in need of explanation. Incorrect answer choices will often emphasize the simple fact - and therefore deepen the paradox rather than resolving it.
For example let's take the following two statements from the Veritas Critical Reasoning 2 book:
1) Anti-lock brakes are designed to be safer than regular brakes.
2) Cars with anti-lock brakes actually tend to be involved in more accidents.
The first statement does not need to be explained. Of course, it is desirable to design brakes to be safer. Any answer choice that emphasizes this would not be the correct answer. The answer choice must explain how it is that with these brakes that are designed for safety would be involved in more accidents. A possible answer would be that people rely too much on the anti-lock brakes and do not drive as carefully.
In the question at hand, (number 72 from the OG Verbal Review 2nd edition,) The two portions of the paradox are:
1) (simple fact) an increase in the minimum wage increased the operating costs of the retailer.
2) (fact to explain) the retailer's profits increased markedly.
The correct answer cannot address the simple fact. Any answer choice that re-emphasizes the increased operating costs will make it less likely that the retailer would have increased profits. As Maciek said in the prior post, Choices D and E both fit into this category and deepen the paradox. D indicates that not only those making minimum wage but also those making just above minimum wage had their wages increased, this means even more operating costs to the retailer. E establishes that many of the employees work for minimum wage, so the increase would apply to lots of employees. This also supports the idea of increased operating costs.
Choice B on the other hand, is the only one that addresses fact 2, the one that needs to be explained. It gives the customers of the retailer more money to spend = more profits.
If you think of a paradox in this way it can help you to quickly eliminate those choices that explain what does not need to be explained.
Hope that helps!
For example let's take the following two statements from the Veritas Critical Reasoning 2 book:
1) Anti-lock brakes are designed to be safer than regular brakes.
2) Cars with anti-lock brakes actually tend to be involved in more accidents.
The first statement does not need to be explained. Of course, it is desirable to design brakes to be safer. Any answer choice that emphasizes this would not be the correct answer. The answer choice must explain how it is that with these brakes that are designed for safety would be involved in more accidents. A possible answer would be that people rely too much on the anti-lock brakes and do not drive as carefully.
In the question at hand, (number 72 from the OG Verbal Review 2nd edition,) The two portions of the paradox are:
1) (simple fact) an increase in the minimum wage increased the operating costs of the retailer.
2) (fact to explain) the retailer's profits increased markedly.
The correct answer cannot address the simple fact. Any answer choice that re-emphasizes the increased operating costs will make it less likely that the retailer would have increased profits. As Maciek said in the prior post, Choices D and E both fit into this category and deepen the paradox. D indicates that not only those making minimum wage but also those making just above minimum wage had their wages increased, this means even more operating costs to the retailer. E establishes that many of the employees work for minimum wage, so the increase would apply to lots of employees. This also supports the idea of increased operating costs.
Choice B on the other hand, is the only one that addresses fact 2, the one that needs to be explained. It gives the customers of the retailer more money to spend = more profits.
If you think of a paradox in this way it can help you to quickly eliminate those choices that explain what does not need to be explained.
Hope that helps!