GMAT Question of the Day - Daily to your Mailbox; hard ones only

It is currently 15 Dec 2018, 10:28

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Close

Request Expert Reply

Confirm Cancel
Events & Promotions in December
PrevNext
SuMoTuWeThFrSa
2526272829301
2345678
9101112131415
16171819202122
23242526272829
303112345
Open Detailed Calendar
  • $450 Tuition Credit & Official CAT Packs FREE

     December 15, 2018

     December 15, 2018

     10:00 PM PST

     11:00 PM PST

    Get the complete Official GMAT Exam Pack collection worth $100 with the 3 Month Pack ($299)
  • FREE Quant Workshop by e-GMAT!

     December 16, 2018

     December 16, 2018

     07:00 AM PST

     09:00 AM PST

    Get personalized insights on how to achieve your Target Quant Score.

Thousands of people work at G. Handy's, an inexpensive fast-food resta

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:

Hide Tags

Manager
Manager
User avatar
G
Joined: 08 Sep 2017
Posts: 77
GMAT 1: 710 Q49 V39
GMAT ToolKit User Premium Member Reviews Badge CAT Tests
Thousands of people work at G. Handy's, an inexpensive fast-food resta  [#permalink]

Show Tags

New post 26 Jul 2018, 16:33
1
00:00
A
B
C
D
E

Difficulty:

  15% (low)

Question Stats:

80% (01:29) correct 20% (01:24) wrong based on 66 sessions

HideShow timer Statistics

Thousands of people work at G. Handy's, an inexpensive fast-food restaurant chain that pays most of its employees minimum wage. Even though new laws forced an increase in the minimum wage, and thus substantially raised the restaurant chain's labor costs, its profits also rose substantially.

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


A Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.

B People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base.

C Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.

D The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.

E Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.

_________________

Kudos please if you liked my post


Thanks!

Manager
Manager
avatar
S
Joined: 11 Mar 2018
Posts: 90
Re: Thousands of people work at G. Handy's, an inexpensive fast-food resta  [#permalink]

Show Tags

New post 26 Jul 2018, 19:17
Carlgrc wrote:
Thousands of people work at G. Handy's, an inexpensive fast-food restaurant chain that pays most of its employees minimum wage. Even though new laws forced an increase in the minimum wage, and thus substantially raised the restaurant chain's labor costs, its profits also rose substantially.

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

A Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.
B People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base.
C Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.
D The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.
E Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.

Kudos please, thank you


Paradox -
Minimum wage of restaurant workers got increased but profits of restaurant also got increased substantially.

Answer Choices -

(A) Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.

Explanation - Out of Scope. Salary of Managers, in this case is irrelevant to profits of restaurant.

(B) People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base.

Explanation - If the people who earn minimum wage are its customer base. Then their wages have been increased and they can afford more. Hence their visits could have become more frequent, making profits of Restaurants higher.

(C) Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.

Explanation - This reason,if anything, will weaken the paradox than strengthen.

(D) The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.

Explanation - This sentence refers to what will have happen after profits increased, making it out of scope.

(E) Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.

Explanation - Irrelevant. We are not concerned with the staff. What will increase profits in this case is the customer base.
_________________

Regards
AD
---------------------------------
A Kudos is one more question and its answer understood by somebody !!!

Senior Manager
Senior Manager
User avatar
G
Joined: 17 Jan 2017
Posts: 300
Location: India
GPA: 4
WE: Information Technology (Computer Software)
Premium Member CAT Tests
Re: Thousands of people work at G. Handy's, an inexpensive fast-food resta  [#permalink]

Show Tags

New post 26 Jul 2018, 20:52
Carlgrc wrote:
Thousands of people work at G. Handy's, an inexpensive fast-food restaurant chain that pays most of its employees minimum wage. Even though new laws forced an increase in the minimum wage, and thus substantially raised the restaurant chain's labor costs, its profits also rose substantially.

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


A Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.

B People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base.

C Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.

D The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.

E Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.


+1 for B

B. People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base
- Correct. This tell us that the raise of minimum age is in turn helping its customer base. Hence, profits rose as customers are benefiting, which attracts them more to the restaurant.
_________________

Only those who risk going too far, can possibly find out how far one can go

Manager
Manager
avatar
B
Joined: 22 Sep 2017
Posts: 173
CAT Tests
Re: Thousands of people work at G. Handy's, an inexpensive fast-food resta  [#permalink]

Show Tags

New post 09 Aug 2018, 17:54
dimmak wrote:
Thousands of people work at G. Handy's, an inexpensive fast-food restaurant chain that pays most of its employees minimum wage. Even though new laws forced an increase in the minimum wage, and thus substantially raised the restaurant chain's labor costs, its profits also rose substantially.

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


A Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.

B People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base.

C Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.

D The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.

E Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.


B is bridging the gap. People who earn minimum wage are its customer base and any extra earning will go directly to the chain in the form of extended spending capacity due to wage increase.
GMAT Club Bot
Re: Thousands of people work at G. Handy's, an inexpensive fast-food resta &nbs [#permalink] 09 Aug 2018, 17:54
Display posts from previous: Sort by

Thousands of people work at G. Handy's, an inexpensive fast-food resta

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  


Copyright

GMAT Club MBA Forum Home| About| Terms and Conditions and Privacy Policy| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.