A discount retailer of basic household necessities employs thousands

Fairly easy Resolve the Paradox. In this kind of question, we need to find "new" element which can solve both sides of the paradox, not only one side. In addition, there's no conclusion here, just facts.

Fact: A discount retailer pays most of employees at the minimum wage rate
Fact: minimum wage increased. Operating expenses should increase. Profit should decrease.
Fact: But retailer's profit increased markedly.

Profit = Revenue - Cost.
What if Revenue increases faster than does cost. >>> Profit will increase.
D says: retailer's customers = people who earn minimum wages. If their income increase >>> they may purchase more >>> Retailer's profit may increase.

D is correct.

Hope it helps.

The only answer choice wich adresses both parts of the argument (increase of costs and profits) is (B)

(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.

But actually I don't like this one either, because if people earne more they buy also more, OK, but this means that the revenue went up , but as we know revenue is not = Profits. They may sell more, but if the costs went up, they can earn "0"....... poorly structured argument.

Cost increased yet profit has also increased. What is the flaw? Revenue - Cost = Profit. Cost Increase, Profit Increase so Revenue must increase. Answer choice will explain how the revenue can increase.

B gives a valid reason. customers of the retailer - people who earn min. wage. if people have more $, then they spend more -> increased revenue.

The discount retail store that meets the basic consumption of the family employs thousands of employees and gives the majority the minimum wage. However, because the federal government has imposed a minimum wage standard, the operating costs of retail stores will increase substantially, but the profits of retail stores will increase substantially. Profit = sales - cost (running cost, labor cost) The
problem is to solve the problem of increasing the cost of retail stores and increasing profits
. A. More than half of the operating costs of retail stores come from wages, and only a small part of the wages are given. Management, this answer has nothing to do with the increase in profits. Instead, it shows that most of the wages are given to ordinary employees. Their minimum wages have increased, and total operating costs have increased. This does not help explain the public opinion
. If the wage earners, or those who accept the minimum wage, increase the minimum wage, the purchasing power of these people will increase, the sales will increase, and the profit may increase. You can keep a look at
C. In addition to wages, the operating costs of retail stores have also increased significantly. After the implementation of the minimum wage rate, various costs will increase, and it will not help to explain the sharp increase in profits
. If D is not selected , when the minimum wage rate is implemented, the retail store will also increase the number of people who are only higher than the minimum wage. age, this age has nothing to do with the cost of goods and do not choose the bit around may mistakenly choose
E most retail employees Cashier, cashier's most wage is the minimum wage, this was indicated that the costs will increase, and increase profits regardless of the election does not
sum up, B is not correct another point to consider labor costs or purchasing power because operating costs are necessities of life sales Will be able to increase profits, certainly increase the interpretation of public opinion

There is never a perfect answer but the best answer relative to others. Focus on that aspect and you can minimise mistakes.

KarishmaB
Can you please explain option A. I couldn't comprehend it. When it says, "only a small percentage of those expenditures go to pay management salaries."
Since it's a small percentage, it is becoming popular for the retailer..no? If you can explain please. I understood your explanation of the correct answer though.

(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.

It tells us that payroll (salary of all employees) is the major part of operating costs. Also that most of the payroll money goes to workers - that management gets a small part of it only. This doesn't impact our conclusion. How much of the payroll goes to management and how much to workers is irrelevant. We know that minimum wage increased for the workers which increased the operating cost of the retailer considerably.

Whether management used to get 2% or 10% or 50% of the overall payroll, doesn't matter. We are talking about how the rest of the 98% or 90% or 50% of the payroll cost has increased.