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Charlesville Co. <600 CR>

Expert replies
by GmatKiss » Fri Aug 26, 2011 12:50 am
At the beginning of 1994, Congress enacted a 10% increase in the federal minimum wage. At that time, Charlesville Hotdog and Beef Company employed 4,000 employees, with over 90 percent of the workforce making minimum wage. Despite the fact that the increase in minimum wage increased the operating expenses of Charlesville Co., the company reported record profits at the end of 1994.

Which of the following, if true, most helps to resolve the apparent paradox?

A)Charlesville Co. spends more money procuring cows for their Hotdog and Beef products than they do paying their 4,000 workers.
B)Charlesville Co. also saw an increase in expenses other than its wages in 1994.
C)Before 1994, the company had considered giving its employees a 10% raise, but ultimately decided not to do so.
D)The company's customer base is made up primarily of families that rely on minimum wage incomes.
E)The majority of the company's 4,000 employees work in the company's meat-packing facilities.

OA after some discussion
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Source: — Critical Reasoning |

by badpoem » Fri Aug 26, 2011 2:29 am
IMO, (D).

A)Charlesville Co. spends more money procuring cows for their Hotdog and Beef products than they do paying their 4,000 workers. --> irrelevant on what their costs are from.

B)Charlesville Co. also saw an increase in expenses other than its wages in 1994. --> Again, increase in costs does not help resolve discrepancy.

C)Before 1994, the company had considered giving its employees a 10% raise, but ultimately decided not to do so --> considered, did not give. That does not explain the profits. At max, the situation could be such that there would be neither any profit nor any loss. That is not the case here.

D)The company's customer base is made up primarily of families that rely on minimum wage incomes --> the customer base consisted of Min. Wages people. Min. wage increased. So they spent at Charlesville.

E)The majority of the company's 4,000 employees work in the company's meat-packing facilities --> where people work does not help give any indication about profits.

Choice D is not the best of answers in general, because IMO, we have to make an assumption that the increase in min. wage actually went towards increased spending, but going by POE, it is the best of all choices.
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by sl750 » Sat Aug 27, 2011 6:30 am
Yep, D. D tells us that its own employee's are its customers. Especially the group whose wages were increased recently
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