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Resolve the paradox!

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Resolve the paradox!

by amysky_0205 » Sun Dec 09, 2012 12:23 am
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.

OA: B

I would like to know A, D and the OA answer B!
plz explain, thank u (:
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by himu » Sun Dec 09, 2012 11:16 pm
I tried this approach:

Conclusion = Even though retailer had to increase salaries of his employees(means he had to give more money from his pocket), the retailer's profit increased(means he earned much more money than his actual OPERATING margin COSTS).Look for OFFSET !

FROM WHERE DID MONEY COME ? & so much that he was profited ??
clearly the retailer had more business to overflow his operating margin cost.
Now pre-phase the ans- probable causes:
1.some competitor closed & hence more customers came INTO retailer's shop contributing to the overflow.
2.Some new PRODUCT IN retailer's shop was responsible which sold more contributing to the overflow.
3.More disposable income to people, might b holiday season contributing to the overflow IN retailer's shop .

Check ans now?

A: management salaries ?? out of scope.
D: age rate for employees?? again doesnt matter out of scope

try

B:The retailer's customer base is made up primarily of people who earn who depend on the earnings of others who earn = very close to what we were after.


Hope it helps !
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