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

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Joined: 08 Sep 2017
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Thousands of people work at G. Handy's, an inexpensive fast-food resta  [#permalink]

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26 Jul 2018, 17:33
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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.

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Re: Thousands of people work at G. Handy's, an inexpensive fast-food resta  [#permalink]

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26 Jul 2018, 20:17
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.

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

(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.
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Re: Thousands of people work at G. Handy's, an inexpensive fast-food resta  [#permalink]

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26 Jul 2018, 21:52
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.
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Joined: 22 Sep 2017
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Re: Thousands of people work at G. Handy's, an inexpensive fast-food resta  [#permalink]

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09 Aug 2018, 18:54
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.
Re: Thousands of people work at G. Handy's, an inexpensive fast-food resta   [#permalink] 09 Aug 2018, 18:54
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