Critical Reasoning

MANHANTAN CR IS VERY HARD AND NICE AND IS SIMILAR THE TO HARDEST QUESTIONS IN GMATPREP.

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?

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

step 1, read and understand argument 30 second
step 2, eliminate 3 choices, 30 seconds
step 3 when there are 2 choice left, read argument again and choose correct

I can go to A and D. which is correct. I see both are correct
In A, it is possible that cost of cow is lower and weakening happen
in D is is possible that customer spent more when they have more money.
In both 2 cases, possibility exist, not actual action happens so both are correct.

The correct answer choice is D. The paradox to be resolved is how could the company have increased its profits if it must pay higher wages to employees, and hence has higher expenses. This type of paradox question revolves on the following formula:

Profits = Revenues - Costs

If the profits went up and the costs went up, for the company to have kept up its profits implies that means the revenues must have gone up. We search for an answer choice that shows us that revenues went up. D tells us that the customer base is comprised of people who earn minimum wage. As a result of the higher wage, we can infer that the customer base had more expendable income and therefore spent more on hotdog and beef products leading to increased revenues for the company which offset the increase in the cost of higher wages.

Hey is this Cr from MGMAT CAT or MGMAT CR Guide

Still learning on the job... but one thing I've found useful on CR is paying attention to the "degree of provability" required for each question.

"must be true" vs. "most probably inferred"
"justifies..." vs. "most helps"

The First requires 100% provability, the second may only require 10% provability.
I struggle more with the latter because I often get stuck trying to prove close-to-100%!!

I think this question is an example of providing less than 100% proof. (D) is correct even though it does not absolutely resolve the paradox; i.e., Just because customers income increased does not necessarily mean that customers spent more to increase company's revenue. Even if we accept that customers spent more, they could have spent their extra cash on shoes!!

But (D) most helps to resolve the paradox because it gives us the best option (out of A thru E) to explain increased profit due to increased revenue.

--> Note to self ...

Ilana@MasterGMAT wrote:The correct answer choice is D. The paradox to be resolved is how could the company have increased its profits if it must pay higher wages to employees, and hence has higher expenses. This type of paradox question revolves on the following formula:

Profits = Revenues - Costs

If the profits went up and the costs went up, for the company to have kept up its profits implies that means the revenues must have gone up. We search for an answer choice that shows us that revenues went up. D tells us that the customer base is comprised of people who earn minimum wage. As a result of the higher wage, we can infer that the customer base had more expendable income and therefore spent more on hotdog and beef products leading to increased revenues for the company which offset the increase in the cost of higher wages.

How to rule this out .....'Before 1994, the company had considered giving its employees a 10% raise, but ultimately decided not to do so.'

someone help pls

hey,
Option C is just irrelevant and doesnt affects the paradox, besides correct option resolves the paradox considering/attending both sides of the argument and IMO it does nothing here. So, it can be ruled out.