lexis wrote:
Official Guide for GMAT Verbal Review, 2nd EditionPractice Question
Question No.: 72
Page: 145
Difficulty: 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 wage 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.
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